Economist Jomo: Inking TPPA will sour ties with China

by Aidila Razak@http://www.malaysiakini.com

Signing the Trans Pacific Partnership Agreement, which is still locked in negotiations, could sour Malaysia's relationship with its top trading partner China, said a leading economist.

Dr Jomo Kwame Sundaram-- Winner of the Wassily Leontief Prize in Economics 2007

According to former United Nations Assistant Secretary-General of Economic Development Jomo Kwame Sundaram (above) , this is because the TPPA was designed to "isolate China".

"That is the whole point of the TPPA," he told reporters after speaking at a packed forum at Universiti Malaya last night.  Not going into details of the agreement, which Jomo (right) said he has "lots of problems with", the economist added that TPPA involves many countries, but is negotiated on a bilateral basis.

This, he said, provided an uneven playing field which benefit countries like the United States.

"Malaysia's trade negotiators are not known for their negotiation acumen. What are we trying to achieve by trying to be in the good books of the US? I'm saying we should (have good ties with the US) and not make scurrilous statements about them, but we shouldn't swing from one end to the other by embracing the US and turning our backs on the other side," he said.

Jomo, who is now Assistant Director General at the UN's Food and Agriculture Organisation (FAO), said the TPPA was first conceived to solve a problem which no longer existed – US trade deficit with China, which has since closed due to US currency devaluation.

Instead of getting involved in a "fight between the US and China", he said that Malaysia should be more concerned with a likely US and European Union economic alliance, which could further block Malaysia's top export - refined palm oil.

TPPA won't guarantee free access

Pro-TPPA quarters have argued that by snubbing the agreement, Malaysia would face closed doors in member countries. Instead, they argued, Malaysia's competitors like Vietnam who may sign the TPPA, would have greater access to international markets.

To this, Jomo, who won the internationally coveted Wassily Leontief Prize for Advancing Economic Frontier in 2007, said that such deals do not really guarantee free access to markets.

"Vietnam signed on to the World Trade Organisation and now they are no longer allowed to breed the Mississippi catfish for the US. These deals cut both ways. They'll find ways to protect (their market)," he said.

Jomo spoke to reporters after launching the book 'Malaysia@50 Economic Development, Distribution, Disparities' which he co-authored with Wee Chong Hui.

In his speech, he said that the book is about the "unlikely nation" of Malaysia which had gone through half a century despite its "awkward birth".

Boom time not result of good policy

He said that at 50, Malaysia's financial sector is squeezing out more industries like manufacturing, which spur still lacking growth fundamentals like innovation.

Malaysia's rapid growth from 1985 to 1995 was less about good policy and more because the US dollar significantly depreciated against the Japanese Yen, he added.

This resulted in high foreign investment from North East Asian countries in Malaysia and the region which loosely pegged its currency to the US dollar.

The boom time ended and finally boiled over in the 1998 financial crisis when the Yen was allowed to depreciate against the dollar in 1995.

He said that Malaysia's recovery effort since then has been compromised by "cronyism or 'jobs for the boys'".

"Many people in politics say this is unsustainable but I say it is because we have oil and we can keep turning on the oil tap," he said cynically.

"We're depriving the future generation, but it is still not unsustainable in the short or medium run. This is the problem. We do not have a disciplinary mechanism," he added.

In the book, published by SIRD Centre, Jomo and Wee discuss different stages of Malaysia's existence, including the "three regimes of the Mahathir era".

Retailing at RM40, it also looks into distribution and equality over the years across class, gender and regions, and public finances and federalism as practiced in Malaysia.