Malaysia with The Trans-Pacific Partnership Agreement: Aftermath of The United States Withdrawal From The TPPA



Kamal Halili Hassan, Muhammad Faliq Abd Razak, Rohaida Nordin, Rohani Abdul Rahim | International Journal of Asian Social Science


The Trans-Pacific Partnership Agreement (TPPA) was a very extensive and speculative trade agreement until the withdrawal of the United States. The world economic and trade bloc was of the view that the TPPA would be the greatest ever trade agreement in the 21st century that would have brought major changes to the trading, economic, and investment sectors. TPPA issues relate to trade and also for example to labour standards, the environment, government procurement, and intellectual property rights. It has major implications to existing standards and legal framework in Malaysia, particularly on labour. Several issues have arisen following the US withdrawal from the TPPA mostly on US-Malaysia Labour Consistency Plan which requires amendments to Malaysian labour laws. The discussion in this paper focuses on the impact of the TPPA-11 (TPPA, original member states minus the United States) on the „Comprehensive and Progressive Agreement for Trans-Pacific Partnership‟ (CPTPP) on existing Malaysian labour laws. Does Malaysia need to amend the current set of labour laws with the application of TPP-11 and CPTPP or should Malaysia maintain the existing labour framework?


Following decades of negotiations, the Trans-Pacific Partnership (TPP) as an international trade agreement among its member states was concluded on 5th October 2015. The agreement seeks to achieve two main objectives: (i) the establishment of market-oriented international trade in various fields that could growth rapidly at the international level, and (ii) the reduction of trade and investment barriers amongst TPP member states (Capaldo et al., 2016). According to estimates, the combined Gross Domestic Product (GDP) of TPP member states in 2014 amounted to $28 trillion or 36% of global GDP of which the export sector constituted $5.3 trillion or 23% of total global exports (Petri and Plummer, 2016). The TPP is viewed as an unique setup because of its flexibility and versatility and comprises nations of all levels of incomes and diverse systems of economic integration. The exclusivity of the TPP Agreement (TPPA) can be seen in the aspiration to achieve economic integration through the provision of various aspects of goods, services, and investments, and involves key global issues such as the digital economy, intellectual property rights, labour, and the environment (Manaf et al., 2014).

The TPP‟s role is in fostering cooperation at the international level and it is regarded as a new framework of trade agreements for the next generation although its impact is still yet to be assessed and analyzed (Chance, 2015). However, it will be the most valuable contribution over the long term through a new economic model. It cannot be denied that there is much doubt on the ambiguity of the main concerns of the TPPA in reference to postnegotiation statements which are very general and the diverse agendas among its member states which have national priorities, especially developing countries of the Commonwealth like Malaysia (Parra and Rollo, 2014). The TPPA will also increase the annual real income of the United States of $131 billion or 0.5% of its GDP (Petri and Plummer, 2016). Its annual exports were estimated to increase by $357 billion or 9.1% by 2030 when the TPP is fully implemented while Malaysia‟s GDP will reach $336.9 billion (TPP Coalition, 2016). The TPP Agreement also places labour rights as one of the main agendas compared to previous or existing free trade agreements (FTA). Chapter in the TPP Agreement was negotiated to achieve high labour standards which had not been addressed in a specific chapter in any earlier trade agreements (Froman, 2016).

The TPP was formed to establish free trade with the United States in the interests of its member states. Some member states of the TPP, now known as TPP-11, are from the North American and Oceania economies such as Canada, Mexico, and Australia. These states possibly gain more benefits from the TPP-11 than from TPP-12 since they already have FTAs with the United States. Apart from that, they also might gain from potential markets such as Japan with the withdrawal of the United States from TPP-12. It is assumed that the United States will experience the largest single net loss by moving from a $131 billion gain under TPP-12 to a $2 billion loss under TPP11 (Petri et al., 2017). This article focuses on the Labour Chapter of the TPP Agreement and analyzes the implications and legal effects on existing labour laws in Malaysia following the withdrawal of the United States. It will also explain, as a follow-up to our previous paper, the effects and position of Malaysia on its Labour Framework with the newly signed CPTPP which has not suspended the Labour Chapter of original TPP Text Agreement (Banga, 2015; TPP Coalition, 2016).


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