Feb 27, 2006

SUBMISSION TO THE PARLIAMENTARY SELECT COMMITTEE ON INTEGRITY

BY THE CONSUMERS’ ASSOCIATION OF PENANG
&
SAHABAT ALAM MALAYSIA

Re: NEED FOR GREATER TRANSPARENCY IN RELATION TO

TRADE NEGOTIATIONS AT MULTILATERAL/REGIONAL/ BILATERAL LEVELS

Why Trade Negotiations Merit Parliamentary Scrutiny?

One of the specific objectives of the National Integrity Plan is –

“ Raising Malaysia’s competitiveness and resilience in meeting the challenges of the

21st century, especially the challenges of globalization”.

This necessarily means addressing one of the main challenges posed by

negotiations at the multilateral, regional and bilateral levels between Malaysia and
other countries.

Presently, negotiations are ongoing on trade and other related issues at the
multilateral (Word Trade Organisation) and at the regional (ASEAN) and the bilateral
level (between countries).

These negotiations are comprehensive and cover a whole range of matters including:

• tariff reduction/elimination for goods including agricultural products;

• liberalisation of the services sector;
• regulatory issues affecting trade and investment policies
• investment protection
• protection of intellectual property
• government procurement
• competition policy etc

These matters have very significant and profound impacts as they can affect job and
food security, the access to cheap medicines, the resilience of the domestic industry
and service providers, the viability of small farms and firms etc.

Among the 5 priority targets for the first 5 years (04-08) of the NIP is to “improve the
quality of life and peoples’ well being.” Given that these negotiations can affect the
quality of life and peoples’ well being, it is imperative that trade related negotiations
are also given due attention.

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One of the factors which have been identified as affecting integrity in the NIP is the
lack of transparency in the management of public interest.

Indeed, one of the strategies which have been identified in them implementing the
NIP is -

Strategy 7: Integrity Agenda for the Political Institution – among the objectives
include -

• Upholding the sovereignty and integrity of Parliament as a legislative body;

• Strengthening the principles of transparency, accountability and good
governance. ( This also applies in the case of the Administrative Institution)

Presently, these negotiations are conducted in a rather non-transparent manner and

there is no Parliamentary oversight. Once these international or bilateral agreements
are concluded, national laws and policies have to be adjusted or changed to give
effect to these commitments. Parliament then acts fait’ accompli.

Although the Parliament is supposed to have sovereignty over legislation, in the

present circumstances Parliament has been reduced to the role of a ‘rubber stamp’
as international commitments have already been made. Indeed, such an approach
undermines the integrity and sovereignty of the Parliament.

There are at present no mechanisms for effective checks and balances to ensure
that correct positions and decisions are taken in the public interest.

In the US for instance, the President of the US is accountable to the Congress in

relation to trade negotiations. The President however can be delegated powers by
Congress to move on a fast track basis without going to Congress which is presently
the case. The Trade Promotion Authority (TPA) grants the US President a fast track
authority without going to Congress, is to be dissolved on 1 July 2007. Without such
a delegation, the US is accountable to the Congress.

Ongoing Negotiations

As has been stated earlier, there are currently negotiations which are ongoing on
trade and other related issues at the Word Trade Organisation and at the regional
(ASEAN) and the bilateral level (between countries).

At the regional level , Malaysia, together with ASEAN, is negotiating FTAs with:

• China ;
• Australia and New Zealand ;
• India ;
• Japan ; and
• Korea .

Further, the ASEAN-China FTA on goods has been completed and came into effect
on 1 July 2005 . Negotiations to conclude the services and investment agreements
are ongoing.

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At the bilateral level, Malaysia has just concluded a Free Trade Agreement (FTA)
with Japan. The details were only provided on the MITI website after the signing of
the agreement.

Malaysia is currently negotiating FTAs with:

• The United States ;

• India ;
• Pakistan ;
• Australia ; and
• New Zealand.

In relation to the US, the Trade and Investment Framework Agreement (TIFA) was
signed on 10 May 2004 by Y.B. Dato' Seri Rafidah Aziz, Minister of International
Trade and Industry and Mr. Robert B. Zoellick, United States Trade Representative
(USTR), in Washington D.C. The TIFA provides for both parties to examine and
consult on the possibility of having a Free Trade Agreement (FTA) at an appropriate
time.

We understand that Malaysia and the US have started preliminary discussions on the
FTA early this year. According to the Bangkok Post (14 Jan 2006), last December,
the Economic Affairs Counsellor at the US Embassy in Kuala Lumpur had said that
Malaysia could sign an FTA before June 2007, as the Trade Promotion Authority
(TPA) which grants the US President a fast track authority without going to Congress,
is to be dissolved on 1 July 2007.

Given the intention of the US to conclude the FTA before the expiry of the fast track
authority, CAP and SAM have very grave concerns that Malaysia will be under
tremendous pressure to conclude the same, which can be detrimental to the public
interest.

As has been publicized, the US-Thailand FTA negotiations have stalled due to public
and other internal pressures, including the unfair demands of the US.

CAP and SAM have submitted a detailed memorandum to the government including
the Prime Minister, which we wish to bring to your attention.

As has been the experience in many countries who have concluded such FTAs, the
implications for ordinary people and sustainable development are very far-reaching.

We are of the view that such matters of negotiations both at the multilateral level (as
in the WTO) and at the bilateral level should be open and transparent, subject to the
scrutiny of the Malaysian Parliament and public debate.

We therefore hope that you will give this submission due attention and address our
serious concerns.

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S.M.Mohamed Idris

President.

Consumers’ Association of Penang

Sahabat Alam Malaysia