CENTRE OF FOUNDATION STUDIES

UNIVERSITI TEKNOLOGI MARA

TERM PAPER 2
Prepared by;
Qurratu Ain binti Awang Said (2015858508)
Course: Academic Writing for Foundation Studies
(ELC093)
Code: PI007

Prepared for;
Dr. Faezah Eliza Binti Abdul Talib

TERM PAPER 2
Topic
Trans Pacific Partnership Agreement is a Threat to Malaysia Government
Thesis Statement
The Trans-Pacific Partnership Agreement (TPPA) would threaten the sovereignty of a country
because it would grant investors the right to sue our Malaysian government, limit the policy
space of government to regulate, and affect the nations key of policy, environment and
intellectual property.

Trans-Pacific Partnership Agreement or also known as TPPA is a Free Trade Agreement

(FTA), signed in Auckland, New Zealand on 4th February 2016 that involves twelve Asian and
Pacific-rim countries which are Malaysia, New Zealand, Australia, Brunei Darussalam, Canada,
Chile, Japan, Mexico, Peru, Singapore, United States, and Vietnam. Malaysia joined the
negotiation period five years ago which was in 2010. The main purpose of this agreement is to
promote and encourage trade, investment, job creation, development and innovation among the
twelve countries under this deal (netivist.org). However, there are fear over the impact of the
TPPA to the nations. One of the major criticism raised is the impact of the TPP agreement to the
sovereign power of a state. Our national authority has the possibility to lose their full right and
power of governing without the interference from the external authority. The TPPA would
threaten our national sovereignty because it would grant investors the right to sue our Malaysian
government through the Investor-State Dispute Settlement (ISDS) mechanisms, limit the policy
space of the government to regulate and affect the nations key of policy, environment and
intellectual property.
Firstly, TPPA would threaten the sovereignty of a state because it would grant investors
the right to sue the government via Investor-State Dispute Settlement. Investor-State Dispute
Settlement or also known as ISDS is a legal system that grants a right for investors to take legal
action against the participating government if there is any breach of contract that can harms
their investment in a particular country (Bernie, 2016). The provisions under the ISDS only allow
foreign investors to sue a government, and not vice versa. In other words, ISDS is an instrument
that create a special status for foreign investors without having to face the federal court. ISDS
has been used over several decades which can be found in certain bilateral and trade
agreements including the North American Free Trade Agreement (NAFTA). It is also can be
found under the treaty TPP agreement in which our Malaysian government can be challenged in
a wide range of aspect if any our state regulations might impinge foreign investors profits.
Referring to the case Phillip Morris Asia Ltd v The Commonwealth of Australia, the Government
of Australia has been resulted because of the ISDS provisions. In this case, Philip Morris Asia
Limited filed a legal action against Australian government for their breached foreign investment
provisions of Australias 1993 Investment Promotion and Protection. It is clearly shows that,
ISDS would just open an opportunity for foreign investors and multinational corporations to
challenge our Malaysian governments law decisions even though the law decisions are made
to protect the nation itself in terms of environment and social. With the TPP agreement that

contained treaty investor dispute-settlement mechanism, it can caused our government easily to
be brought to international tribunal court.
The Trans Pacific Partnership Agreement (TPPA) would also threaten the sovereignty of
a country because it limits the policy space of government to regulate. According to Bradbury
(2016), TPPA is one of the tool that can be used by the foreign investors to participate and
intervene Malaysias domestic decisions. As to prove the statement given by Bradbury, before
the enforcement of the agreement, all countries under the agreement are required to rewrite
their laws and policies so that it is in accordance to the provisions of the TPPA provisions
(eff.org). Several laws have been amended after the enforcement of the TPP agreements (Kaur,
2016). Among the amendments, it involved the enforcement under the Custom Act 1967, the
Free Zone Act 1990 and the Custom Act Chapter 27 (Chapter 2). There are also nine
amendments involving the field of patent, copyright, trademark and geographical indications.
TPPA does not only violate the right of our executive body to implement its own regulations and
policies, but it also removes the policy power of our elected government to regulate (bersih.org).
It shows that our government is lack of power and sovereignty because we are bind to the
external power to regulate our laws. Besides, bersih.org also stated that, TPPA would limit our
courts decision and allow our federal court to be challenged by the foreign investors. This is
because, the foreign investors has the right to skip our federal court and go after the
international panel or arbitrators with the investor dispute settlement mechanism (Warren,
2015).
Another reason that threaten the sovereignty of a country is that the TPPA would affect
the nations key of policy, environment and intellectual property. Under the North American Free
Trade Agreement, in the case of The Metalclad Corporation, a waste disposal company from the
United States cooperation had taken an action under the ISDS provisions to sue the Mexican
federal government for their decision to deny a permit to operate a toxic dump waste
(aflcio.org). The Mexican governments are concerned that the expansion of toxic waste would
pollute their water supply. However, it was held that, by the order from the investor-state
tribunal, Mexico was required to pay the foreign company more than $16 million to the disposal
company. The question here is, who actually has the power to govern the Mexico? Is it the
Metalclad Corporation or the home state government itself? The Mexican government should be
given the power to make their own choice and decision on what is best for their nations policy.
Same goes to Malaysian government in which, we are supposed to be free to enact These has
clearly shows that, the ISDS provisions under the TPPA would just restrict Malaysias right and
left the law decision making in the hands of un-elected international tribunal court. For instance,
if Malaysian government enact anti-smoking legislation as to protect the environment, there is a
possibility for Malaysia to be sued by any foreign investors through ISDS. As a result, Malaysia
might be forced to pay millions of dollars as a compensation to the particular foreign company.
There are many criticism against the Malaysias participation in the TPP agreement as it
is seen that, under the provision of the TPPA, Malaysia has the possibility to lose its sovereign
rights by taking part in this treaty agreement. However, the Former International Trade and
Industry Minister of Malaysia, Tan Sri Rafidah Aziz stated that, Trans Pacific Partnership
Agreement would bring more benefits than challenges to the nation in various aspects such as
economy and social (malaysiandigest.com). Our economic state is seemed to be more
guaranteed if Malaysia chooses to be part of this controversial supra-trade pact, the Trans

Pacific Partnership Agreement (TPPA). In addition, Malaysian government is given their rights to
maintain and protect policies of Bumiputera businesses and local industries
(malaysianinsider.com). These policies only allow Bumiputera companies to bid for certain
contracts from the government or government-liked companies (GLC). Though it seems to give
positive impact to Malaysian economically, Malaysia government should be aware of the
consequences of TPPA after it is signed. As a developing country, Malaysia most would be
affected because most developed countries such as United States and Japan would probably
dominating the trade and investment under this agreement since TPPA is a free trade
agreement that promotes open market among the members of the TPPA.
In conclusion, it is better for Malaysia to withdraw our involvement from the TransPacific Partnership (TPP) agreement. Since Malaysia could exit the agreement in within six
months by providing written notice to withdraw with no penalty (Bernama, 2015), we should take
this advantage because it is seen that, TPP agreement is not only gives negative impact to our
national sovereignty as well as on federal and state laws but it also can result in challenging our
local industries to the foreign investors from other nations under this deal such as United States,
and Japan. As what have been reported by the Economists at the United Nations Conference
on Trade and Development (UNCTAD), as a result of these agreement, developing country such
as Malaysia would actually be a net loser among the countries that join the agreement. TPPA is
a bad deal for Malaysia because it grants investors the right to sue our Malaysian government,
limit the policy space of government to regulate, and affect the nations key of policy,
environment and intellectual property.

REFERENCES
Kaur, M. (2016). 17 laws to be amended if TPPA approval given. Retrieved March 5, 2016 from
http://www.nst.com.my/news/2016/01/124065/17-laws-be-amended-if-tppa-approvalgiven?m=1
Parliament must reject the TPPA to protect Malaysias institutions and democratic development.
Retrieved March 5, 2016 from http://www.bersih.org/8012-2/
The Trans-Pacific Partnership (TPP) will increase trade, but will it undermine democracy, public
services,
and
the
environment?.
Retrieved
March
7,
2016
from
https://nativist.org/debate/tpp-pros-and-cons
TPPA will benefit more bumiputera companies. Retrieved March 5, 2016 from
http://www.themalaysianinsider.com/Malaysia/article/tppa-will-benefit-more-bumiputeracompanies-says-think-tank
TPPA, RCEP a must for Malaysia, says Rafidah. Retrieved March 4, 2016 from
http://malaysiandigest.com/news/553133-tppa-rcep-a-must-for-Malaysia-saysrafidah.html
Trans

Pacific
Partnership
Agreement.
https://www.eff.org/issues/tpp

Retrieved

March

6,

2016

from

Warren, E. (2015). The Trans-Pacific Partnership clause everyone should oppose. Retrieved
March 3, 2015 from https://www.washingtonpost.com/opinions/kill-the-disputesettlement-language-in-the-trans-pacific-partnership/2015/02/25/ec7705a2-bd1e-11e4b274-e5209a3bc9a9_story.html
What is ISDS?. Retrieved March 4, 2016 from http://www.aflcio.org/Issues/Trade/What- IsISDS

APPENDICES