Negotiations between the Malaysia and the European Union for a free trade agreement (FTA) are expected to begin in Brussels next week. But most Malaysians are being left in the dark about what this means for Malaysia while Parliament is not even looking at this seriously.

The way I see it, the EU-Malaysia FTA aims to prise open the Malaysian market for large European firms – in the same way that these firms are eyeing the vast Indian market under the EU-India FTA and the Asean market under the EU-Asean FTA. That’s the main agenda of Corporate Europe.

These large European firms or BusinessEurope are working very closely with EU Commission negotiators to secure the best possible outcome for themselves. What are they looking for? We can get a pretty good idea of what they want by looking at the negotiations for the EU-India FTA.

One of the main concerns is that the manufacture and export of affordable generic medicine by India could be affected, and there would be less control over exports of raw materials from India and imports of subsidised European agricultural produce into India.

Thanks to the good folks at Corporate Europe Observatory and India FDI Watch, we know this is what Big Business in Europe is looking for:

Full liberalisation of trade in industrial goods:

total elimination of import tariffs for all industrial goods within seven years and no possibility of excluding certain sensitive products from tariff cuts. Longer time frames for these cuts should only be possible for a very limited number of sensitive products.

Nearly full liberalisation of trade in agricultural products

elimination of agricultural import tariffs with only a few exceptions for sensitive products that might be exempt from liberalisation or liberalised to a lesser extent. Tariffs for processed food and beverages, however, should be reduced to zero.

Dismantling all regulations on investments by EU companies in India:

there should be no limits to foreign ownership for European banks, insurance and telecom companies. Sectors that are completely or relatively closed to foreign investors such as retail, accounting, legal and postal services should be opened up to European multinationals, the unlimited transfer of their profits guaranteed and limits on risky forms of investment eliminated.

Protection for European investments, particularly against all forms of expropriation.

Liberalisation of trade in services

European companies want a less regulated services market in fields such as research, insurance, banking, telecommunications and maritime transport. This includes the liberalisation of risky and highly speculative financial instruments.

A ban on export taxes and other export restrictions

to secure unhampered access to manufacturing inputs for European industries, India should abstain from export restrictions on raw materials such as rice, cotton, leather, rare earth, paper, wood products and metals that the country has used strategically to encourage infant industries or for reasons of price stability.

The protection of intellectual property rights (IPRs) beyond what is required under WTO rules

this includes ´data exclusivity‘ for a minimum period of 10 years, to strengthen the monopoly rights of pharmaceutical and agrochemical companies. It also includes an army of IPR enforcement measures ranging from at the border measures against potentially counterfeit goods to “cleaning up any street market that sells pirated European goods” (EuroCommerce).

An ambitious government procurement chapter:

This would enable European companies to bid for public contracts in sectors such as energy infrastructure, water treatment, healthcare, transport or construction.

The elimination of regulatory (´non-tariff‘) barriers (NTBs) that hamper market access for European exporters. This includes a demand for regulatory transparency, information on any proposed new regulation in India long before it is implemented and ´consultation mechanisms‘ through which European corporate interests can provide comments and input.

The facilitation of the migration of key personnel for both industry and services subsidiaries: the mutual recognition of professional qualifications is key.

Strong and rapid dispute settlement mechanisms: this also includes so called investor-to-state provisions that would allow European companies to directly sue India at international tribunals when they feel that their investment or profits are being jeopardised.

Intense cooperation between business and the Commission

the Commission should “closely involve industry, keeping it regularly updated throughout the FTA negotiation process, from preliminary consultations and the launch of the talks through to the completion of the final agreement” (European Tyre and Rubber Manufacturers Association).

Because Big Business in Europe is working closely with the EU, their demands are likely to be close to the EU negotiators’ position, which is (going by the experience in India):

IPR

Go beyond TRIPS standards: “This chapter shall complement and further specify the rights and obligations between the Parties beyond those under the TRIPS Agreement” (art. 8.1)

  • introduction of data exclusivity in India (art. 18)
  • extent patents from the standard 20 to up to 25 years (art. 17.3)
  • border protection provisions that allow the seizure of products suspected of infringing IPRs at the Indian border (art. 36)
  • training of personnel for the enforcement of IPRs (art. 38)136

Tariffs

  • Elimination of more than 90% of tariffs on manufactured and agricultural products within 7 years; aiming at tariff liberalisation for all industrial products
  • Zero tariffs on chemicals, textiles and probably also dairy, automotives, processed food and beverages
  • Less radical liberalisation commitments for a limited list of sensitive agricultural products

Services and investment

“far reaching liberalisation of services and investment”

  • emphasis on the following sectors: banking,insurance, retail, accounting, legal and postal services…
  • full liberalisation of capital movements
  • no limits on risky forms of investment
  • Maximum protection for EU investors
  • Investor-to-state provisions that allow companies to directly sue India through international tribunals

Government procurement

“progressive liberalisation of procurement markets at national, regional, and, where appropriate, local levels; as well as in the field of public utilities”

“gradual market access on the basis of the principles of non-discrimination and national treatment”

Access to raw materials

prohibit export taxes and other export restrictions

Given the disparity in negotiating strength, expertise and resources, Malaysian negotiators are likely to be no match for the EU’s. Worse, the Malaysian public have no idea what they are in for.

The likes of Tesco, Carrefour and heavyweight European banks (those that are still solvent, that is!), hotels and financial institutions could be setting up shop in the region while subsidised EU agricultural produce may end up flooding our domestic market. All these could severely affect local businesses, the domestic economy and ultimately, the Malaysian people.

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13 COMMENTS

  1. Corporate Europe Observatory and India FDI Watch have now also published a short animation that sums up the results of the “Trade Invaders” report:
    http://www

  2. Trade liberalisation only mean that you either milked by Umno and cronies or by the new colonial master in the name of free trade. Either way the people are losing out. However competition is better than monopoly. Welcome to a brand new world of colonization in the name of free trade.

  3. What kind of European FTA if we have to continue to pay exhorbitant price for European cars and high price for the inferior and hopeless Proton?

  4. This is why they “cultivate” 3rd-world leaders from their student days, and promote (publicise) them later. It pays to have a compromised rep on the other team.

    We know that when the behemoths clash, they don’t give in to each other, whether on Japanese rice, European beef and dairy or US maize and wheat. So they squeeze what they can out of the small fry.

    • One commodity is GM food made profitable due to economies of scale and easily modified to meet changes in consumption pattern and demand, emerging diseases or climate disruptions. In the event of a full scale 3rd world war, it can be a tactical weapon of mass hunger and biological outbreak of pandemic disease against whosoever is at the mercy of the GM food producers.
      Some MNCs are no straight business enterprises just for profits and market penetration. They can be used as instruments of political and military interests for espionage and guerrilla intrusions or supply disruptions as in the case of essential food.

  5. Our industries have not changed since the time of Lim Chong Eu. So what father of Industrialisation? Instead those Gerakan/MCA wanted to keep the profit and not wanting to invest into higher like Sinkapore, AMNO invited cheap labour. So Penang industries have not changed to keep up with the advancing world trend. Malaysia is gifted with oil and surrounded by sea and has build highrises and highways, where are our centres for oil industries and shipbuilding. Instead, Sinkapore is one of the largest oil refining and shipbuilding for commerce and oil exploration and production.

  6. Looks, sounds and smells like the old colonialists’ arm twisting deals with the local natives and Sultans during the Sultanate periods. It has never been a fair play when dealing with these Westerners who see in our less advance state of legal, technological and scientific stances, an easy prey to tackle and to devour in whole. Never mind that there will be casualties in the name of human rights. This will be interpreted / twisted in their favour as economic casualties of the undemocratic 3rd world nations.

    Let’s be more careful and bargain firmly for better deals and negotiations, better still upper hands rather than give in, in awe.

    Are our leaders well versed in the ‘Art of War’? If not, learn from China before it is too late.

  7. Trade liberalisation gave Malaysia millions of jobs at great expense to what used to be known as the ‘working class’ in Europe and are now labelled ‘spongers’. The only honest alternative to accepting foreign firms is to lose the jobs those firms have created here. It’s a challenging problem: Europe has haemorrhaged labour cash because big business did not want to pay domestic workers whose rights made them so expensive.

    I think it’s dishonest to say ‘yes’ to the jobs but ‘no’ to the companies.

    • What about the jobs that could be affected when local firms suffer because they cannot match the financial muscle of the big foreign firms, and when farmers cannot compete with the heavily subsidised European imports, and when sick Malaysians cannot afford expensive patented drugs?

      • Where were your complaints when Europe exported its jobs here? Why didn’t you close your borders then? What ‘heavily subsidised food’ are you expecting to import from Europe – pizzas? I see one very well-known European foodstuffs manufacturer is more common on supermarket shelves here than it is in Europe due to rolling domestic boycotts (in which I have been participating) for as long as I can remember. They obviously don’t need a FTA to stamp out competition here, just a greedy local supply chain who is attracted to their business practices. Are you protecting them too?

        And which local firms are you wishing to protect? You don’t think there’s enough ‘protection’ going on already? Who knows – given that my local supermarkets appear to be full of garden waste and pre-broken toys, perhaps a little invasion would be a good thing. Who do you think will be working for the ‘invaders’? Foreign firms != foreign workers.

        I’m not a great fan of unfettered globalisation – but come on Anil, Malaysians have been benefiting from being employed by foreign companies dodging their employment responsibilities in their own countries – it seems only fair to let the companies in too. You’ve had 50 years to become competitive, if you’re not competitive by now, how much longer would you like – and what is the excuse this time?

        If you think Malaysians are the only ones who can’t afford medicine, perhaps you should ask a German to tell you about British teeth. I’ll grant you the patent issue – I think patent law is long overdue for a complete overhaul to stop it from being used to strangle innovation and small start-ups.

        No nonsense about ‘colonialists’ please: there are only two states left in the world who are still aggressively recruiting ‘colonies’ and neither of them are located in what is locally regarded as “the West”. And attempting to plead inadequacy in the face of trade negotiators is beneath pitiful.

      • Oh, you mean the cheap labour jobs… wages for which can barely keep pace with the cost of living… the below poverty line wages for production workers… and even then, real wages have stagnated.

        It’s not just a matter of protecting domestic firms (and yes, I would like to protect the small retail shops, the SMEs, the independent farmers who are in danger of becoming contract workers). It’s also a question of economic sovereignty – the ability to decide our own economic policies, fix our own import tariffs (which would also help raise badly needed public funds), protect infant industries and small businesses, and impose export taxes on raw materials (because we want to develop and nurture our own value-added downstream sectors or protect the environment or conserve our resources).

        With the FTA, these economic decisions would be dictated to us to fit the agenda of powerful MNCs, whose turnover in some cases could be more than some developing nations.

        And I would never want to see an MNC hauling a government to an international tribunal because it doesn’t like the government acting in the people’s interest (against the MNC’s interest).

        No, it’s by no means a level playing field. And yes, we are staring at MNC colonisation.

        Europe – and the US for that matter – had donkey’s years of protectionism for their fledgling industries while their industries profited from raw materials in their colonial territories or client nations – and now they want a tariff-free world and ‘free trade’?

      • Some people just damn deny their own recalcitrance at global economic theatrette performing as if the world will continue to lust at their filthy barbaric performances against nations. Such pity they cannot admit their own condemned antics to impoverize nations, people and races.

        The poorer and less advanced nations are now their focused filth playground to dump their excesses, parlay their one-way bargaining chips and squeeze dry the economic blood-life of helpless nations at the contorted mercy of so-called well meaning globalization or open society of the infamous George Soros.

        If the so-called well meaning of MNCs selling cheap skate magic potions at economic forums is to be accepted at face value, we less advanced nations will be slaved at their mercy in no time till eternity.

        Colonialism is well, alive and thriving in a new guise playing the new barbaric rules of economic warfare engagement not too dissimilar from the early colonialist forays and raping in the new world of Americas and land to the East of the rising sun.

        History is repeating itself as if it happened only yesterday.
        Not everyone is that forgetful, nor forgiving. Caution is the call of the day if you happen to deal with a Western MNC.

      • By the way, the democratic free reign of excessive consumerism and living on credit is the new ‘opium’ of the global economic colonialism and slavery.

        China is tasting the new ‘opium’ like heaven on middle kingdom once again without learning introspectively from Emperor Pu Yi. And soon it will be ripe for the multiple gang raping by these MNCs who will dictate on behalf of their colonialist masters in far away Mediterranean islands, Capitol Hill or Open Society Institute.

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