Friday, April 01, 2016
Trans-Pacific Partnership (TPP) - What It Means for Brunei Darussalam?
BANDAR SERI BEGAWAN
Friday, April 1, 2016
THE fourth of February 2016 marks a momentous occasion as twelve countries across the Asia Pacific region - Brunei Darussalam, Australia, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States of America, and Vietnam - gathered in Auckland, New Zealand to sign the Trans-Pacific Partnership (TPP), a comprehensive free trade agreement that bridges the two sides of the Pacific.
The TPP is a massive regional undertaking. But many are still wondering: What exactly is the TPP? More importantly, what does the TPP mean for a small country at the heart of Southeast Asia with a population of just around 450,000?
From P4 to TPP
The TPP started from humble beginnings, tracing its origins back to a smaller trade agreement called the Trans-Pacific Strategic Economic Partnership (TPSEP) or more commonly known as the P4 which stands for the ‘Pacific 4’, signed in 2005 between Brunei Darussalam, Chile, New Zealand and Singapore. Because of this, Brunei Darussalam can in fact be considered as a founding member of the TPP.
These four small, like-minded economies established the P4 with an “open accession” clause – meaning that it was open for future membership by other economies - with hopes that the arrangement could become a platform for bigger economic cooperation in the future. This hope was realised when wide interest from other countries soon took the form of an expanded participation. Subsequently, formal negotiations for the TPP was officially launched in 2010 between the P4 countries in conjunction with the United States, Peru, Australia and Vietnam. Later on, Malaysia, Canada, Mexico and Japan also came on board and the TPP became the 12-party FTA it is today, comprising of a combined GDP of approximately US$27.5 trillion with a total population of 800 million.
What is the scope of the TPP?
The TPP is a comprehensive, high standard regional trade agreement. Altogether it contains 30 chapters covering a full spectrum of areas to enhance and improve trade. As a high quality trade agreement, it takes into account emerging issues including the development of the digital economy and providing an environment where all enterprises, both public and private-owned, can operate on an equal footing. Additionally, the TPP features a specific chapter on small and medium enterprises (SMEs) which contains commitments to provide easy access to information on regulations and business procedures.
Benefits of the TPP
For Brunei Darussalam, being a member of this group carries significant strategic importance both politically and economically. As an original signatory of the TPP, Brunei Darussalam becomes a founding member of an important initiative that will shape how trade will be conducted in the region. This will then help elevate Brunei Darussalam’s profile in the international community and garner greater interest for our trading partners to do business in Brunei Darussalam.
The TPP also brings with it real and concrete benefits. Brunei Darussalam already trades heavily with TPP countries and over the past four years, the figure comprises of an average of 64 per cent of its overall trade. In 2014 alone, Brunei Darussalam’s total trade with TPP partners amounted to $10.8 billion.
The TPP will provide local Bruneian businesses and investors with improved access to the markets of these 11 countries, with a consumer base of 800 million people, compared to our domestic market of less than 450,000 people. This is hugely beneficial for local companies that are already exporting and presents numerous opportunities for those looking to do so, especially in the countries which we did not have FTAs with previously, like Canada, Mexico, Peru and the United States.
The opportunities also go beyond the exporting of goods and services. TPP enables Bruneian companies and service providers, including SMEs to bid for government procurement projects in TPP markets in as far as the United States and Peru, or our close neighbours Malaysia, Singapore and Vietnam.
In terms of investment, Bruneians that invest abroad can rest assured that they will be treated fairly and that their investments are protected, thus reducing the risks of investing abroad and ensures that they can compete on an equal footing with others.
The TPP also makes it easier for short-term business visitors as well as professionals from a wide range of occupations to enter into TPP countries through easier visa requirements and longer allowed stay.
Building a conducive trade and investment environment
As we know, businesses cannot thrive without a competitive and supporting environment that enables them to flourish. Investors look for predictability and transparency in rules and regulations.
It is also important to provide a level-playing field that enables businesses in any form and size to compete fairly with each other.
And this is where the TPP can help to strengthen and build a favourable environment to do business in Brunei Darussalam that benefits both local and foreign businesses.
For instance, the commitments in Competition Policy ensures that action will be taken to prevent price fixing, bid-rigging and tender collusion.
Through the TPP as well, Brunei Darussalam can learn from our partners and adopt international best practices in wide areas of trade, including in transparency, e-commerce, environmental protection and labour standards.
In addition, the commitments for having a strong intellectual property regime can help nurture the development of innovation and creativity in Brunei Darussalam, which is important especially as we try to encourage the growth of our local start-ups and enterprises.
Having transparent and predictable trade and investment rules gives investors the confidence to operate in Brunei Darussalam and helps attract foreign direct investment (FDI) into the country. Consumers can then enjoy access to a wide range of goods and services of higher quality as a result of a healthier and competitive market. So now that the agreement has been signed, what is next?
Although the TPP has been signed, it has not yet “entered into force”. What this means is that all 12 signatories including Brunei Darussalam must now complete their respective domestic processes to “ratify” or implement the agreement and this is currently ongoing.
As part of the process, TPP countries including Brunei Darussalam will be making structural adjustments that includes updating laws and regulations where needed, to ensure that the legal framework is in line with the TPP commitments.
The benefits of the TPP can be enjoyed once the agreement comes into force. In the case of the TPP, the agreement will enter into force after at least six parties, accounting for 85 per cent of TPP’s GDP, ratify the agreement.
TPP in a nutshell
The TPP sets forth a new standard of trade and investment rules in the region which Brunei Darussalam helped shape.
The benefits for Brunei Darussalam are not only strategic, economically and politically, but with very real positive impact on structural and regulatory improvements.
These benefits may not be seen immediately, but over time will spur competitive markets and attract more foreign investors to Brunei Darussalam.
Our participation can further complement and help drive the country’s economic diversification efforts, leading to job creation and elevating the population’s standard of living.
To learn more about the TPP, the Ministry of Foreign Affairs and Trade of Brunei Darussalam will be organising an outreach programme on April 2 at the International Convention Centre, to share information on the TPP, ASEAN Economic Community as well as other key initiatives being undertaken by Brunei Darussalam.
Interested members of the public are welcome to pre-register at email@example.com.
Ministry of Foreign Affairs and Trade
ASEAN Economic Community - What it means for Brunei?
Pehin Lim Jock Seng, Brunei's Minister of Foreign Affairs and Trade II - On Brunei's Policy
US Views on TPP (The New York Times)
TPP Trade Deal - Winners and Losers (BBC)
What the TPP mean for Southeast Asia? (The Diplomat)