Benefits and challenges of a Brunei TPP membership
There has been much talk but less action with regards to the Trans-Pacific Partnership (TPP), the US-backed plan to establish a free trade area in the Asia–Pacific. The TPP is widely acknowledged to represent an economic cooperation concept aimed at supporting emerging trade issues in the 21st century as opposed to existing blocs such as the North-Atlantic Free Trade Agreement or what is set to become the ASEAN Economic Community by 2016 in ASEAN.
The ties are currently quite loose within the TPP, with its member countries being Brunei, Chile, New Zealand and Singapore and negotiations with Australia, Canada, Malaysia, Mexico, Peru, Vietnam and Japan going on.
How can small Brunei benefit from such a global trade partnership? One of the challenges the TPP faces is preventing the dilution of its original economic goals for the sake of expansion. In order for the member countries to benefit economically, the TPP must be a high-quality agreement that moves market-oriented liberalisation forward on multiple fronts.
However, a sound TPP will also reinforce US political leadership in Asia–Pacific and around the world, demonstrating that the US will continue to make the decisions necessary to remain fully engaged in the global economy for the cause of open markets. Brunei needs to agree on this in a region where economic hegemony is also highly represented by China, the US’ arch rival in terms of economic expansion in ASEAN.
The favourable facts for Brunei are that the TPP cover areas such as market access for goods, cross border trade in services, investment, government procurement, customs and trade facilitation, technical barriers to trade, sanitary measures, intellectual property rights, labour and environment. In addition, it also addresses emerging trade issues such as non-tariff measures and cross-cutting issues such as the enhancement of regulatory coherence across TPP countries. All this can give Brunei’s trade and development a boost and support the country’s efforts to diversify its economy. No wonder that important talking points exchanged at Sultan Hassanal Bolkiah’s visit to the White House on March 12 were touching the TPP.
However, there are several issues in the partnership that need a closer look. For example, the TPP has a very concrete stance on state-owned enterprises, which dominate Brunei’s economy. The TPP, in its effort to restart global liberalisation, demands that state-owned enterprises must be restricted to a limited number of sectors in a new global economic order in which the state plays a far less prominent role. Brunei will have to face this. A narrow definition of state-owned enterprises may permit firms to escape classification due to superficial changes. These can include selling a small amount of stock on a public bourse, or including discrete, “private” ownership by members of its own board or even government officials. Such a definition would negate any restrictions on state-owned enterprises, regardless of their content.
When Brunei as a TPP member state insist on retaining state-owned companies, their market share could be capped at as low a level as possible to limit their competitive superiority. This will have certainly to be taken into account when proceeding with TPP talks.
This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.
[caption id="attachment_7466" align="alignleft" width="146"] By Arno Maierbrugger[/caption] There has been much talk but less action with regards to the Trans-Pacific Partnership (TPP), the US-backed plan to establish a free trade area in the Asia–Pacific. The TPP is widely acknowledged to represent an economic cooperation concept aimed at supporting emerging trade issues in the 21st century as opposed to existing blocs such as the North-Atlantic Free Trade Agreement or what is set to become the ASEAN Economic Community by 2016 in ASEAN. The ties are currently quite loose within the TPP, with its member countries being Brunei, Chile, New Zealand and...
There has been much talk but less action with regards to the Trans-Pacific Partnership (TPP), the US-backed plan to establish a free trade area in the Asia–Pacific. The TPP is widely acknowledged to represent an economic cooperation concept aimed at supporting emerging trade issues in the 21st century as opposed to existing blocs such as the North-Atlantic Free Trade Agreement or what is set to become the ASEAN Economic Community by 2016 in ASEAN.
The ties are currently quite loose within the TPP, with its member countries being Brunei, Chile, New Zealand and Singapore and negotiations with Australia, Canada, Malaysia, Mexico, Peru, Vietnam and Japan going on.
How can small Brunei benefit from such a global trade partnership? One of the challenges the TPP faces is preventing the dilution of its original economic goals for the sake of expansion. In order for the member countries to benefit economically, the TPP must be a high-quality agreement that moves market-oriented liberalisation forward on multiple fronts.
However, a sound TPP will also reinforce US political leadership in Asia–Pacific and around the world, demonstrating that the US will continue to make the decisions necessary to remain fully engaged in the global economy for the cause of open markets. Brunei needs to agree on this in a region where economic hegemony is also highly represented by China, the US’ arch rival in terms of economic expansion in ASEAN.
The favourable facts for Brunei are that the TPP cover areas such as market access for goods, cross border trade in services, investment, government procurement, customs and trade facilitation, technical barriers to trade, sanitary measures, intellectual property rights, labour and environment. In addition, it also addresses emerging trade issues such as non-tariff measures and cross-cutting issues such as the enhancement of regulatory coherence across TPP countries. All this can give Brunei’s trade and development a boost and support the country’s efforts to diversify its economy. No wonder that important talking points exchanged at Sultan Hassanal Bolkiah’s visit to the White House on March 12 were touching the TPP.
However, there are several issues in the partnership that need a closer look. For example, the TPP has a very concrete stance on state-owned enterprises, which dominate Brunei’s economy. The TPP, in its effort to restart global liberalisation, demands that state-owned enterprises must be restricted to a limited number of sectors in a new global economic order in which the state plays a far less prominent role. Brunei will have to face this. A narrow definition of state-owned enterprises may permit firms to escape classification due to superficial changes. These can include selling a small amount of stock on a public bourse, or including discrete, “private” ownership by members of its own board or even government officials. Such a definition would negate any restrictions on state-owned enterprises, regardless of their content.
When Brunei as a TPP member state insist on retaining state-owned companies, their market share could be capped at as low a level as possible to limit their competitive superiority. This will have certainly to be taken into account when proceeding with TPP talks.
This comment is part of Inside Investor’s weekly column series in Brunei’s leading newspaper Brunei Times and is published every Monday.
