The impact of trans-pacific partnership agreement on Malaysia`s trade access to medicine

Abstract

In 2010, Malaysia announced that it will be joining the Trans-Pacific Partnership (TPP) negotiation that currently involves twelve countries from three continents namely the US, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam. The Trans-Pacific Partnership Agreement (TPPA) that was finally concluded on 5th October 2015 is viewed by some as a strategic step towards achieving high income nation status by 2020. TPPA is ambitious and comprehensive trade agreement and there has been a lot of controversy and debate on this mega-trade deal. Some argue that the TPPA is more geo-politically motivated and that there is no much economic advantage that can be gained from the deal while some other suggest the potential benefits that Malaysia would gain from TPPA will outweighs its costs. The proponents argue that the free trade agreement between countries across the three continents would create a deeper integration and obtain greater market access in the TPPA member nations, enhance trade engagement with the US as well as to serve as a stepping stone in penetrating the Latin American market. Analysts are doubt on the significance of the TPPA on Malaysia’s trade. In addition, the issue on the effect of the TPPA on access to affordable medicines in Malaysia is among the most contentious one. The TRIPS-plus elements if included in the recent agreement on intellectual chapter are believed to bring adverse effects to medicine prices and expenditure. Patent linkages, patent term restoration and data exclusivity are among the subject of heated debate in the media. This study intends to analyse two most important potential impact of the TPPA. The first is to evaluate the impact on market access of Malaysian export to TPPA member countries in general and the US in particular. The research also intends to examine the impact of TPPA on Malaysia’s access to medicine. To validate the critics and assess the effects of the TPPA on Malaysia’s trade and access to medicine, this study is conducted to fill in the gaps in the literature as there is limited study has been undertaken to date. In assessing the potential impact of the TPPA on Malaysia’s Trade and Access to Medicine, regression analysis using Gravity Model of Trade and simulation exercise using Model of Impact Changes in Intellectual Property Rights have been undertaken. The study found that FTA has positive effects on Malaysia’s export of beverages and tobacco (SITC-1), mineral fuels, lubricants and related materials (SITC-3), manufacturing goods classified chiefly by material (SITC- 6), machinery and transport equipment (SITC-7), miscellaneous manufactured articles (SITC-8) and commodities and transactions not classified elsewhere in the SITC (SITC-9) but negative effects on the export of food and live animals (SITC-0) export of animal and vegetable oils and fats (SITC-4). In addition, FTA is found to have caused increase in Malaysia’s import for all product categories except for mineral fuels, lubricants and related materials (SITC-3). Similar effects are projected when TPPA is signed. Moreover, the study suggests that FTA has been found to have positive impacts on both the export of Malaysia and the import of the United States in some product categories namely beverages and tobacco (SITC-1), manufacturing goods classified chiefly by material (SITC-6), machinery and transport equipment (SITC-7), miscellaneous manufactured articles (SITC-8) and Commodities / transactions not classified elsewhere in the SITC (SITC-9). These exports are high and thus will have significant impact on export to the US. Apart from that, the study found that the 3 TRIPS-Plus provisions will have negative impact on Malaysia’s access to medicine by causing the increase in medicine price and medicine expenditure and drop in domestic pharmaceutical industry sales. The findings of this study is hoped to provide information that may be useful for Malaysian government and other stakeholders.