Brunei Darussalam weighs Pacific trade deal

As progress in the US-led Trans-Pacific Partnership Agreement (TPPA) accelerates, some Bruneians are saying it represents a significant opportunity to create jobs and energise trade. However, critics are concerned that the legal powers it will give to foreign firms could impinge on Brunei Darussalam’s sovereignty.

After 12 countries converged in Brunei Darussalam for a 19th round of TPPA talks on August 24-31, including Japan, Australia, Canada, the US and Singapore, a joint statement confirmed that the agreement will not be signed at the October Asia-Pacific Economic Cooperation summit.

This appeared to contradict statements from US Trade Representative Michael Froman a few days earlier. Froman had claimed the deal, which would create a market of 800m people and a combined GDP of $27.5trn, was entering an “end game”.

It is likely that the delay is a result of governments reacting to concerns among member nations’ populations. For example, Malaysia’s delegation noted public fears that the agreement would permit foreign companies to sue governments.

Under the TPPA, the US is expected to eliminate import restrictions on politically sensitive products like sugar, dairy, footwear and clothing. However, in exchange, its partners would be expected to adopt new rules on digital trade and the operations of state-owned enterprises, and to bolster protection for workers and the environment.

There are also concerns over a lack of transparency, as the governments that are negotiating the TPPA have signed a confidentiality clause and agreement whereby they will not disclose any text relating to the history of the talks.

“We don’t know what is being negotiated in our name. It’s going to affect me, my children and it’s going to affect whether I can afford medicines or not, but I can’t see it. Civil society can’t see it and even our elected representatives can’t see it,” wrote business columnist Debbie Too in the local press.

Opponents of the agreement say the US-led deal would significantly raise the cost of local health care by extending patents on brand-name pharmaceuticals, thereby reducing access to less expensive generic equivalents.

“Agreeing to the US proposal to the TPPA would lock Brunei in a costly patent adjustment system, constraining the country’s ability to make its own rules,” stated a report published by Public Citizen, a US-based non-profit organisation, in April.

Such concerns prompted the Ministry of Foreign Affairs and Trade (MoFAT) to respond with an official note on August 27.

“The TPPA will ... build upon existing agreements by providing Bruneian exports greater access to the markets of the 11 TPP partners by lowering duties on Brunei Darussalam’s exports, making our goods more competitively priced, and therefore, increasing demand for our products,” wrote the MoFAT.

The ministry added that the TPPA will enhance the quality of services, encourage local service providers to become more competitive and support national efforts to promote economic diversification away from oil and gas dependence.

This positive outlook squares with that of some business leaders. For instance, the founder of local online magazine The AMO Times, Abdul Malik Omar, wrote in August that thanks to greater market liberalisation – the strategic goal of the agreement – “Bruneians could encounter massive global job opportunities, access to education abroad and experience. This could then be cross-transferred towards nation-building.”

“Imagine our youths working at world-class institutions such as Goldman Sachs or the US Federal Reserve, attending Harvard Business School or ... having their expertise utilised in building the nation’s financial, real estate, monetary, media and educational sectors,” he said.

Asking why Brunei Darussalam is not making more of a dent in investment the South-east Asian region, despite its “deep-rooted history as a regional trading hub”, Abdul adds that the TPPA has “great potential” in helping Bruneians to secure jobs, trade and investment across the regional market.

As a resource-rich nation with less substantial trade figures than those of many other participants in the TPPA, Brunei Darussalam will likely benefit from extra exposure to regional and global market. While this could mean increased competition for domestic firms, they may react to this challenge with more innovation and improved productivity.