TPP Basics: Liberalisation of Services (Workshop by Sanya Reid Smith)

The gist of the TPPA content on services is that all service sectors should be liberalised for foreign investment, unless member countries specify exceptions. The TPPA full text shows that Malaysia did not get as many exceptions as other countries. The services and investment chapter is binding across all levels of government (federal, state and local), and restricts the governments’ ability to put in laws and regulations for services.

This series is brought to you by TPPDebate.org based on a recent NGO briefing on the Trans-Pacific Partnership (TPP) in Malaysia by Ms Sanya Reid Smith, an expert on Trade and Investment Rules. She has been monitoring the Trans-Pacific Partnership Agreement (TPPA) since 2011, and is also the resource expert for Bantah TPPA Malaysia. The entire talk is uploaded on YouTube in a seven part series and can be accessed here; this article is drawn mainly from Part 1 of the talk. The index of the series is attached at the end of the article.

Video starts at 12:07

Services and the TPP

I don’t know how many of you are worried about Lynas, about fracking, this kind of dodgy activities? This is where the services and investment chapters are relevant. You can think of services as anything you cannot drop on your foot. From professional services like lawyers, doctors, dentists, to electricity, phones, banking, insurance, to mamak stalls, petrol stations, hypermarkets… these are all services.

The general rule of the TPP is you must liberalise. Liberalise doesn’t mean removing tariffs for services. It means you open to foreign investors. It means you open to investors from other TPP countries in all the sectors, unless you have an exception. So if you don’t want fracking, you have to put fracking as an exception. If you don’t want casinos, you have to put casinos as an exception. If you don’t want vaping shops, you need to put it down as an exception.

Binding at all levels of government

But the thing about the services and investment chapter is that it is strictly binding on all levels of government. Federal government, state (negeri) government, and the local (tempatan) government. So Petaling Jaya wants to ban ah long- ah long. Or casinos. They have to have an exception. Now the local governments got an automatic exception for what they do today anyway, but not for future things they want to do that are bad for the investor.

The federal and state governments have to list down their exceptions. If they didn’t list, too bad. You have to allow as much of that activity as they want. Toxic waste dumps, nuclear power plants, whatever, unless you got an exception.

Malaysia did not get many exceptions

And those exceptions are not just everything Malaysia wants. They had to negotiate. All the other 11 TPP country governments have to agree, eg the US has to agree to allow you to ban casinos or nuclear power plants.

So you can see on the text of the TPP, from the website, the 6000 pages – you can see where Malaysia got exceptions. And Malaysia didn’t seem to get as many exceptions as the other countries. So you need to look to see if your area of concern has an exception or not.

Not possible to increase license fees to deter certain services

That’s the general rule about services. And if you think, alamak, I’ve opened the vaping shops and I want to ban them – and since I can’t ban them, let me charge them a licensing fee of a million dollars a year, so that they don’t want to come. That is also illegal. They found that loophole and they closed it. You can’t charge them a high licensing fee to discourage them.


Index of the Series

This series contains 20 articles on the TPP, and can be read in any order:

Transcriptions are kept chiefly ad verbatim, with some minor edits for readability. The text has also been checked by Ms Smith for accuracy.

After reading this information...

Welcome to TPP Debate!
What's your stance?

TPPDebate.org is a crowd-sourced platform to debate the Trans-Pacific Partnership Agreement (TPP). What does everyone think about the TPP? What is your stance?