Thank you, Mr. Chair.
Honourable members of the House of Commons Standing Committee on International Trade, at the outset I wish to congratulate Canada on the approval of the CETA and the SPA by the European Parliament today. I am sure this is an important milestone for Canada and the EU in your continuing efforts for progressive free trade.
I'm honoured to be invited to make a statement to the committee on behalf of the Malaysian government regarding the TPP agreement. First and foremost, let me take this opportunity to highlight that Malaysia and Canada have long enjoyed warm and cordial relations. This year is particularly significant as we commemorate the 60th anniversary of Malaysia-Canada diplomatic relations.
I wish to reiterate that we share important historical linkages through our common membership in the Commonwealth. Canada is also a dialogue partner of ASEAN, and this year we commemorate 40 years of that relationship. We also are partners in APEC, and of course, we closely interact in other multilateral platforms.
Key focus areas in our bilateral ties are trade, investment, defence, and security co-operation, to name a few. In this regard, we value Canada as an important trade and investment partner. Total bilateral trade between Malaysia and Canada for the period January to November 2016 was $1.52 billion Canadian. In 2015, Canada was Malaysia's 27th largest trading partner.
Our investment in the Canadian market is mainly in the oil and gas sector. The $36-billion potential investment by Petronas, our national oil corporation, in British Columbia is touted as the largest foreign direct investment in Canada. Certainly this investment will be a catalyst for enhanced trade and commercial relations between our two countries. We were delighted with the approval, with conditions, by the Canadian government on September 27, 2016, for Petronas to proceed with the project. Petronas is presently undertaking a review on whether to proceed.
As any open economy highly dependent on international trade and FDI, Malaysia embraces free trade, much like Canada. Therefore, the TPP offers an excellent platform to realize the creation of a huge market, as it encompasses some of the biggest economies in the Asia-Pacific region.
TPP is different from other FTAs in that it is more comprehensive and encompasses a wider scope, such as government procurement, environment, government-owned companies, and intellectual rights. Consultations by our MITI with various stakeholders have also revealed an increasing need by Malaysia's companies for more open markets and trade facilitation. The TPP agreement motion was tabled in the Malaysian Parliament in January 2016, which enabled our lawmakers to deliberate on the pros and cons of the TPP to our country. The TPP agreement motion was passed with a majority support of 127 against 84, resulting in Malaysia signing the agreement with Canada and other TPP members last February in Auckland.
Many Malaysian products are of world standard and are able to compete at a global level. Malaysian companies are also increasingly becoming international investors and require a level of transparency and predictability that can only be guaranteed effectively through binding agreements like FTAs.
There is also interest from foreign companies in non-TPP countries that are increasingly exploring Malaysia as a base for their operations to enjoy the benefits of the TPP agreement. In addition, there are Malaysian companies that export to the U.S. and Canada that are increasingly interested in seeing the implementation of the agreement.
The TPP agreement will allow Malaysia to continue to be an integral part of the deepening economic integration taking place within the Asia-Pacific region. It will also enable us to engage in a more concrete way with major trading partners such as Canada, the U.S., Mexico, and Peru, with which we currently do not have FTAs.
As a member of the TPP, Malaysia will also be able to participate as an important link in the whole regional supply chain. Almost 4,000 tariffs within this market will be abolished. This includes our main exports, namely, electrical and electronics, chemical and petrochemical, wood-based products, food, rubber-based products, and textiles.
In the long run, Malaysia believes the TPP will bring benefits of the lower cost of goods and more efficient production by taking advantage of the competition and economies of scale. The successful conclusion of the TPP will form an unprecedented market of 793 million people with a combined GDP of $27.5 trillion U.S. This far surpasses the limited domestic market of 29.5 million people and a GDP of $300 billion U.S. in Malaysia.
With the TPP, we aim to open up new market opportunities and horizons for Malaysians to take advantage of the international marketplace. In short, the TPP will provide an opportunity for Malaysia to be a seamless market with preferential access far beyond our population. It will provide investment opportunities regionally and globally.
With regard to Malaysia and Canada, it will certainly enhance trade and economic relations between our two countries, as we currently do not have any bilateral FTA. The TPP agreement would also introduce a new dimension to regional trade and investment between countries.
In addition to extensive trade liberalization in goods and services, TPP was further intended to promote fair competition, develop the digital economy, govern the role of state-owned enterprises in the global economy, promote free investment movement, enhance enforcement of intellectual property, and harmonize legal and regulatory issues.
At the same time, TPP is also the first FTA that has a dedicated chapter on SMEs. This provides numerous opportunities for Malaysian SMEs, especially when it comes to knowledge sharing and collaboration with SMEs from other TPP countries. This will allow deeper integration of SMEs in the regional and global supply chains.
We also recognize that TPP is not just about trade. It will also help improve Malaysia's competitiveness and governance through the adoption of international standards, for example, in halal requirements, as well as best practices in areas such as labour and environment.
Malaysia sees the TPP as a balanced agreement beneficial to all its members. However, we acknowledge that the future of the TPP after the U.S. withdrawal would very much depend on further consultation and collective decision-making by the remaining TPP agreement members, including Malaysia. The entry into force of the TPP agreement under the present conditions cannot take place without U.S. participation.
Going ahead without the U.S. is an option, but this would require an amendment to the clause on entry into force in the text of the signed agreement. In this regard, TPP agreement chief negotiators from the other 11 countries, including Malaysia, would need to be in constant communication with each other to consider all available options before deciding the best way forward.
During the meeting of the 12 leaders of the TPP agreement countries in Lima, Peru, on November 19, 2016, all leaders reaffirmed their commitment towards the realization of the agreement because of the benefits it will bring to their respective economies and the region, particularly in boosting trade and investment, as well as further enhancing the internationalization of small and medium-sized enterprises.
Going forward, Malaysia remains hopeful that the agreement will be implemented as agreed to in Auckland on February 4, 2016, as it is an important undertaking in an open economy that will deepen co-operation in the Asia-Pacific region. Should the TPP agreement fail to enter into force, Malaysia would see it as a missed opportunity.
As expressed by our Minister of International Trade and Industry at the World Economic Forum in Davos recently, should the TPP agreement fail to materialize, Malaysia's focus would be to enhance the economic integration of ASEAN in the context of the ASEAN economic community's “Blueprint 2025”. We would also be pushing for the timely conclusion of the regional comprehensive economic partnership, or RCEP, as well as pursuing bilateral FTAs with TPP members with whom we don't have any preferential trading arrangement.
As regards Canada, we welcome the statement by Minister Freeland, who was then Minister of International Trade, that Canada will conduct a feasibility study on an ASEAN-Canada FTA. We hope that the study will find that such an agreement would be beneficial to both Canada and ASEAN. As of now, ASEAN has existing FTAs with China, South Korea, New Zealand, India, and Japan.
In the meantime, Malaysia will continue to monitor closely developments in U.S. trade policies. With or without the TPP agreement, Malaysia will continue to amend various laws and regulations that have been identified, to make them relevant in current times. We hope to table them in parliament this year. The changes to these laws are not merely to comply with the TPP agreement but also are part of Malaysia's internal domestic review in order to strengthen and update legislation, as well as to meet international obligations.