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CPTPP: Implications for Malaysia’s Merchandise Trade Balance
Rashmi Banga*
Abstract: A mega regional Free Trade Agreement like the Comprehensive and Progressive
Agreement for Trans-Pacific Partnership (CPTPP) has the potential to impact countries which are
inside as well as those which are outside the agreement. This paper provides empirical estimates of
potential changes in Malaysia’s merchandise balance of trade if it joins the CPTPP and compares
it to its trade balance if it does not join this free trade agreement (FTA). A positive balance of
merchandise trade is important for Malaysia as it is a net importer of services. However, since 2010
Malaysia’s merchandise imports have been growing much faster than its exports. Using SMART
simulations, the estimates show that if Malaysia joins the CPTPP its imports will rise much more
than its exports leading to a worsening of its trade balance by around US$2.4 billion per annum.
Imports of vehicles from the CPTPP countries will increase including that of plastics and its articles.
Exports to the CPTPP partner countries will rise only marginally as Malaysia already has free trade
agreements with its top three export destination countries, i.e., Japan, Singapore and Australia,
which account for 84% of its exports to the CPTPP partner countries. Remaining out of the CPTPP
will also adversely impact Malaysia’s exports to the CPTPP countries but this decline is much
smaller compared to the rise in its imports if it joins the CPTPP. The estimated tariff revenue loss
to Malaysia of joining the CPTPP is estimated at US$1.6 billion per annum. The paper argues that
along with the traditional indicators of trade competitiveness like trade balance developing countries
also need to give importance to preserving their policy space in free trade agreements as the fourth
digital revolution is changing the ways products are manufactured and exported. Growing trade in
electronic transmissions will be a game changer in the area of international trade competitiveness.
1. Introduction
Malaysia has always been a net exporter in its merchandise trade but a net importer of services. In
2017, it enjoyed $22.6 billion of merchandise trade surplus while its net services imports amounted to
US$ 5.3 billion
1
. While Malaysia enjoys a positive trade balance in its merchandise trade, this trade
balance has been steadily declining over the years. It declined from US$34 billion in 2010 to US$23
billion in 2015 and further to US$22.6 billion in 2017. Most of its merchandise exports comprise of
manufactured goods (67%) and fuel (15%) with top five export products going to Singapore, China
and the USA. While Malaysia’s exports have posted strong and resilient growth with an average annual
growth rate of 4.4% in the period 2010-2017, its imports have grown faster with an average annual
*Senior Economic Affairs Officer, Unit of Economic Cooperation and Integration among Developing Countries, Division
on Globalization and Development Strategies, UNCTAD. Views expressed are personal
1
Source: UNCTADSTAT
2
growth rate of 6.6%. Maintaining a positive merchandise trade surplus is important for Malaysia in the
face of the faster growing imports as well as a negative trade balance in services, which declined from
(+) US$2.0 billion in 2010 to (-) US$5.3 billion in 2017.
In this context, it becomes important to examine the implications of any new regional trade agreement
like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on
Malaysia’s merchandise exports and imports as well as its balance of trade. The share of 10 CPTPP
partner countries in Malaysia’s global exports has remained on an average around 31% in the period
2010- 2017, while their share in Malaysia’s global imports has remained around 27%.
The CPTPP, which followed the Trans-Pacific Partnership Agreement (TPP12) after the withdrawal
of the USA, was signed by 11 participating countries - Australia, Brunei Darussalam, Canada, Chile,
Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Viet Nam - on 8th March 2018 in Santiago,
Chile. By February 2019, seven out of the eleven countries had completed their ratification procedure.
These are Mexico, Japan, Singapore, Australia, New Zealand, Canada and Viet Nam. Malaysia is in
the process of re-examining the implications of the CPTPP. This paper estimates the likely impact of
the CPTPP on Malaysia’s merchandise exports, imports and its trade balance. The rest of the paper is
organized as follows: section 2 briefly reviews the existing literature on the CPTPP; section 3
highlights the existing trends in Malaysia’s trade with the CPTPP partner countries; section 4 discusses
the methodology adopted to estimate the impact of the CPTPP on Malaysia’s exports and imports to
the CPTPP partner countries; section 5 presents the results at the country level as well as at the
disaggregated product level; section 6 reports results of potential import tariff revenue loss to Malaysia
of the CPTPP; section 7 concludes and provides a way forward.
2. Existing Literature on CPTPP
While there is an extensive literature on the impact of TPP on TPP12 countries, very limited studies
exist which estimate the impact of CPTPP on the partner countries’ trade. The exclusion of the USA
from the TPP has drastically changed the results which were arrived at by the existing literature on
TPP. The USA being the largest trading partners for all the TPP partner countries had the maximum
weight in terms of bringing economic gains and losses to the TPP partner countries.
Very few studies exist which estimates the economic impact of the CPTPP. Some of the existing
literature shows that the CPTPP without the USA cannot bring the expected trade gains for the
CPTPP11 partner countries. For example, according to World Bank (2018), the CPTPP will increase
Viet Nam’s GDP by 1.1 per cent by 2030 but in terms of its trade balance, the exports are projected to
grow by 4.2%, and imports by 5.3%, which will worsen Viet Nam’s existing trade balance. PIIE (2017)
compared the impact of the TPP and the CPTPP for the 11-member countries. While the study reports
an expected rise in exports of these countries, especially for Malaysia and Viet Nam, it is silent about
the expected rise in their imports. With USA out of this regional trade agreement, these countries have
lost their biggest export market while retaining their import partners.
3
Further the methodology adopted by the existing studies including that used by the PIIE (2017) has
been strongly criticized in the economic literature. The computable general equilibrium (CGE) models
that have been adopted are based on unreasonable assumptions such as full employment, which will
always show positive gains in the gross domestic product (GDP) (Raza et al, 2014)
2
. According to
Taylor and Arnim (2006), most of the CGE models assume (i) fixed or ‘full’ employment of labour
and capital is maintained everywhere in the world (ii) each country’s trade deficit (or surplus) stays
constant after liberalization; and (iii) completely flexible taxes on households, which enable each
country’s internal economy to adjust smoothly. The assumption regarding the 'constant trade balance'
implies that if government revenues change due to tariff reduction or other trade policies, government
expenditures must adjust endogenously to satisfy the fixed budget deficit. However, in real world this
is never the case. The assumption regarding completely flexible taxes on households, imply that "any
changes in government budget are automatically compensated by income tax rates on households".
These assumptions mean that the models are designed in such a way that 'the price system' will always
respond to liberalization in a way which leads to increases in overall well-being. These assumptions
are made in most of the studies assessing implications of the TPP and the CPTPP, including the PIIE
studies (2012, 2017).
According to Panagariya and Duttagupta (2001), CGE models that show 'gains' for a country from its
own preferential liberalization are able to do so only by using internally inconsistent assumptions. The
'Armington assumption' used in all CGE models, including Petri et al (2017), implies that there exists
'product differentiation' i.e., no country, howsoever small, produces something which is also produced
by another country in the world. In other words, domestic and foreign products are imperfect
substitutes. For example, it is assumed that oil produced in one country is different from the oil
produced by any other country, and therefore it can never be completely substituted.
According to Raza et al (2014), the costs of 'regulatory changes' are also never estimated by CGE
models. CPTPP involves considerable regulatory changes in the member countries which can have
huge short-term adjustment costs, which are ignored by the CGE models.
This paper estimates the likely increase in merchandise imports and exports of Malaysia post CPTPP,
estimating the per annum change in Malaysia’s Balance of Trade following CPTPP. The methodology
adopted is partial equilibrium analysis at a HS 6-digit product disaggregation and therefore avoids the
above discussed restrictive assumptions.
3. Existing Trends in Malaysia’s Trade with CPTPP Members
2
Raza, W., Grumiller, J, Taylor, L., Tröster, B., von Arnim, R. (2014) ‘Assess TTIP: Assessing the Claimed Benefits of
the Transatlantic Trade and Investment Partnership’. Vienna: Austrian Foundation for Development Research
4
Malaysia has enjoyed a net merchandise trade balance since 2009, however this trade balance has been
steadily declining. It declined from USD 34 billion in 2009 which was 21% of its exports to USD 23
billion in 2017 which amounted to 10% of its exports (Figure1).
Figure 1: Malaysia’s Merchandise Exports, Imports and Trade Balance (US$ billion): 2009-2017
Source: World Integrated Trade Solutions, World Bank and UNCTAD
The share of CPTPP partner countries of Malaysia’s global exports and imports has remained on an
average around 32% and 27% respectively between 2010 to 2017. Examining the share of different
CPTPP countries in Malaysia’s exports and imports, we find that within the CPTPP Singapore is the
largest export market for Malaysia (46%) followed by Japan (26%) in terms of value of exports. It is
important to note that with its two largest importers which account for 72% of Malaysia’s exports to
CPTPP partner countries, Malaysia already as FTAs. In terms of Malaysia’s imports, share of Japan
and Singapore account for around 74% of Malaysia’s total imports from CPTPP partner countries
(Figure 2). Australia accounts for around 10% of Malaysia’s exports and imports to CPTPP. Australia
also has an existing FTA with Malaysia. These are the three important countries for Malaysia within
CPTPP, with whom Malaysia already has FTAs and therefore may not gain any additional tariff
concessions by entering CPTPP. Canada, Mexico and New Zealand have minor share in Malaysia’s
merchandise trade.
Figure 2: Share of CPTPP Countries in Malaysia’s Exports and Imports
157
199
227 227 228 234
200 189
216
124
164
188 196 206 209
176 168
194
34 23
0
20
40
60
80
100
120
140
160
180
200
220
240
260
280
300
2009 2010 2011 2012 2013 2014 2015 2016 2017
Malaysia's Merchandise Exports, Imports and Trade Balance
($ billion): 2009-2017
Malaysia's Exports to World Malaysia's Imports from World Malaysia's Trade Balance
5
Source: World Integrated Trade Solutions, World Bank and UNCTAD
In terms of product-wise exports and imports, Appendix Table A.1 reports Malaysia’s total exports
and imports in different product categories (HS 2-Digit) to and from CPTPP countries and their share
in Malaysia’s global exports and imports in those product categories. The top five ranking products of
exports of Malaysia in CPTPP countries are electrical machinery and equipment and parts thereof;
mineral fuels, mineral oils and products of their distillation; machinery and mechanical appliances;
plastics and articles thereof; optical, photographic, cinematographic products; and animal or vegetable
fats and oils,
The top five products with highest share of CPTPP countries in Malaysia’s global imports are wool,
fine or coarse animal hair; horsehair yarn and woven fabric; nickel and articles thereof; dairy produce;
birds' eggs; natural honey; edible products of animal origin, not elsewhere specified or included; cork
and articles of cork; and live animals. CPTPP countries have more than 60% share in Malaysia’s global
imports in these products. In terms of Malaysia’s exports to CPTPP countries the top five ranking
products are clocks and watches and parts thereof; articles of stone, plaster, cement, asbestos, mica or
similar materials; carpets and other textile floor coverings; cereals; and meat and edible meat offal
apart from live animals. CPTPP countries have more than 64% share in Malaysia’s global exports in
these products.
With respect to Malaysia’s tariffs vis-a-vis CPTPP10 countries, given that Malaysia already has
existing trade agreements with most of the countries, Malaysia’s applied and Bound tariffs are on an
average lower than compared its MFN tariffs. Table 1 reports Malaysia’s average tariffs with respect
to the CPTPP10 countries and CPTPP10 countries average tariffs vis-a-vis Malaysia. It is important to
note that the tariff liberalization for Malaysia will be greater than the CPTPP10 countries as Malaysia’s
Australia
11%
Brunei
1%
Canada
1%
Chile
0%
Japan
26%
Mexico
3%
New
Zealand
2%
Peru
0%
Singapor
e
46%
Vietnam
10%
Share of Countries in Malaysia's
Exports to CPTPP in 2017
Australia
10%
Brunei
1% Canada
1%
Chile
0%
Japan
30%
Mexico
1%
Peru
0%
Singapor
e
44%
Vietnam
11%
Share of Countries in Malaysia's
Imports from CPTPP in 2017
6
average tariffs are higher than their average tariffs for total trade. However, while average industrial
tariffs are higher in Malaysia, agricultural tariffs are higher in CPTPP10 countries vis-a-vis Malaysia.
Table 1: Malaysia’s Tariffs vis-à-vis CPTPP10 Countries in 2016
Malaysia vis-à-vis CPTPP10
WTO HS
Agricultural
WTO HS
Industrial
Total Trade
Applied Duties
Simple Average
2.77
5.61
5.28
Applied Duties
Weighted Average
3.7
4
3.51
Bound Duties
Simple Average
11.54
15.24
14.75
Bound Duties
Weighted Average
12.5
9.03
8.9
CPTPP10 vis-a-vis Malaysia
Applied Duties
Simple Average
2.93
2.47
1.11
Applied Duties
Weighted Average
4.45
1.59
0.23
Bound Duties
Simple Average
14.19
14.48
13.94
Bound Duties
Weighted Average
11.22
9.17
7.64
Source: TRAINS database, World Integrated Trade Solutions, WITS
4. Methodology Used to Estimate Impact of CPTPP on Malaysia’s Trade Balance
To estimate the impact of the CPTPP on Malaysia’s trade balance, we use SMART simulations which
are based on Partial equilibrium and available in World Integrated Trade Solutions-WITS (World Bank
and UNCTAD)
3
. One of the advantages of this approach is that it allows estimation of tariff reduction
at a very disaggregated level, for example, implications of removing tariffs on broken rice (at HS six-
digit disaggregation). HS-Combined nomenclature is used by SMART simulations. Such a
disaggregated product-level estimations of tariff reductions are not possible in any other model.
SMART simulations are appropriate to use for the CPTPP analysis as only few products have high
tariffs in many of the member countries and implications for removing these tariffs on exports, imports,
trade creation and trade diversion can be estimated. This also resolves a number of “aggregation biases.”
However, it needs to be remembered that this result of partial equilibrium analysis applies to only that
product/sector and ignores inter-sectoral linkages. For estimating trends in Malaysia’s trade HS2012
nomenclature has been used.
The analysis is undertaken to estimate the impact of 100% tariff liberalization for all the CPTPP
countries. The results arrived for exports of Malaysia will be over-estimated as in the CPTPP while
3
https://wits.worldbank.org/
7
Malaysia removes tariffs on 100% imports, Japan removes tariffs on 95% of imports and Canada and
Viet Nam remove tariffs on 97% of imports while Mexico removes tariffs on 99% of imports
4
.
5. Impact of CPTPP on Malaysia’s Trade Balance: Results
The impact of entering the CPTPP on Malaysia’s imports, exports and trade balance is estimated using
the above discussed methodology. The results are arrived at the country level as well as at the product
level. The analysis also reports the results of new imports that will be created for Malaysia due to the
CPTPP, i.e., ‘trade creation’ as well as imports that Malaysia will divert from non-CPTPP countries to
instead buy from the CPTPP countries, i.e., ‘trade diversion.’ Impact of the CPTPP on Malaysia’
exports is also estimated. Further, the impact of Malaysia not entering the CPTPP (while other 10
countries ratify the CPTPP) is estimated on Malaysia’s exports and imports.
5.1 Impact on Malaysia’s Imports from CPTPP Countries
Table 1 reports the results using the SMART simulations of the impact of CPTPP on Malaysia’s trade.
The simulation results show that if Malaysia enters CPTPP and all 11 countries bring their tariffs down
to zero, Malaysia’s total imports from the CPTPP partner countries will rise by US$2.5 billion per
annum. Maximum increase of imports will take place from Japan, in which case imports into Malaysia
are estimated to increase by US$1.5 billion (Table 2). This is followed by increase in imports from
Singapore and Vietnam.
Table 2: Impact of the CPTPP on Malaysia’s Imports from CPTPP Partner Countries
Imports in
2016
(US$1000)
Imports Post
CPTPP
(US$1000)
Change in
Imports post
CPTPP
(US$1000)
Trade
Creation
(US$1000)
Trade
Diversion
Effect in
(US$1000)
Percentage
Change in
Imports
Australia
3 695 967
3 766 828
70 861
37 497
33 365
2
Brunei
156 307
159 172
2 865
1 662
1 203
2
Canada
663 154
679 072
15 918
7 764
8 154
2
Chile
104 351
107 335
2 984
2 074
910
3
Japan
13 638 712
15 149 847
1 511 135
856 937
654 198
11
Mexico
366 806
380 421
13 615
6 320
7 296
4
New Zealand
684 386
708 549
24 163
14 145
10 019
4
Peru
76 386
76 882
496
321
175
1
Singapore
17 254 412
17 830 565
576 153
306 893
269 261
3
Vietnam
4 509 779
4 834 617
324 838
166 989
157 849
7
Total
41 150 259
43 693 289
2 543 030
1 400 601
1 142 428
6
Source: Author’s estimations based on SMART simulations, WITS
4
Table 2 of Chapter 2 http://www.piie.com/publications/briefings/piieb16-1.pdf.
8
The results at the disaggregated product-level show that if Malaysia enters CPTPP the top five products
whose imports will rise the most are vehicles; plastics and articles thereof; machinery and mechanical
appliances; electrical machinery and equipment; and iron and steel (Table 3). Appendix Table A.2
reports the change in imports of 97 HS chapter (2-digit) following Malaysia’s entry into CPTPP.
Imports of vehicles which enter Malaysia with a custom duty will rise by 36% if these duties are
brought down to zero. Table 4 presents more details of the increase in imports of motor cars, above
US$2 million. Highest rise in imports will be of motor cars with HS code- 870323(of a cylinder
capacity exceeding 1,500 cc but not exceeding 3,000 cc), followed by motor cars under HS code-
870324 (of a cylinder capacity exceeding 3,000 cc), mainly from Japan.
Table 3: Impact of CPTPP on Malaysia’s Imports from CPTPP Partner Countries: Product-
Level
HS
Chapter
Imports of
Malaysia
Before
CPTPP
(US$1000)
(2016)
Estimated
Imports of
Malaysia
after
CPTPP
(US$1000)
Change in
Imports
post
CPTPP
(US$1000)
Percentage
Change in
Imports of
Malaysia
post
CPTPP
(%)
1
87
Vehicles Other Than Railway or Tramway
Rolling Stock, And Parts and Accessories
Thereof
1 794 805
2 436 822
642 017
36
2
39
Plastics and Articles There of
1 325 380
1 562 165
236 785
18
3
84
Nuclear Reactors, Boilers, Machinery and
Mechanical Appliances; Parts Thereof
1 353 111
1 585 407
232 296
17
4
85
Electrical Machinery and Equipment and Parts
Thereof; Sound Recorders and Reproducers,
Television Image and Sound Recorders and
Reproducers, and Parts and Accessories of Such
Articles
994 438
1 180 381
185 943
19
5
72
Iron and Steel
918 529
1 097 007
178 478
19
6
76
Aluminium and Articles There of
260 588
373 546
112 958
43
7
71
Natural or Cultured Pearls, Precious or Semi-
Precious Stones, Precious Metals, Metals Clad
With Precious Metal, And Articles Thereof;
Imitation Jewellery; Coin
443 476
539 632
96 156
22
8
40
Rubber and Articles Thereof
328 741
424 852
96 111
29
9
73
Articles of Iron or Steel
657 981
749 545
91 564
14
10
48
Paper and Paperboard; Articles of Paper Pulp,
of Paper or of Paperboard
309 558
385 994
76 437
25
Source: Author’s estimations based on SMART simulations, WITS
9
Table 4: Rise in Imports of Motor Cars in Malaysia post CPTPP post CPTPP
Product
Code at
4digit
Product At 4digit
Product
code At
6digit
Description of
Product At
6digit
Imports
from
Malaysia's
Imports
Before the
CPTPP
(US$1000)
Malaysia's
Imports
after the
CPTPP
(US$1000)
Change in
Imports Post
the CPTPP
(US$1000)
8703
Motor cars and other motor
vehicles principally
designed for the transport of
persons (other than those of
heading 87.02), including
station wagons and racing
cars.
870323
Of a cylinder
capacity
exceeding
1,500 cc but not
exceeding
3,000 cc
Japan
616 972
821 141
204 170
8703
Motor cars and other motor
vehicles principally
designed for the transport of
persons (other than those of
heading 87.02), including
station wagons and racing
cars.
870324
Of a cylinder
capacity
exceeding
3,000 cc
Japan
85 992
128 169
42 177
8703
Motor cars and other motor
vehicles principally
designed for the transport of
persons (other than those of
heading 87.02), including
station wagons and racing
cars.
870322
Of a cylinder
capacity
exceeding
1,000 cc but not
exceeding
1,500 cc
Japan
37 826
52 801
14 974
8703
Motor cars and other motor
vehicles principally
designed for the transport of
persons (other than those of
heading 87.02), including
station wagons and racing
cars.
870332
Of a cylinder
capacity
exceeding
1,500 cc but not
exceeding
2,500 cc
Japan
15 497
28 676
13 179
8703
Motor cars and other motor
vehicles principally
designed for the transport of
persons (other than those of
heading 87.02), including
station wagons and racing
cars.
870333
Of a cylinder
capacity
exceeding
2,500 cc
Japan
4 933
6 852
1 919
Source: Author’s estimations based on SMART simulations, WITS
It is interesting to note that the CPTPP may lead to higher imports of plastic waste and scarp under
plastics and plastic products. This import can increase by around 35%, mainly coming from Japan,
Singapore and Australia (Table 5).
10
Table 5: Increase in Imports of Plastic Waste and Scrap post CPTPP in Malaysia
Product
Code at
4digit
Product description at 4digit
Imports
from
country
Malaysia's
Imports
before the
CPTPP
(US$1000)
in 2016
Malaysia's
Estimated
Imports
after the
CPTPP
(US$1000)
in 2016
Change in
Imports
post
CPTPP
(US$1000)
In 2016
Percentage
Change in
Imports
Post
CPTPP
(%)
3915
Waste, parings and scrap, of
plastics.
Japan
8 969
11 991
3 022
34
3916
Waste, parings and scrap, of
plastics.
Singapore
3 284
4 454
1 169
36
3917
Waste, parings and scrap, of
plastics.
Australia
2 184
2 971
787
36
3918
Waste, parings and scrap, of
plastics.
Canada
1 028
1 430
401
39
3919
Waste, parings and scrap, of
plastics.
Mexico
413
570
158
38
3920
Waste, parings and scrap, of
plastics.
New
Zealand
328
459
131
40
3921
Waste, parings and scrap, of
plastics.
Vietnam
37
51
14
38
3922
Waste, parings and scrap, of
plastics.
Chile
17
21
5
30
3923
Waste, parings and scrap, of
plastics.
Brunei
3
4
1
30
Total
16 263
21 951
5 688
35
Source: Author’s estimations based on SMART simulations, WITS
5.2 Change in Malaysia’s Exports Post CPTPP
While CPTPP may lead to a rise of US$2.5 billion in Malaysia’s imports, the CPTPP may not offer
the opportunity to Malaysia to increase its exports substantially. There are two reasons for this. Firstly,
Malaysia already has existing free trade agreements with its major trading partners within the CPTPP,
i.e., Japan, Singapore and Australia. The existing tariffs are already very low in these countries, vis-
a-vis Malaysia so any further trade agreements will not boost the exports of Malaysia substantially.
However, within these trade agreements Malaysia has a sensitive list whereby Malaysia’s tariffs are
not very low vis-a-vis these countries. Any new trade agreement may imply lowering tariffs of sensitive
products of Malaysia and consequently rise in its imports of these products like vehicles and plastics.
Table 6 reports the estimated rise in Malaysia’s exports post CPTPP, which is only 0.2% of its existing
imports in 2016. Highest rise in absolute terms is expected in Malaysia’s exports to Vietnam followed
by Canada. While Vietnam is part of ASEAN FTA along with Malaysia, it may have reserved high
tariffs in some of the product lines of interest to Malaysia. The CPTPP could therefore lead to a rise in
11
Malaysia’s exports to Vietnam. Malaysia does not have an FTA with Canada and therefore there exists
a potential for Malaysia to increase its exports to Canada post CPTPP. Appendix Table A.3 reports the
product-wise and country-wise likely increase in exports of Malaysia (greater than US$ 1million) if it
ratifies the CPTPP.
Table 6: Estimated Change in Malaysia’s Exports post CPTPP
Exports Before
CPTPP (US$1000)
Exports After
CPTPP
(US$1000)
Change in Exports
post CPTPP
(US$1000)
Percentage
Change in
Exports
(%)
Australia
6 445 327
6 406 655
-38 672
-0.6
Brunei
512 029
510 493
-1 536
-0.3
Canada
704 494
722 811
18 317
2.6
Chile
164 104
175 427
11 323
6.9
Japan
15 250 309
15 250 309
0
0
Mexico
1 890 946
1 898 510
7 564
0.4
New
Zealand
731 767
731 035
-732
-0.1
Peru
122 405
129 260
6 855
5.6
Singapore
27 581 069
27 581 069
0
0
Vietnam
5 730 266
5 856 332
126 066
2.2
Total
59 132 717
59 261 902
129 185
0.2
Source: Author’s estimations based on SMART simulations, WITS
Note: It should be noted that the export figures of Malaysia to CPTPP countries do not match with the import figures of
CPTPP countries from Malaysia. One reason is imports figures include c.i.f. But in come cases like Malaysia’s exports to
Mexico and Mexico’s imports from Malaysia has huge difference. Some studies account this difference to misinvoicing.
https://wits.worldbank.org/wits/wits/witshelp/content/data_retrieval/T/Intro/B2.Imports_Exports_and_Mirror.htm
The results show that there will be a fall in exports from Malaysia to Australia post the CPTPP.
Although this may appear counter-intuitive, this is very likely within a regional trading bloc. Any
regional free trade agreement leads to a shift in the regional pattern of trade with imports into partner
countries being shifted from less competitive to more competitive countries within the region. This is
‘trade diversion’ which always accompanies trade creation within the free trade area. In case of
Australia, post CPTPP it is estimated that there will be trade diversion for Australia and it will source
more imports from other competitive countries as compared to Malaysia, adversely impacting
Malaysia’s exports to Australia.
Table 7 reports results of trade creation and trade diversion for Australia post CPTPP. The results
indicate that Australia’s imports from Malaysia declines while they increase from Japan by 7%. There
will be no new exports to Australia from Brunei, Chile, Malaysia, New Zealand and Singapore. Japan
on the other hand will have new exports to Australia of US$ 711 million along with trade diversion of
US$ 228 million.
12
Table 7: Australia’s Trade Diversion from Malaysia post CPTPP
Imports of
Australia from
Countries in 2016
(US$1000)
Trade Creation
Effect post
CPTPP
(US$1000)
Trade Diversion
Effect post
CPTPP
(US$1000)
Trade Total
Effect post
CPTPP
(US$1000)
Percentage
Change in
Imports post
CPTPP
Brunei
229 225
0
-10
-9
0
Canada
1 558 291
31 102
10 753
41 855
3
Chile
397 413
0
-1 764
-1 764
0
Japan
14 391 496
711 581
228 517
940 098
7%
Malaysia
6 834 028
0
-38 780
-38 780
-1
Mexico
1 866 294
32 429
24 806
57 236
3
New Zealand
5 593 377
0
-54 395
-54 395
-1
Peru
262 864
852
780
1 632
1
Singapore
5 117 498
0
-20 966
-20 966
0
Vietnam
3 313 112
6 435
-21 321
-14 886
0
Total
39 563 598
782 399
127 621
910 020
2
Source: Author’s estimations based on SMART simulations, WITS
5.3: Implications of CPTPP on Malaysia’s Merchandise Trade Balance
The simulations results reported in Table 8 present the results for the likely impact of CPTPP on
Malaysia’s merchandise trade balance. The results show that post CPTPP Malaysia’s trade balance
can worsen, falling from US$17.9 billion in 2016 to US$15.5 billion post CPTPP, i.e., a fall of around
13% in Malaysia’s merchandise Balance of Trade is expected post CPTPP, if Malaysia joins the
regional trade agreement.
Table 8: Impact of CPTPP on Malaysia’s Merchandise Trade Balance
Malaysia’s
Imports in
2016
(US$1000)
Malaysia’s
Exports in
2016
(US$1000)
Malaysia’s
Trade Balance
in 2016
(US$1000)
Estimated
Imports post
CPTPP
(US$1000)
Estimated
Exports Post
CPTPP
(US$1000)
Trade
Balance Post
CPTPP
(US$1000)
Change in
BOT
(US$1000)
Australia
3 695 967
6 445 327
2 749 360
3 766 828
6 408 753
2 641 925
-107 435
Brunei
156 307
512 029
355 722
159 172
510 687
351 515
-4 207
Canada
663 154
704 494
41 340
679 072
722 970
43 898
2 558
Chile
104 351
164 104
59 753
107 335
175 423
68 088
8 335
Japan
13 638 712
15 250 309
1 611 597
15 149 847
15 255 611
105 764
-1 505 833
Mexico
366 806
1 890 946
1 524 140
380 421
1 899 336
1 518 915
-5 225
New Zealand
684 386
731 767
47 381
708 549
731 020
22 471
-24 910
Peru
76 386
122 405
46 019
76 882
129 299
52 417
6 398
Singapore
17 254 412
27 581 069
10 326 657
17 830 565
27 581 069
9 750 504
-576 153
Vietnam
4 509 779
5 730 266
1 220 487
4 834 617
5 856 024
1 021 407
-199 080
Total
41 150 259
59 132 717
17 982 458
43 693 289
59 270 193
15 576 904
-2 405 552
Source: Author’s estimations based on SMART simulations, WITS
13
5.4: Implications of CPTPP on Malaysia’s Balance of Trade if Malaysia does not join CPTPP
It is often argued that a country which stays out of a regional trade agreement loses in terms of its
exports as tariffs of the partner countries within the FTA are lower with respect to each-other compared
to countries outside the FTA. This would imply a trade diversion away from countries out of the
agreement and towards countries within the trade agreement, adversely impacting the exports of
excluded countries.
However, the extent of trade diversion depends on whether the excluded country has an existing free
trade agreement with its major trading partners, which are participating in the regional FTA. In case
of Malaysia, it is found that Malaysia already has existing FTAs with Singapore, Japan and Australia.
These three countries account for around 82% and 84% of Malaysia’s exports and imports within
CPTPP. Consequently, Malaysia may not lose much in terms of trade diversion by staying out of
CPTPP.
Table 9 reports the estimated results, which show that if Malaysia decides not to join CPTPP, the loss
of exports from Malaysia following the CPTPP will be only 0.09% of its existing exports to the CPTPP
partner countries, which amounts to US$53.2 million.
Table 9: Impact of CPTPP on Malaysia’s Exports if Malaysia does not join CPTPP
Exports of Malaysia
before CPTPP in
2016 (US$1000)
Exports of Malaysia
post CPTPP
(US$1000)
Change in Exports
of Malaysia post
CPTPP (US$1000)
Percentage Loss in
Exports of Malaysia
post CPTPP if
Malaysia does not join
CPTPP
Australia
6 445 327
6 436 304
-9 023
-0.14
Brunei
512 029
512 029
0
0
Canada
704 494
703 156
-1 339
-0.19
Chile
164 104
162 250
-1 854
-1.13
Japan
15 250 309
15 233 534
-16 775
-0.11
Mexico
1 890 946
1 889 622
-1323
-0.07
New
Zealand
731 767
730 230
-1 537
-0.21
Peru
122 405
122 319
-85
-0.07
Singapore
27 581 069
27 581 069
0
0
Vietnam
5 730 266
5 696 458
-33 809
-0.59
Total
59 132 717
59 079 498
-53 219
-0.09
Source: Author’s estimations based on SMART simulations, WITS
14
While Malaysia’s exports to CPTPP partner countries will be adversely impacted marginally if it does
not join CPTPP, with no changes to its tariffs, the imports will not change leading to a lower but a
healthier trade balance than if it joins the CPTPP of US $ 17.92 billion (Table 10).
Table 10: Comparison of Change in Malaysia’s Trade Balance with CPTPP and without
CPTPP
Malaysia’s Trade
Balance in 2016
(US$1000)
Trade Balance Post
CPTPP If Malaysia
Joins CPTPP
(US$1000)
Trade Balance Post
CPTPP If Malaysia
does not Join CPTPP
(US$1000)
Australia
2 749 360
2 639 827
2 740 337
Brunei
355 722
351 321
355 722
Canada
41 340
43 739
40 002
Chile
59 753
68 092
57 899
Japan
1 611 597
100 462
1 594 822
Mexico
1 524 140
1 518 089
1 522 816
New Zealand
47 381
22 486
45 844
Peru
46 019
52 378
45 933
Singapore
10 326 657
9 750 504
10 326 657
Vietnam
1 220 487
1 021 715
1 186 679
Total
17 982 457
15 568 614
17 929 239
Source: Author’s estimations based on SMART simulations, WITS
6. Potential Tariff Revenue Loss to Malaysia of joining CPTPP
As discussed in section 3, on average Malaysia has higher import tariffs as compared to the other
CPTPP countries. This implies that the tariff revenue loss to Malaysia will also be higher. Using the
WITS simulation, the import tariff revenue loss of Malaysia is estimated. The results are reported in
Appendix Table A.4. The total import tariff revenue loss to Malaysia by entering the CPTPP will be
of around US$1.6 billion per year, of which 26% of tariff revenue loss will be from removing custom
duties on vehicles followed by plastics and articles thereof and machinery and mechanical appliances
(Table 11).
15
Table 11: Potential Tariff Revenue Loss to Malaysia if it ratifies the CPTPP
S.No
HS
Total Tariff Revenue
Loss (US$1000)
% of Total
Tariff
Revenue
Loss
Total
-1 643 003
1
87
vehicles other than railway or tramway rolling stock, and
parts and accessories thereof
-422 413
26
2
39
plastics and articles thereof
-150 164
9
3
84
nuclear reactors, boilers, machinery and mechanical
appliances; parts thereof
-132 047
8
4
72
iron and steel
-122 065
7
5
85
electrical machinery and equipment and parts thereof;
sound recorders and reproducers, television image and
sound recorders and reproducers, and parts and
accessories of such articles
-113 961
7
6
40
rubber and articles thereof
-82 654
5
7
76
aluminium and articles thereof
-79 676
5
8
73
articles of iron or steel
-68 868
4
9
10
Cereals
-49 474
3
10
48
paper and paperboard; articles of paper pulp, of paper or
of paperboard
-47 839
3
Source: Author’s estimations based on SMART simulations, WITS
7. Conclusion and the Way Forward
In the scenario of a growing number of bilateral and regional free trade agreements, mega regional
trade agreements like the CPTPP pose new challenges for the developing countries. Not only do these
agreements stretch trade liberalization beyond the existing limits, they take away important policy
space of the governments for regulating their imports to protect their domestic industry and to promote
their exports in order to generate employment. Custom duties are an important policy tool in the hands
of the governments which not only generate revenue but also leverage domestic production and
employment. In this context, this paper estimates the impact of the CPTPP and associated full trade
liberalization on Malaysia’s merchandise balance of trade.
Using SMART simulations, the results show that if Malaysia enters the CPTPP it will experience a
surge in its imports amounting to around US$2.5 billion, i.e., a 6% rise in its imports while its exports
rise only marginally by around 0.2% from CPTPP countries. The reason for this being that Malaysia
already has existing FTAs with its major export markets in the CPTPP namely Japan, Singapore and
Australia which together account for 84% of Malaysia’s exports to CPTPP. The associated trade
balance of Malaysia will fall by US$2.4 billion if Malaysia ratifies the CPTPP, which is 13% of its
16
existing trade balance. If Malaysia does not ratify the CPTPP, Malaysia’s trade balance will fall
marginally by 0.2% (US$53 million).
More importantly, remaining out of the CPTPP not only has a lower adverse impact on Malaysia’ trade
balance, it also provides the much-needed policy space to Malaysia for designing its industrial and
trade policies. With the advent of the digital industrial revolution developing countries are fast losing
their trade competitiveness, even in their traditional export sectors. The rising digital divide is
providing a competitive edge to developed countries as they are steadily increasing the digital content
in all stages of their manufacturing production. For example, Big data analytics along with artificial
intelligence is being used in the pre-production stage; robotics and 3D printing in the production stage
and e-commerce and internet of things in the post production stage.
The rising use of digital technologies and increasing product digitalization require developing
countries to re-think their existing industrial and trade policies with the objective of increasing their
trade competitiveness through higher use of digital technologies and digital services
5
. The CPTPP
chapters have some binding commitments especially in the area of zero customs duties on electronic
transmissions which has the potential of eroding all the negotiated industrial tariffs in the trade
agreements whether at the regional level or at the WTO
6
. The growing trade in electronic transmissions
implies that the core resources of digital industrial revolution namely data, software and computer-
aided design files (CAD files) used in 3D printing are increasingly being electronically transmitted.
This may provide higher market access to the foreign suppliers in the developing countries as they will
be able to manufacture products within the national boundaries of the developing counties without
their physical presence. They can electronically transmit the software and CAD files and 3D print the
currently manufactured products. While 3D printing is still considered to be catering to the niche
markets, its market has grown annually by 22% in the period 2014-2018
7
. It is estimated that if current
growth of investments in 3D printing continues, 50% of the manufactured goods will be ‘printed’ in
2060 and if investments in 3D printing doubles, this target will be achieved in 2040 (ING, 2017)
8
. This
will wipe out almost 40% of cross-border physical global trade. The fourth digital industrial revolution
is fast changing the landscape of international trade. While traditional indicators of trade
competitiveness like balance of trade are still important inputs into the policy making of developing
countries, there is a need to go beyond raising the trade balance to preserving policy space for
regulating trade in the digital world.
5
Banga (2018)
6
For detailed discussion on this see Banga (2019)
7
Statista (https://www.statista.com/statistics/796237/worldwide-forecast-growth-3d-printing-market/)
8
ING (2017), “3D printing: a threat to global trade” https://www.ing.nl/media/ING_EBZ_3d-printing_tcm162-
131996.pdf
17
References
Banga Rashmi (2014). Trans Pacific Partnership Agreement (TPPA): Implications for Domestic Value
Added Trade of Malaysia. background paper, no. RVC-12, UNCTAD.
Banga R. (2017). Rising Product Digitalization and Losing Trade Competitiveness.
UNCTAD/GDS/ECIDC/2017/3, UNCTAD, Geneva.
Banga R. (2019). Growing Trade in Electronic Transmissions: Implications for the South. UNCTAD
Research Paper No. 29 UNCTAD/SER.RP/2019/1, UNCTAD.
Panagariya, A. and Duttagupta (2001). The ‘Gains’ from Preferential Trade Liberalization in the CGEs:
Where Do They Come From? in S. Lahiri, ed. Regionalism and Globalization: Theory and Practice,
Routledge. London, 39-60.
Peter A. Petri, Michael G. Plummer, Shujiro Urata and Fan Zhai, (October 2017). Going It Alone in the
Asia-Pacific: Regional Trade Agreements Without the United States. Working Paper, PIIE, pp 17-10.
Peterson Institute for International Economics. (2012). Policy Brief by Peter A. Petri, and Michael G.
Plummer. The Trans-Pacific Partnership and Asia-Pacific Integration: Policy Implications. Johns Hopkins
University and East-West Center, June 2012.
Raza, W., Grumiller, J, Taylor, L., Tröster, B., von Arnim, R. (2014). Assess TTIP: Assessing the
Claimed Benefits of the Transatlantic Trade and Investment Partnership. Vienna: Austrian Foundation for
Development Research.
Taylor, L., and R. von Arnim. (2006). Computable General Equilibrium Models of Trade Liberalization:
The Doha Debate, New School for Social Research. Oxford: Oxfam GB.
World Bank (2018). Economic and Distributional Impacts of Comprehensive and Progressive Agreement
for Trans-Pacific Partnership: The case of Vietnam. Washington, D.C: World Bank Group.
18
Appendix
Table A.1 Malaysia’s Exports and Imports at the Product-Level to CPTPP Countries and their
Share in Malaysia’s Global Exports and Imports in 2017
ProductCode
Imports of
Malaysia
from CPTPP
countries IN
2017
(US$1000)
Share of
CPTPP
Countries
in
Malaysia's
Global
Imports in
2017 (%)
Exports of
Malaysia in
2017 to
CPTPP
Countries
(US$1000)
Share of
CPTPP
Countries
in
Malaysia's
Global
Exports
1
live animals
38 048
61
172 563
95
2
meat and edible meat offal
323 009
35
23 551
64
3
fish and crustaceans, molluscs and other aquatic
invertebrates
191 410
24
288 853
57
4
dairy produce; birds' eggs; natural honey; edible
products of animal origin, not elsewhere specified
or included
588 000
67
159 577
34
5
products of animal origin, not elsewhere specified
or included
13 581
52
1 134
13
6
live trees and other plants; bulbs, roots and the like;
cut flowers and ornamental foliage
219
2
114 702
83
7
edible vegetables and certain roots and tubers
87 784
9
133 486
50
8
edible fruit and nuts; peel of citrus fruit or melons
105 660
15
79 515
45
9
coffee, tea, maté and spices
99 586
19
66 249
53
10
cereals
400 916
28
9 609
72
11
products of the milling industry; malt; starches;
inulin; wheat gluten
82 135
20
42 856
45
12
oil seeds and oleaginous fruits; miscellaneous
grains, seeds and fruit; industrial or medicinal
plants; straw and fodder
108 210
18
19 230
36
13
lac; gums, resins and other vegetable saps and
extracts
5 612
10
1 452
13
14
vegetable plaiting materials; vegetable products
not elsewhere specified or included
24
1
24 800
37
15
animal or vegetable fats and oils and their cleavage
products; prepared edible fats; animal or vegetable
waxes
102 635
6
1 604 384
12
16
preparations of meat, of fish or of crustaceans,
molluscs or other aquatic invertebrates
25 072
17
122 689
44
17
sugars and sugar confectionery
62 043
6
69 584
30
18
cocoa and cocoa preparations
66 243
7
510 882
40
19
preparations of cereals, flour, starch or milk;
pastrycooks' products
183 068
25
391 587
29
20
preparations of vegetables, fruit, nuts or other parts
of plants
26 984
8
75 468
46
21
miscellaneous edible preparations
236 944
25
394 106
29
22
beverages, spirits and vinegar
168 937
27
458 338
59
19
23
residues and waste from the food industries;
prepared animal fodder
123 299
11
159 634
37
24
tobacco and manufactured tobacco substitutes
29 994
12
78 789
32
25
salt; sulphur; earths and stone; plastering materials,
lime and cement
82 604
19
157 726
48
26
ores, slag and ash
391 275
21
72 332
5
27
mineral fuels, mineral oils and products of their
distillation; bituminous substances; mineral waxes
9 002 963
36
17 063 108
52
28
inorganic chemicals; organic or inorganic
compounds of precious metals, of rare-earth
metals, of radioactive elements or of isotopes
847 739
37
249 868
29
29
organic chemicals
936 875
26
734 775
19
30
pharmaceutical products
155 371
12
107 151
46
31
fertilisers
250 619
25
192 812
34
32
tanning or dyeing extracts; tannins and their
derivatives; dyes, pigments and other colouring
matter; paints and varnishes; putty and other
mastics; inks
277 444
33
272 222
40
33
essential oils and resinoids; perfumery, cosmetic or
toilet preparations
210 055
21
133 412
40
34
soap, organic surface-active agents, washing
preparations, lubricating preparations, artificial
waxes, prepared waxes, polishing or scouring
preparations, candles and similar articles,
modelling pastes, ‘dental waxes’ and dental
preparation
183 855
30
171 266
18
35
albuminoidal substances; modified starches; glues;
enzymes
58 702
20
45 819
26
36
explosives; pyrotechnic products; matches;
pyrophoric alloys; certain combustible
preparations
3 495
16
3 925
28
37
photographic or cinematographic goods
45 261
41
37 162
19
38
miscellaneous chemical products
462 524
15
843 582
20
39
plastics and articles thereof
1 903 226
25
2 402 583
32
40
rubber and articles thereof
556 109
14
866 224
12
41
raw hides and skins (other than furskins) and
leather
4 476
5
4 774
18
42
articles of leather; saddlery and harness; travel
goods, handbags and similar containers; articles of
animal gut (other than silkworm gut)
51 367
10
30 420
48
43
furskins and artificial fur; manufactures thereof
4 311
11
3 138
7
44
wood and articles of wood; wood charcoal
136 572
20
1 147 275
33
45
cork and articles of cork
1 775
64
8
3
46
manufactures of straw, of esparto or of other
plaiting materials; basketware and wickerwork
2 319
30
665
49
47
pulp of wood or of other fibrous cellulosic
material; recovered (waste and scrap) paper or
paperboard
59 538
32
565
26
48
paper and paperboard; articles of paper pulp, of
paper or of paperboard
348 004
19
479 009
52
20
49
printed books, newspapers, pictures and other
products of the printing industry; manuscripts,
typescripts and plans
34 680
17
82 203
25
50
silk
35
0
481
5
51
wool, fine or coarse animal hair; horsehair yarn
and woven fabric
20 594
73
4 764
15
52
cotton
84 979
19
46 419
18
53
other vegetable textile fibres; paper yarn and
woven fabrics of paper yarn
153
3
369
7
54
man-made filaments; strip and the like of man-
made textile materials
43 365
10
67 514
16
55
man-made staple fibres
29 812
19
84 453
26
56
wadding, felt and nonwovens; special yarns; twine,
cordage, ropes and cables and articles thereof
22 348
12
111 046
45
57
carpets and other textile floor coverings
2 348
2
13 247
74
58
special woven fabrics; tufted textile fabrics; lace;
tapestries; trimmings; embroidery
2 943
6
4 352
26
59
impregnated, coated, covered or laminated textile
fabrics; textile articles of a kind suitable for
industrial use
21 158
12
17 430
23
60
knitted or crocheted fabrics
9 382
7
28 837
17
61
articles of apparel and clothing accessories, knitted
or crocheted
83 899
9
241 091
25
62
articles of apparel and clothing accessories, not
knitted or crocheted
73 566
11
59 223
17
63
other made-up textile articles; sets; worn clothing
and worn textile articles; rags
151 375
32
44 593
22
64
footwear, gaiters and the like; parts of such articles
136 932
22
61 365
41
65
headgear and parts thereof
3 587
12
24 830
64
66
umbrellas, sun umbrellas, walking sticks, seat-
sticks, whips, riding-crops and parts thereof
159
1
442
48
67
prepared feathers and down and articles made of
feathers or of down; artificial flowers; articles of
human hair
183
1
734
48
68
articles of stone, plaster, cement, asbestos, mica or
similar materials
43 532
15
345 385
75
69
ceramic products
27 099
8
102 953
40
70
glass and glassware
291 702
33
249 194
26
71
natural or cultured pearls, precious or semi-
precious stones, precious metals, metals clad with
precious metal, and articles thereof; imitation
jewellery; coin
1 237 241
28
893 944
30
72
iron and steel
1 346 723
26
460 179
20
73
articles of iron or steel
840 071
28
1 007 867
49
74
copper and articles thereof
1 407 777
41
477 569
22
75
nickel and articles thereof
190 313
69
35 232
6
76
aluminium and articles thereof
407 403
16
761 388
24
78
lead and articles thereof
16 248
19
24 987
11
79
zinc and articles thereof
94 221
22
74 685
20
21
80
tin and articles thereof
41 715
22
110 816
19
81
other base metals; cermets; articles thereof
16 113
23
11 153
36
82
tools, implements, cutlery, spoons and forks, of
base metal; parts thereof of base metal
171 527
35
74 665
37
83
miscellaneous articles of base metal
56 889
13
132 442
48
84
nuclear reactors, boilers, machinery and
mechanical appliances; parts thereof
4 964 204
22
6 366 778
27
85
electrical machinery and equipment and parts
thereof; sound recorders and reproducers,
television image and sound recorders and
reproducers, and parts and accessories of such
articles
13 745 453
25
20 728 599
30
86
railway or tramway locomotives, rolling stock and
parts thereof; railway or tramway track fixtures
and fittings and parts thereof; mechanical
(including electromechanical) traffic signalling
equipment of all kinds
19 685
20
3 260
5
87
vehicles other than railway or tramway rolling
stock, and parts and accessories thereof
1 515 998
28
299 438
18
88
aircraft, spacecraft, and parts thereof
194 158
6
520 819
26
89
ships, boats and floating structures
52 979
4
62 126
25
90
optical, photographic, cinematographic,
measuring, checking, precision, medical or
surgical instruments and apparatus; parts and
accessories thereof
1 535 436
28
2 039 255
26
91
clocks and watches and parts thereof
258 561
47
187 344
75
92
musical instruments; parts and accessories of such
articles
8 466
14
33 493
27
93
arms and ammunition; parts and accessories
thereof
121
1
58
1
94
furniture; bedding, mattresses, mattress supports,
cushions and similar stuffed furnishings; lamps
and lighting fittings, not elsewhere specified or
included; illuminated signs, illuminated
nameplates and the like; prefabricated buildings
115 670
11
779 333
30
95
toys, games and sports requisites; parts and
accessories thereof
98 704
18
106 328
30
96
miscellaneous manufactured articles
79 318
22
136 590
38
97
works of art, collectors' pieces and antiques
643
4
718
26
total/average
48 545 358
21
66 942 848
33
Source: Author’s estimations based on SMART simulations, WITS
22
Table A. 2 : Change in Malaysia’s Imports post the CPTPP -Product-Wise
Chapter
Imports
Before CPTPP
(US$1000)
(2016)
Imports after
CPTPP
(US$1000)
Change in Imports post
CPTPP
(US$1000)
87
vehicles other than railway or tramway rolling
stock, and parts and accessories thereof
1 794 805
2 436 822
642 017
39
plastics and articles thereof
1 325 380
1 562 165
236 785
84
nuclear reactors, boilers, machinery and
mechanical appliances; parts thereof
1 353 111
1 585 407
232 296
85
electrical machinery and equipment and parts
thereof; sound recorders and reproducers,
television image and sound recorders and
reproducers, and parts and accessories of such
articles
994 438
1 180 381
185 943
72
iron and steel
918 529
1 097 007
178 478
76
aluminium and articles thereof
260 588
373 546
112 958
71
natural or cultured pearls, precious or semi-
precious stones, precious metals, metals clad with
precious metal, and articles thereof; imitation
jewellery; coin
443 476
539 632
96 156
40
rubber and articles thereof
328 741
424 852
96 111
73
articles of iron or steel
657 981
749 545
91 564
48
paper and paperboard; articles of paper pulp, of
paper or of paperboard
309 558
385 994
76 437
70
glass and glassware
247 616
304 324
56 709
27
mineral fuels, mineral oils and products of their
distillation; bituminous substances; mineral waxes
5 560 478
5 613 275
52 797
35
albuminoidal substances; modified starches; glues;
enzymes
38 742
81 794
43 052
32
tanning or dyeing extracts; tannins and their
derivatives; dyes, pigments and other colouring
matter; paints and varnishes; putty and other
mastics; inks
147 642
189 642
42 001
21
miscellaneous edible preparations
250 262
291 053
40 791
10
Cereals
92 746
129 397
36 651
28
inorganic chemicals; organic or inorganic
compounds of precious metals, of rare-earth
metals, of radioactive elements or of isotopes
66 414
97 758
31 345
44
wood and articles of wood; wood charcoal
50 993
80 434
29 441
38
miscellaneous chemical products
139 007
162 121
23 113
83
miscellaneous articles of base metal
53 682
75 281
21 599
69
ceramic products
26 515
47 526
21 011
23
96
miscellaneous manufactured articles
56 965
74 110
17 145
94
furniture; bedding, mattresses, mattress supports,
cushions and similar stuffed furnishings; lamps
and lighting fittings, not elsewhere specified or
included; illuminated signs, illuminated
nameplates and the like; prefabricated buildings
66 699
82 692
15 993
74
copper and articles thereof
50 445
64 367
13 922
82
tools, implements, cutlery, spoons and forks, of
base metal; parts thereof of base metal
155 662
169 474
13 811
18
cocoa and cocoa preparations
52 634
65 106
12 472
34
soap, organic surface-active agents, washing
preparations, lubricating preparations, artificial
waxes, prepared waxes, polishing or scouring
preparations, candles and similar articles,
modelling pastes, ‘dental waxes’ and dental
preparation
81 653
93 083
11 430
56
wadding, felt and nonwovens; special yarns; twine,
cordage, ropes and cables and articles thereof
29 611
40 071
10 460
68
articles of stone, plaster, cement, asbestos, mica or
similar materials
28 595
38 922
10 327
52
Cotton
56 599
66 199
9 600
81
other base metals; cermets; articles thereof
30 128
38 961
8 833
54
man-made filaments; strip and the like of man-
made textile materials
35 372
42 783
7 411
19
preparations of cereals, flour, starch or milk;
pastrycooks' products
105 493
112 774
7 281
63
other made-up textile articles; sets; worn clothing
and worn textile articles; rags
23 545
30 163
6 618
80
tin and articles thereof
64 355
70 746
6 391
25
salt; sulphur; earths and stone; plastering materials,
lime and cement
7 082
11 799
4 717
17
sugars and sugar confectionery
17 822
22 138
4 316
22
beverages, spirits and vinegar
9 984
14 263
4 279
95
toys, games and sports requisites; parts and
accessories thereof
12 915
17 019
4 104
15
animal or vegetable fats and oils and their cleavage
products; prepared edible fats; animal or vegetable
waxes
40 656
43 982
3 326
55
man-made staple fibres
20 047
23 192
3 144
90
optical, photographic, cinematographic,
measuring, checking, precision, medical or
surgical instruments and apparatus; parts and
accessories thereof
23 566
26 481
2 915
60
knitted or crocheted fabrics
8 744
11 428
2 684
37
photographic or cinematographic goods
8 976
11 106
2 130
24
49
printed books, newspapers, pictures and other
products of the printing industry; manuscripts,
typescripts and plans
8 993
11 028
2 035
20
preparations of vegetables, fruit, nuts or other parts
of plants
22 090
24 122
2 031
30
pharmaceutical products
8 000
9 740
1 740
58
special woven fabrics; tufted textile fabrics; lace;
tapestries; trimmings; embroidery
4 467
5 959
1 491
86
railway or tramway locomotives, rolling stock and
parts thereof; railway or tramway track fixtures
and fittings and parts thereof; mechanical
(including electromechanical) traffic signalling
equipment of all kinds
9 162
10 580
1 418
89
ships, boats and floating structures
5 524
6 520
996
59
impregnated, coated, covered or laminated textile
fabrics; textile articles of a kind suitable for
industrial use
2 044
2 884
840
29
organic chemicals
7 746
8 562
816
79
zinc and articles thereof
4 050
4 847
796
36
explosives; pyrotechnic products; matches;
pyrophoric alloys; certain combustible
preparations
3 492
4 102
610
92
musical instruments; parts and accessories of such
articles
1 749
2 278
529
57
carpets and other textile floor coverings
1 568
2 062
494
46
manufactures of straw, of esparto or of other
plaiting materials; basketware and wickerwork
843
1 284
442
78
lead and articles thereof
1 070
1 365
295
16
preparations of meat, of fish or of crustaceans,
molluscs or other aquatic invertebrates
6 607
6 880
273
64
footwear, gaiters and the like; parts of such articles
125
344
218
12
oil seeds and oleaginous fruits; miscellaneous
grains, seeds and fruit; industrial or medicinal
plants; straw and fodder
2 039
2 231
192
67
prepared feathers and down and articles made of
feathers or of down; artificial flowers; articles of
human hair
372
494
122
91
clocks and watches and parts thereof
314
436
122
93
arms and ammunition; parts and accessories
thereof
290
374
83
66
umbrellas, sun umbrellas, walking sticks, seat-
sticks, whips, riding-crops and parts thereof
179
262
83
25
62
articles of apparel and clothing accessories, not
knitted or crocheted
483
559
76
61
articles of apparel and clothing accessories, knitted
or crocheted
58
120
62
88
aircraft, spacecraft, and parts thereof
106
153
47
45
cork and articles of cork
137
172
35
11
products of the milling industry; malt; starches;
inulin; wheat gluten
125
138
13
97
works of art, collectors' pieces and antiques
64
72
9
31
Fertilisers
101
105
3
50
Silk
14
17
3
Total
16 122 309
18 665 339
2 543 030
Source: Author’s estimations based on SMART simulations, WITS
26
Table A. 3 : Change in Malaysia’s Exports post the CPTPP -Product-Wise and Country Wise
Product
Code
product description
Exports
Before the
CPTPP
(US$1000)
Exports
After the
CPTPP
(US$1000)
Export
Change In
Revenue
post
CPTPP
(US$1000)
%
Change
Canada
40
rubber and articles thereof
86 078
96 408
10 329
12
Canada
61
articles of apparel and clothing
accessories, knitted or crocheted
16 774
22 477
5 703
34
Canada
94
furniture; bedding, mattresses,
mattress supports, cushions and
similar stuffed furnishings; lamps
and lighting fittings, not elsewhere
specified or included; illuminated
signs, illuminated nameplates and
the like; prefabricated buildings
74 531
79 003
4 472
6
Canada
85
electrical machinery and equipment
and parts thereof; sound recorders
and reproducers, television image
and sound recorders and
reproducers, and parts and
accessories of such articles
218 499
220 684
2 185
1
Canada
62
articles of apparel and clothing
accessories, not knitted or
crocheted
5 059
6 931
1 872
37
Canada
15
animal or vegetable fats and oils
and their cleavage products;
prepared edible fats; animal or
vegetable waxes
17 530
19 108
1 578
9
Chile
85
electrical machinery and equipment
and parts thereof; sound recorders
and reproducers, television image
and sound recorders and
reproducers, and parts and
accessories of such articles
30 230
32 346
2 116
7
Chile
40
rubber and articles thereof
24 197
25 649
1 452
6
Chile
15
animal or vegetable fats and oils
and their cleavage products;
prepared edible fats; animal or
vegetable waxes
18 807
19 936
1 128
6
Chile
94
furniture; bedding, mattresses,
mattress supports, cushions and
similar stuffed furnishings; lamps
and lighting fittings, not elsewhere
specified or included; illuminated
signs, illuminated nameplates and
the like; prefabricated buildings
19 531
20 508
977
5
27
Chile
84
nuclear reactors, boilers, machinery
and mechanical appliances; parts
thereof
9 368
10 117
749
8
Japan
44
wood and articles of wood; wood
charcoal
730 589
752 507
21 918
3
Japan
4
dairy produce; birds' eggs; natural
honey; edible products of animal
origin, not elsewhere specified or
included
9 350
26 929
17 579
188
Japan
18
cocoa and cocoa preparations
159 314
162 500
3 186
2
Japan
19
preparations of cereals, flour,
starch or milk; pastrycooks'
products
52 782
57 004
4 223
8
Mexico
85
electrical machinery and equipment
and parts thereof; sound recorders
and reproducers, television image
and sound recorders and
reproducers, and parts and
accessories of such articles
1 266 394
1 268 261
1 867.7
0.1
Mexico
84
nuclear reactors, boilers, machinery
and mechanical appliances; parts
thereof
239 887
241 066
1 179.5
0.5
Mexico
69
ceramic products
5 426
7 922
2 496
46
Mexico
44
wood and articles of wood; wood
charcoal
29 196
31 531
2 336
8
Mexico
21
miscellaneous edible preparations
7 950
9 699
1 749
22
Mexico
40
rubber and articles thereof
31 108
32 664
1 555
5
Mexico
39
plastics and articles thereof
28 529
29 670
1 141
4
Mexico
34
soap, organic surface-active agents,
washing preparations, lubricating
preparations, artificial waxes,
prepared waxes, polishing or
scouring preparations, candles and
similar articles, modelling pastes,
‘dental waxes’ and dental
preparation
8 599
9 631
1 032
12
Mexico
15
animal or vegetable fats and oils
and their cleavage products;
prepared edible fats; animal or
vegetable waxes
8 881
9 947
1 066
12
Peru
85
electrical machinery and equipment
and parts thereof; sound recorders
and reproducers, television image
and sound recorders and
reproducers, and parts and
accessories of such articles
29 088
31 124
2 036
7
28
Peru
40
rubber and articles thereof
14 880
16 071
1 190
8
Vietnam
24
tobacco and manufactured tobacco
substitutes
18 538
91 765
73 226
395
Vietnam
55
man-made staple fibres
23 933
31 352
7 419
31
Vietnam
84
nuclear reactors, boilers, machinery
and mechanical appliances; parts
thereof
523 520
528 755
5 235
1
Source: Author’s estimations based on SMART simulations, WITS
Note: For estimating impact on exports, the exports figures of Malaysia are considered, which may be different from the
import figures of the partner countries from Malaysia. Under Tobacco and manufactured tobacco substitutes, Malaysia’s
exports of HS 240220 (cigarettes containing tobacco) and HS240290 (other) increase.
Table A.4: Total Tariff Revenue Loss to Malaysia Post CPTPP
Total Tariff Revenue
Loss (US$1000)
Total
-1 643 003
87
vehicles other than railway or tramway rolling stock, and parts and
accessories thereof
-422 413
39
plastics and articles thereof
-150 164
84
nuclear reactors, boilers, machinery and mechanical appliances; parts
thereof
-132 047
72
iron and steel
-122 065
85
electrical machinery and equipment and parts thereof; sound recorders and
reproducers, television image and sound recorders and reproducers, and
parts and accessories of such articles
-113 961
40
rubber and articles thereof
-82 654
76
aluminium and articles thereof
-79 676
73
articles of iron or steel
-68 868
10
cereals
-49 474
48
paper and paperboard; articles of paper pulp, of paper or of paperboard
-47 839
71
natural or cultured pearls, precious or semi-precious stones, precious
metals, metals clad with precious metal, and articles thereof; imitation
jewellery; coin
-44 579
70
glass and glassware
-43 342
32
tanning or dyeing extracts; tannins and their derivatives; dyes, pigments
and other colouring matter; paints and varnishes; putty and other mastics;
inks
-32 950
27
mineral fuels, mineral oils and products of their distillation; bituminous
substances; mineral waxes
-28 383
21
miscellaneous edible preparations
-24 030
44
wood and articles of wood; wood charcoal
-17 594
83
miscellaneous articles of base metal
-13 884
29
38
miscellaneous chemical products
-13 403
28
inorganic chemicals; organic or inorganic compounds of precious metals,
of rare-earth metals, of radioactive elements or of isotopes
-11 940
35
albuminoidal substances; modified starches; glues; enzymes
-11 516
74
copper and articles thereof
-9 528
96
miscellaneous manufactured articles
-9 323
94
furniture; bedding, mattresses, mattress supports, cushions and similar
stuffed furnishings; lamps and lighting fittings, not elsewhere specified or
included; illuminated signs, illuminated nameplates and the like;
prefabricated buildings
-9 262
82
tools, implements, cutlery, spoons and forks, of base metal; parts thereof
of base metal
-8 567
34
soap, organic surface-active agents, washing preparations, lubricating
preparations, artificial waxes, prepared waxes, polishing or scouring
preparations, candles and similar articles, modelling pastes, ‘dental
waxes’ and dental preparation
-8 328
68
articles of stone, plaster, cement, asbestos, mica or similar materials
-7 575
18
cocoa and cocoa preparations
-7 532
69
ceramic products
-7 239
56
wadding, felt and nonwovens; special yarns; twine, cordage, ropes and
cables and articles thereof
-6 006
52
cotton
-6 005
20
preparations of vegetables, fruit, nuts or other parts of plants
-5 817
63
other made-up textile articles; sets; worn clothing and worn textile
articles; rags
-4 611
81
other base metals; cermets; articles thereof
-4 431
19
preparations of cereals, flour, starch or milk; pastrycooks' products
-4 091
54
man-made filaments; strip and the like of man-made textile materials
-3 826
80
tin and articles thereof
-3 538
17
sugars and sugar confectionery
-3 063
95
toys, games and sports requisites; parts and accessories thereof
-2 857
25
salt; sulphur; earths and stone; plastering materials, lime and cement
-2 198
22
beverages, spirits and vinegar
-2 152
55
man-made staple fibres
-2 112
15
animal or vegetable fats and oils and their cleavage products; prepared
edible fats; animal or vegetable waxes
-2 087
37
photographic or cinematographic goods
-1 683
49
printed books, newspapers, pictures and other products of the printing
industry; manuscripts, typescripts and plans
-1 601
90
optical, photographic, cinematographic, measuring, checking, precision,
medical or surgical instruments and apparatus; parts and accessories
thereof
-1 568
60
knitted or crocheted fabrics
-1 531
58
special woven fabrics; tufted textile fabrics; lace; tapestries; trimmings;
embroidery
-843
89
ships, boats and floating structures
-764
30
79
zinc and articles thereof
-600
59
impregnated, coated, covered or laminated textile fabrics; textile articles
of a kind suitable for industrial use
-503
86
railway or tramway locomotives, rolling stock and parts thereof; railway
or tramway track fixtures and fittings and parts thereof; mechanical
(including electromechanical) traffic signalling equipment of all kinds
-489
29
organic chemicals
-392
30
pharmaceutical products
-352
92
musical instruments; parts and accessories of such articles
-307
36
explosives; pyrotechnic products; matches; pyrophoric alloys; certain
combustible preparations
-301
46
manufactures of straw, of esparto or of other plaiting materials;
basketware and wickerwork
-204
57
carpets and other textile floor coverings
-172
78
lead and articles thereof
-166
16
preparations of meat, of fish or of crustaceans, molluscs or other aquatic
invertebrates
-130
12
oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit;
industrial or medicinal plants; straw and fodder
-94
62
articles of apparel and clothing accessories, not knitted or crocheted
-80
91
clocks and watches and parts thereof
-68
67
prepared feathers and down and articles made of feathers or of down;
artificial flowers; articles of human hair
-68
66
umbrellas, sun umbrellas, walking sticks, seat-sticks, whips, riding-crops
and parts thereof
-44
93
arms and ammunition; parts and accessories thereof
-29
64
footwear, gaiters and the like; parts of such articles
-27
45
cork and articles of cork
-21
88
aircraft, spacecraft, and parts thereof
-19
61
articles of apparel and clothing accessories, knitted or crocheted
-10
97
works of art, collectors' pieces and antiques
-3
11
products of the milling industry; malt; starches; inulin; wheat gluten
-2
50
silk
-2
31
fertilisers
-1
Source: Author’s estimations based on SMART simulations, WITS
