[2701] The quantitative aspect of trade diversion; TPP may increase Malaysian GDP

I have previously highlighted the cost of Malaysia not participating in the Trans-Pacific Partnership, which is a proposed free trade agreement among 12 countries across the Pacific. The cost comes in the form of trade diversion. I have only mentioned the qualitative aspect however. While it is good to know that, having quantitative assessment of the TPP will provide a greater case for joining, or not joining for that matter. Indeed, Pakatan Rakyat as well as the anti-TPP camp are demanding the goverment to release a cost-benefit analysis of the TPP. I think that is fair.

Well, they and all of us are in luck.

Inkyo Cheong of Asian Development Bank Institute recently published a working paper that comes close to a CBA. In the paper, the author does provide the impact on GDP of various countries:^[1]

As you can see, most countries that join the TPP, if the TPP is agreed upon, are expected to enjoy positive impact on their GDP. Most which do not are projected to suffer some reduction in its GDP. That reduction is caused by trade diversion.

For Malaysia in particular, the implementation of the TPP is projected to increase the GDP by 0.7% (see the TPP12 column). As you can see, Malaysia is expected to be one of the biggest winners of the TPP.

  [1] — [Comparing the Economic Impact of the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. Inkyo Cheong. Asian Development Bank Institute. July 2013]