Trans-Pacific Partnership trade agreement to underpin Brunei Darussalam's diversification efforts

As a founding member of the vast Trans-Pacific Partnership (TPP), the Sultanate is poised to welcome a host of economic benefits as a result of its membership. After a historic signing ceremony in October 2015, the next phase of the pact’s development will see each signatory seek domestic ratification prior to official enactment. Although policymakers will continue to negotiate over several TPP provisions related to labour and transparency, the country has made strong progress in meeting the TPP’s intellectual property rights (IPR) protection provisions. It is widely expected that Brunei Darussalam will also benefit from access to new markets.

Signed & Sealed

In October 2015 TPP negotiations made major headway when 12 countries met in Atlanta to announce they had successfully negotiated the world’s largest free trade agreement, which will cover an estimated 40% of global trade, 38% of global GDP, and includes Brunei Darussalam, Australia, Japan, the US, Malaysia, Mexico, New Zealand, Singapore, Peru, Vietnam and Chile. In February 2016, ministers from all TPP members met in New Zealand, to officially sign the agreement. The TPP will reduce or eliminate tariffs on over 18,000 categories of goods, and if enacted, is expected to offer annual trade benefits of $295bn by 2025, according to a report by the Peterson Institute for International Economics.

Along with Chile, New Zealand and Singapore, Brunei Darussalam was one of the four founding members of the agreement in 2005, when it was called the Trans-Pacific Strategic Economic Partnership Agreement, and TPP negotiations have received strong government support. This is understandable — Brunei Darussalam’s trade with TPP partners stood at $10.8bn in 2014 alone, equivalent to over half of total foreign trade, while TPP membership would improve access to 11 markets for the Sultanate.

The new agreement will also have a limited negative impact on the economy. Import tariffs on more than 90% of goods have already been eliminated, so there is little concern that the local market will be flooded with cheaper imports. Policymakers have also stressed that Brunei Darussalam will be at an advantage as it is one of only three ASEAN signatories and stands to benefit from rising numbers of US investors. The TPP will also improve small- and medium-sized enterprises’ access to new markets — an important priority as the government seeks to improve economic diversification.


In February 2016 Erywan Yusof, the deputy minister of foreign affairs and trade, told local media that Brunei Darussalam is aiming to ratify the TPP within two years, although the country will first need to revise several pieces of federal legislation, including minimum wage, labour and transparency laws. TPP requires all members to meet uniform environmental and labour standards, including minimum wage, fair hours of work and workplace safety policies. Brunei Darussalam’s TPP agreement does not provide for labour courts or independent structures free from political influence, which could have the effect of limiting or delaying these anticipated reforms. However, Erywan told media that the agreement offers the country an opportunity to refine and reform existing labour laws, with areas including wages and the minimum working age cited as two areas where changes will be made.


The country will also have to accede to the TPP’s IPR provisions. The US Department of State reported in 2015 that although the Sultanate’s IPR protection and enforcement regime is still under development, it is becoming increasingly strong and effective. The country was removed from the US Special 301 report, or IPR blacklist, in 2013 and remained off the list in 2014 and 2015. A total of 101 foreign patent applications and eight local applications were filed in 2015, according to the Brunei Intellectual Property Office, compared with 91 and eight in 2014, respectively.


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The Report: Brunei Darussalam 2016

Trade & Investment chapter from The Report: Brunei Darussalam 2016

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