Malaysian-US FTA talks ’easier’ than Thai
Bangkok Post
Malaysian-US FTA talks ’easier’ than Thai
12 June 2006
(Kyodo) The United States and Malaysia began a first round of talks Monday to forge a bilateral free trade agreement they hope will be concluded by early next year.
The first formal negotiations, which started today and last until Friday in Penang state, are led by US Assistant Trade Representative for Asia Pacific Barbara Weisel and Malaysian International Trade and Industry Ministry Secretary General Mohamad Sidek Hassan.
Weisel also handles stalled FTA talks with Thailand.
But the talks with Malaysia are expected to be less problematic as both sides have expressed optimism the FTA could be fast-tracked without hindrance.
The United States wants to send the FTA to Congress for approval before July 1, 2007, the date when President George W. Bush’s administration loses its authority to negotiate deals that need Congress to approve or reject without amendment.
The possible obstacles would be Malaysia’s reluctance to open its auto and banking sectors and intellectual property infringement issues.
On the latter, rampant software piracy has led to Malaysia being included among 36 countries on a US watch list for intellectual property rights infringement issues.
As for the auto sector, Malaysia, the only Southeast Asian country that produces its own cars, has imposed high import tariffs on foreign carmakers to protect its national car industry.
In banking, foreign banks are tightly regulated by among others, the number of branches or automated teller machines they are allowed to have.
But the most sensitive area is the state procurement system.
The American Malaysian Chamber of Commerce, in a statement to welcome the start of the FTA talks, said it hopes to see included in an eventual FTA government procurement, competition policy, transparency and intellectual property rights protection.
"In particular, the chamber is aware that government procurement is a particularly sensitive issue, but it would like to see greater transparency in the decision-making process when procurement policies are formulated," AMCHAM President Vince Leusner said.
"The Malaysian government should also establish clear guidelines in the government tendering process, and it should allow foreign and local companies to bid directly for government projects," he added.
State procurement is a politically sensitive matter.
The Malaysian government has made it compulsory for companies bidding for contracts to have at least 30 percent Malay equity and 60 percent of government contracts will go to Malay companies.
This is part of its affirmative action policy that favors the dominant ethnic Malays who are perceived to be lagging behind the ethnic Chinese minority.
Leusner said the US government was one of the world’s largest single procurement entities, purchasing more than 720 billion ringgit ($200 billion) in goods and services every year.
"Opening up government procurement would not only benefit American companies seeking to supply world-class products and services to the Malaysian government, but also Malaysian firms wanting to sell into the US government’s procurement channels," he said.
Malaysia is the United States’ 10th largest trading partner, with $44 billion in two-way trade.
The US National Association of Manufacturers has estimated that an FTA with Malaysia would double two-way trade by 2010.
"The conclusion of the US-Malaysia FTA will create a greater ’brand awareness’ of Malaysia abroad, which is critical in helping foreign investors to better understand about Malaysia, and to make Malaysia a key investment destination in Southeast Asia," Leusner said. (Compiled from agency reports)
