AFX News Limited

US-Malaysia trade talks may not meet US deadline - US official

11.03.2006

KUALA LUMPUR (XFN-ASIA) — Malaysia and the United States have made good progress towards forging a free trade deal, but negotiations may fail to meet Washington’s deadline to sign a pact, a senior US trade official said.

In the first indication the US may not clear a free trade agreement (FTA) by mid-2007, US Assistant Trade Representative for the Asia-Pacific, Barbara Weisel, said talks could finish by early next year, but also flagged challenges in sensitive areas.

’We’re in the middle of negotiations now, and we’ll have to see as the process continues whether or not we can conclude (in time),’ Weisel told reporters after a third round of talks here.

’Both sides are working very hard to try and to do that, and we will see as each round proceeds, whether we’ll in fact be able to do that.’

The US has said it wants to conclude talks for an FTA with Malaysia by the end of the year, although Malaysia has said it will not be dictated to by Washington’s deadline.

The timeline would give the Bush administration enough time to pass the deal before the July 1, 2007 expiry of its fast-tracking Trade Promotion Authority, when the US Congress regains the right to amend any trade pact.

’Whether or not the new Congress intends to extend (the authority), or intends to renew it, is something that I cannot predict. But it’s our view that it’s very much in the interest of the two countries to try to finish it before that time,’ Weisel said.

While Weisel, the US lead negotiator, said both sides had accomplished their goals in talks this week, she indicated they could slow over sensitive areas.

Malaysian government procurement, where lucrative contracts are awarded to the country’s majority ethnic Malays as part of a system of positive discrimination, is seen as the biggest political hurdle in the talks.

’While there was a convergence of views in many areas, the Malaysian government is still consulting internally,’ she said.

Urging the speedy conclusion of talks, Weisel cited uncertainty surrounding US Congressional elections next week, and warned the fate of the FTA would be unclear if the deadline was not met.

’It’s a very uncertain environment and if we’re serious about this, if we’re serious about taking the opportunity that we’ve been presented here, then we think we need to conclude this,’ she said.

’We would like to see both countries complete the agreement, but it’s up to Malaysia whether it wants to take that opportunity while the window is still open,’ she added.