Malaysia and America as free trade partners?
Daily Times | Pakistan | June 17, 2006
VIEW: Malaysia and America as free trade partners?
Farish A Noor
The American-backed FTA is certainly not designed to serve the interest of ordinary Malaysian or American workers (it may well lead to the practice of dumping and out-sourcing instead), but it will invariably open up the Malaysian economy to the rigours and discipline of the global market. Badawi in turn may find himself captive to external variable factors
This week marks a significant date as far as Malaysian-American relations are concerned. During the two decades that Malaysia was under the governance of former prime minister, Mahathir Mohamad, the country’s relations with the West were somewhat frosty. Despite the close relations between the security services of Malaysia and its Western counterparts, Malaysia - along with Singapore - steadfastly stood against the imposition of what was then termed “Western values”.
Malaysia’s Mahathir and Singapore’s Lee Kuan Yew insisted that Western notions of human rights and democracy had little relevance in a part of a world where Asians (to quote at least one prominent ASEAN leader) were somehow not “genetically” suited to Western codes and standards of democracy.
Things were set to change with the onset of the so-called “war on terror” in the wake of the attacks on the USA on September 11, 2001. Overnight, Malaysia - along with the rest of ASEAN - suddenly appeared on the map of American technocrats and securo-crats again, and the region was designated the “second front” in the “war on terror”. Since then the governments of ASEAN have been racing to be the first at the White House door, with leaders like Thaksin Shinawatra of Thailand and Gloria Aroyyo of the Philippines in particular coveting the title of America’s No 1 non-NATO ally.
Perhaps the most surprising outcome was the sudden elevation of Malaysia as a key strategic partner of the USA in the war against its enemies. Following the departure of Mahathir in 2003, the new establishment under Prime Minister Abdullah Ahmad Badawi sought to improve ties with the USA at no inconsiderable cost. That the two countries would like to come closer is hardly a surprise considering that exports to the USA amount to around a quarter of Malaysia’s export earnings and Malaysia happens to be the 10th biggest trading partner of the United States. The scene was thus set for a marriage of convenience.
This week sees further warming of US-Malaysian ties. American and Malaysian representatives are meeting on the Malaysian island of Penang to work out the terms of a mutual free trade agreement (FTA) between the two countries. At present the annual trade between the two countries amounts to around $44 billion. It is set to rise even higher should the FTA go through.
There are however some important snags. The American representatives are keen to focus on two areas in particular: access to the Malaysian auto market and a commitment on the part of the Malaysian government to curb the infringement of copyright laws in the country.
It is here that the Badawi government finds itself painted in a corner. Prime Minister Badawi came to power on a wave of reform promises, the chief of which was to ensure greater transparency and accountability in governance. He promised to crack down on cases of corruption as well as to look into the alleged abuses and misconduct of the Malaysian police. Yet thus far none of the reform measures has taken root or shown evidence of having effect. The few cases in which those accused of corruption were taken to court were cited as marginal to the real problem of institutionalised corruption and linkages between political parties, the government and the private sector. In the area of police reform, the Badawi government has failed to secure the support of the chiefs of police to initiate even the mildest reform measures.
Taking into account the current political stalemate in the country, analysts wonder if Prime Minister Badawi can actually deliver the terms for the FTA, and whose interests the agreement will serve in the long run. Local economists and trade unionists in the country warn that any attempt by the US and its automobile industry to edge into the domestic automobile market in Malaysia will spell doom for the national carmaker, Proton, which is already under pressure from Chinese and Japanese auto producers.
At present the American representatives are demanding that American car makers also be given access to the Malaysian market and that import tariffs be lowered to make American (and other foreign) cars competitive in Malaysia. Just how the beleaguered Proton company will survive under such circumstances is an open question.
The biggest political hurdle that Badawi will have to face, however, is ensuring transparency and competitiveness in bids for tenders of government projects. Long-term observers of Malaysian politics have long since recognised that its fragile ethnic consensus is based on discriminatory economic preferential treatment that favours the majority Malay community. Despite talk of reform and transparency, even the Badawi establishment has had to fall back on its traditional ethnic Malay vote base to secure power and remain in government.
But should the American representatives get their way, such ethnic preferential treatment would no longer be practicable. This in turn jeopardises the political base of the ruling UMNO party that Badawi is president of. Ironically, by bringing Malaysia into the free global economy, Badawi may have introduced to Malaysia’s cocooned system external variable factors that may well interrupt the consensus upon which Malaysian politics has been based for half a century.
The American-backed FTA is certainly not designed to serve the interest of ordinary Malaysian or American workers (it may well lead to the practice of dumping and out-sourcing instead), but it will invariably open up the Malaysian economy to the rigours and discipline of the global market. Badawi in turn may find himself captive to external variable factors. He may end up being the prime minister who opened up the Malaysian economy to the world, or alternatively the prime minister who allowed the world to come in and plunder the country.
Dr Farish A Noor is a Malaysian political scientist and human rights activist, based at the Zentrum Moderner Orient (ZMO), Berlin
