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Group calls for halt to US-Malaysia FTA negotiations

28 February 2007

Group Calls for Halt to US-Malaysia FTA Negotiations

By Third World Network

Malaysia should stop all negotiations with the US on a free trade agreement (FTA) as it has failed to conduct an assessment on the implications of such an agreement on the people, a grouping of concerned Malaysians urged on Tuesday.

Speaking at a press conference, representatives of the People’s Coalition Against the US-Malaysia FTA highlighted the far-reaching implications that the US-Malaysia FTA will have on the public and the country’s sovereignty and policies. They also denounced the haste at which the negotiations are being conducted.

The recently concluded fifth round of negotiations was bogged down by 58 contentious issues. Malaysia’s Minister of International Trade and Industry Rafidah Aziz has briefed the Cabinet on the state of negotiations and has asked them for their feedback on the contentious issues this week.

Even though the Minister has claimed that Malaysia will not bow to US pressure, the government nonetheless appears to be continuing to follow the US timetable in rushing into a deal by 2 April in order to meet the end June deadline when the US President’s fast track authority expires.

The Coalition urged the government to reveal the 58 contentious issues at stake and called for a cost-benefit analysis to be conducted and its results made public.

“Given that the government has failed to resolve these issues, why then is the government rushing to meet the US timetable when it has already said that it won’t be pressured to complete the negotiations?” asked Kohila Yanasekaran, from JERIT, a member of the Coalition.

Based on various sources, the contentious issues are said to include labour, intellectual property rights and access to affordable medicines, agricultural products such as rice, finance, telecommunications, the labeling of genetically modified (GM) foods and government procurement.

According to Charles Santiago of Monitoring Sustainability of Globalisation, experiences from other countries have shown that the benefits from an FTA with the US could prove to be an illusion.

Countries which sign an FTA with the US are promised preferential market access. However, Santiago pointed out that in the case of Singapore which entered into an FTA with the US in 2005, the rate of return on investment for Singaporean companies in the US was only 0.4%. Singapore also has a trade deficit with the US, indicating that the country has not benefited from the deal as yet.

He warned that the US’ unsustainable trade and budget deficits are putting pressure on the country to cut its imports, meaning that other countries will find it harder to export to the US, as clearly shown in the case of Singapore.

He added that Malaysia should rethink its decision to enter into a free trade deal with the US given that Malaysia is likely to give up more for a small return. Moreover, FTAs are mainly about protecting investors’ rights and allowing big corporations to control trade, which may come at the expense of the people.

There was concern that the US-Malaysia FTA will raise the cost of drugs thus making medicines less affordable especially for the poorer sectors of society.
“Prices will go up and the people will suffer,” said A. H. Ponniah of the Coalition Against the Privatisation of Health Services. The reasons being that the FTA will increase patent durations, make it more difficult to register generic medicines and impose greater restrictions on the government to bring in generic medicines. Patented medicines in Malaysia can be 1,044% more expensive than their generic equivalents.

Malaysia was a world leader when it issued compulsory licence for patented medicines to treat HIV/AIDS. This allowed a cheaper generic version to be imported, which more than doubled the amount of patients who could be treated. Compulsory licencing (licensees that are granted by a government to use existing patents) will be more difficult if the US FTA is signed.

There was also a call for the government to recognise the right to health for Malaysians especially children and women because it has signed the United Nations Convention on the Rights of the Child as well as the Convention on the Elimination of All Forms of Discrimination Against Women.

In response to questions from the UN Committee on the Rights of the Child about the impact of an FTA on its human rights obligations, the Attorney General has stated that ‘generic drugs should not be restricted in any manner’ and implied that a US-Malaysia FTA could result in more expensive medicines, adding that Malaysia is not going to negotiate on this issue.

“Since Malaysia is a party to these conventions, the government has to ensure that the FTA should not violate the rights of women and children (to access affordable medicines). Anything to the contrary will be a breach of the international conventions,” said Yap Swee Seng of the human-rights group SUARAM.

He added that the people also have the fundamental right to know what is happening with regards to the FTA negotiations and urged the government to disclose the content of the talks as well as to what the 58 contentious issues are.

Moreover, given the intense lobblying by the biotechnology industry, the Coalition believes that one of the contentious issues would also be the issue of labeling of GM foods. GM foods are produced from GM organisms, and there are concerns that they may pose health risks.

Under the legislation which grants the US Trade Representative negotiating authority for the FTA, labeling that affects new technologies including biotechnology (such as genetic modification), is viewed as an unjustified trade restriction, eventhough labeling is allowed under the World Trade Organisation. One of the objectives of the legislation is thus to eliminate such practices, and to ensure US market access opportunities. The US is the world’s largest producer and exporter of GM crops.

Industry groups, in their public submissions to the US Trade Representative, are not in favour of mandatory labeling for GM food. They oppose Malaysia’s Biosafety Bill, which requires GM food labeling. In particular, the American Chamber of Commerce in Malaysia/US Chamber of Commerce insists that this ‘should be firmly opposed by the US in the FTA negotiations.’

But Jessica Binwani of the Consumers Association of Penang pointed out, it is the consumers’ right to know what food they are eating, especially as there could be potential health effects and religious/ethical concerns related to GM foods.

Apart from safety and consumer concerns, the issue of labeling is also important as it pushes exporting GM-producing countries to adopt segregating measures, shifting the burden which currently falls on importing countries to detect and identify GM products.

She pointed out that Malaysia is a signatory to international treaties such as the Cartagena Protocol on Biosafety, which calls for a precautionary approach to genetically modified organisms, and therefore Malaysia has no reason to go against existing commitments. The US is not a party to the Cartagena Protocol.

Another issue that was raised was with regard to the future of rice, Malaysia’s staple food. According to the Ninth Malaysia Plan, the country is aiming for 90% rice self-sufficiency. There is worry that if Malaysia’s 40% tariff on US rice was to come down to 0% under the US FTA, the livelihoods of thousands of rice farmers will be wiped-out as they are unlikely to be able to compete with the subsidised US rice.

According to Santiago, most farm products imported from the US are highly subsidised and this creates an uneven playing field.

While there have been verbal assurances from the government that rice is excluded from the FTA talks, the Coalition fears that US would not agree to such a proposal, and called on the Government to disclose whether the US has indeed agreed to exclude rice.