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Malaysia lays out position on FTA with US

TWN FTA Info: Malaysia Lays Out Position on FTA With US

20 November 2006

Dear Friends and Colleagues,

Re: Malaysia Lays Out Position on FTA With US

We wish to bring to your attention a statement released by the Ministry of International Trade and Industry (MITI) that lists out the government’s position as well as the state of play in the various areas of its negotiations on an FTA with the US.

According to the MITI statement, the US wants to include labour as a chapter in the FTA but Malaysia’s ‘preference’ is that it should not. Malaysia has no objection to including the environment but the main contention was whether it should be subject to dispute settlement as proposed by the US.

On investment, Malaysia wants “adequate provisions” to allow for the pursuit of “socio-economic goals.” According to Inside US Trade (Vol. 24, No. 46 - November 17, 2006), the investment working group was one of three working groups that did not meet at the last FTA negotiating round in Kuala Lumpur and that Malaysia has yet to provide a text in the sectors of telecommunications or e-commerce.

On services, Malaysia will progressively liberalise taking into account its developmental needs. The Inside US Trade articles interprets this as a positive list approach where only the sectors listed would be open to US competition. It notes that the US favours the negative list approach (where all service sectors are opened unless listed). All USFTAs except Jordan’s liberalise services on a negative list basis.

Malaysia also identified Government Procurement as one of the sensitive areas discussed and said both sides continued to seek clarification. It pointed out that the US wants greater transparency, predictability and opportunity to bid for some of the government tenders.

The Malaysian government also said it will not be bound by any deadline to complete the negotiations. The next round of talks will be held in San Francisco in the week of January 8, 2007.

Best wishes,

Third World Network
2-1, Jalan 31/70A
Desa Sri Hartamas
50480 Kuala Lumpur
Tel: +603-2300 2585
Fax: +603-2300 2595
websites: and

Media Release

Malaysia - US FTA Negotiations

Monday, November 13, 2006

Malaysia ’s objectives in negotiating an FTA with the US are to:

 seek market access for Malaysian goods and services;
 further facilitate and promote bilateral trade and investment flows as well as economic development;
 enhance the competitiveness of Malaysian producers and exporters; and
 build capacity in specific targeted areas through technical cooperation

Nineteen working groups have been established. Each working group is led by the respective Ministry/Agency responsible. MITI is the overall coordinator of the negotiations. The list of lead Ministries/Agencies is attached.

Three rounds of negotiations have been held:
 12-15 June 2006, Penang ;
 17-21 July 2006, Washington DC ;
 30 October-3 November 2006, Kuala Lumpur .

On market access, both sides explored the possibility of elimination of remaining tariffs. Malaysia submitted its request for early tariff elimination on:-
 textile and garments;
 rubber and wood products;
 ceramics, electrical and electronics; and
 agricultural products

US duties on these products range from 5 - 32 per cent. Both sides plan to exchange initial offers at the end of November 2006.

On investment, discussions focused on how interests of both sides could be protected. Malaysia wants adequate provisions that would allow the pursuit of socio economic goals.

On services, both sides discussed approaches to liberalise the services market. Malaysia will progressively liberalise taking into account its developmental needs, the growth and contribution of the sector to the economy.
The FTA provides an opportunity to build competitiveness in:
 computer related services;
 professional services; and
 business related services.

On financial services, the US is keen in increasing its participation. Malaysia will liberalise this sector in line with the objectives and timeline under the Financial Sector Master Plan and the Capital Market Master Plan.

The objective of including environment into the FTA is to ensure the enforcement of domestic environmental laws. The main point of contention is whether it should be subjected to dispute settlement, as proposed by the US .

The US is seeking the inclusion of labour as a chapter in the FTA. Malaysia ’s preference is not to include labour provisions.

On capacity building the US is prepared to consider Malaysia ’s request for cooperation and training programmes:
 training to meet SPS requirements on tropical fruits, fisheries and processed food;
 training in IPR enforcement, internet privacy surveillance and patent examination on nano-tech and bio-tech technology; and
 development of patent system for sound and scent;

On intellectual property rights, proposals being considered include:
 extension of protection for sound and scent marks;
 patenting of plants and animals;
 extension of copyright protection from 50 to 70 years; and
 accession to international treaties related to IPR

Government Procurement is one of the sensitive areas discussed. Both sides continued to seek clarification on their respective market and procurement methods. The US wants greater transparency and predictability and opportunity to bid for some of the government tenders.

There is no specific timeline to conclude the Malaysia-US FTA negotiations. Two more rounds have been scheduled early next year.

Ministry of International Trade and Industry, Malaysia

10 November 2006

Issues Lead Ministries/Agencies:

  1. Market Access for Goods - MITI
  2. Textiles & Apparel - MITI
  3. Agriculture - Ministry of Agriculture and Agro-Based Industries (MoA)
  4. Rules of Origin - MITI
  5. Customs Administration and Trade Facilitation - Royal Customs Department
  6. Trade Remedies - MITI
  7. Technical Barriers to Trade - Department of Standard
  8. Sanitary and Phytosanitary - MoA
  9. Services - Ministry of International Trade and Industry (MITI)
  10. Financial Services - Bank Negara
  11. Investment - MITI
  12. Telecommunication and E-Commerce - Ministry of Energy, Water and Communications
  13. Government Procurement - Ministry of Finance
  14. Intellectual Property Rights - Ministry of Domestic Trade and Consumer Affairs (MDTCA)
  15. Competition Policy - MDTCA
  16. Environment - Ministry of Natural Resources and Environment
  17. Labour - Ministry of Human Resource
  18. Legal Issues, Transparency and Dispute Settlement - Attorney General’s Chambers (AGC)
  19. Capacity Building - MITI