Malaysia says FTA deal with US cannot be completed before July deadline
The Associated Press | Wednesday, January 17, 2007
Malaysia says FTA deal with U.S. cannot be completed before July deadline
KUALA LUMPUR, Malaysia
A free trade pact with the United States is unlikely to be concluded before a July 1 deadline because of differences over opening up services and Malaysian government contracts, the trade minister said Wednesday.
"The subject matters are very wide, it’s comprehensive. If they want to finish by July, I do not see it happening because there are so many issues to cover," International Trade and Industry Minister Rafidah Aziz told reporters.
"I am not optimistic. Malaysia has no deadline constraints. We can take another year if need be. Let’s do it very carefully."
Negotiators are under time pressure because the U.S. wants to get a Congressional vote on the pact before President George W. Bush’s special "fast-track" trade authority expires July 1. That allows him to submit a deal to Congress for a straight up-or-down vote without amendments.
But the proposed trade agreement must wrap up by end of March so that American lawmakers have time to review it before a vote. The United States is also aiming to conclude a trade deal with South Korea within that timeframe.
Rafidah said Malaysia has made clear to the U.S. that it would not compromise on its policy of awarding government tenders to ethnic Malay-owned companies under an affirmative action program - a key obstacle in the talks.
The policy, which has shut out local non-Malay companies and foreign firms from bidding for government tenders, is mandated by a 1970 preferential program that gives privileges in contracts, jobs and housing to help Malays close the gap with wealthier minority Chinese.
Malays make up about 60 percent of the country’s 26 million people, Chinese account for a quarter and Indians about 10 percent.
"On government procurement, our position has been made very clear. We stood firm...Malaysia has stood firm on areas that we cannot compromise and this the U.S. knows," Rafidah said.
Malaysia is the United States’ 10th-largest trading partner, with US$44 billion (€35 billion) in two-way trade in 2005. Officials say that figure will double by 2010 if the pact is signed.
Talks on tariff cuts for trade in goods are progressing smoothly but there are snags in liberalizing services and investment as both sides have different approaches, she said.
Negotiators held a fourth round of talks last week in San Francisco and are due to meet again next month in Malaysia.
Rafidah said the U.S. wants every sector under services and investment to be opened up except for those under a so-called "negative list" while Malaysia’s approach is to just liberalize areas that are agreed upon, she said.
"That’s dangerous because there are new areas we don’t know about, so how can we open up everything? We just want to say we shall open only this ... we have different stance and we need to see how we can accommodate each other," she said.
"This is not cast in stone" but both sides need to be flexible, Rafidah said.
If the July deadline is not met, she acknowledged free trade talks might be thwarted if Bush administration is unable to get an extension of the fast-track trade authority.
U.S. officials last week admitted significant challenges remained and that at least two more rounds of negotiations were needed to overcome obstacles and reach a free trade agreement with Malaysia.
Other sticking points in the negotiations are Malaysia’s highly protected state car industry, its ban on majority foreign ownership of banks and poor intellectual property rights.
