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US aims to conclude FTA talks with Malaysia by second quarter 2008, says official

Associated Press | July 16, 2007

U.S. aims to conclude FTA talks with Malaysia by second quarter 2008, says official

KUALA LUMPUR, Malaysia: Washington aims to conclude free trade talks with Malaysia by the second quarter next year after missing an earlier deadline to fast-track the deal, a U.S. official said Monday.

Both sides have made good progress to push forward negotiations, although differences remained over sensitive issues related to Malaysia’s government procurement policy, said Barbara Weisel, a senior U.S. negotiator leading the talks on the free trade agreement, or FTA.

Talks have been ongoing in small groups since April, and the two sides hope to schedule a formal round of talks by the end of the year, she said.

"Both sides recognize that we would like to finish this as quickly as possible and there is an ideal window to that. We would prefer it not to go on past next year second quarter just because you start losing momentum once these things go on too long," Weisel told reporters after meeting Malaysian officials.

Washington had earlier hoped to wrap up talks by the end of March so the pact could be reviewed by U.S. lawmakers for a vote before U.S. President George W. Bush’s special "fast-track" trade authority expired July 1. That authority allowed him to submit a deal to Congress for a straight up-or-down vote.

Talks have stumbled largely over Malaysia’s affirmative action program that awards government tenders to ethnic Malay-owned companies. The program is meant to give the traditionally underprivileged Malays an advantage in competing with the wealthier Chinese minority.

The program effectively shuts out all non-Malays, including foreigners, from most government contracts.

While some government contracts are open to bids from foreign firms, Washington wants more clarity and transparency in the bidding process.

Weisel said Malaysia’s government procurement policy remains a "very sensitive issue." Washington is confident it can address Malaysia’s concerns with "flexibility and creativity," she said.

Trade Minister Rafidah Aziz told national Bernama news agency on Monday that Malaysia is seeking access for 600 products into the U.S. market and would pursue the FTA only if it was beneficial to both countries.

"The FTA should benefit both nations, then we will do it," Rafidah was quoted as saying in South Korea, where he was on a trade mission.

Malaysia is the 10th-largest trading partner of the United States, with US$44 billion (€31.93 billion) in two-way trade in 2005. Officials say the figure will double by 2010 if the pact is signed.

Other sticking points in the negotiations are Malaysia’s highly protected car industry, its ban on majority foreign ownership of banks, poor intellectual property rights, and labor and environmental issues. As well, there are differences over liberalizing Malaysia’s services sector.

 source: IHT