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US expects easy FTA talks with Malaysia

March 09, 2006

U.S. Expects Easy FTA Talks With Malaysia

Associated Press

KUALA LUMPUR, Malaysia (AP) - The United States does not expect an uphill battle in persuading Malaysia to open its tightly controlled car market during talks for a free trade agreement, the U.S. ambassador said Thursday.

"I don’t necessarily anticipate fights here. The two governments going into this are well aware of what the issues are," Ambassador Christopher LaFleur told reporters. He added that the U.S. is committed to moving the negotiations "on a fast-track."

Malaysia and the United States announced in Washington on Wednesday their intention to start talks on a free trade area soon, and conclude them by the end of this year before sending it to Congress for approval by July 1, 2007. That’s the deadline for the Bush administration’s authority to negotiate trade deals that require Congress to approve or reject them without adding any amendments.

Malaysia has long protected its local automobile industry, dominated by national car makers Proton and Perodua, by imposing high tariffs on foreign cars. The tariffs have been whittled down in recent years in line with a regional free trade agreement, but still present a formidable barrier to Japanese, U.S. and European car makers.

LaFleur said there will certainly be some negotiating points on which "we will have to work harder on than others," but the FTA talks would not have been launched "unless we had a fair degree of confidence" in their success.

He said the two governments are well aware of the issues, thanks to periodic consultations by trade officials since 2004.

"Both sides understand what their respective concerns are and what their respective needs are," he said. "We will leave it to negotiators to work out the specifics."

Malaysia is the United States’ 10th largest trading partner with $44 billion in two-way trade. Of this, Malaysia sells about $30 billion worth of goods to the U.S., mostly electrical machinery, rubber, furniture and bedding, and optic and medical equipment.

The balance of trade favors Malaysia for a number of reasons, including Malaysian tariffs and regulatory issues on foreign companies, which the FTA aims to reduce, LaFleur said.

"We are out to negotiate exactly what the term says: free trade. So everything is on the table," including goods and services, he said.

"As Malaysia has become an increasingly wealthy country, the potential here for sale of (American) consumer goods of a wide variety is growing, and that spans the range, from agricultural products to sophisticated goods like automobiles," he said.

Malaysian officials did not immediately comment on LaFleur’s statements, but Malaysian Minister of International Trade Rafidah Aziz said in Washington Wednesday that she expected no major roadblocks to the FTA.

"We in Malaysia believe this is a very strategic agreement," she said. "There is no opposition."

LaFleur also said that the FTA will raise Malaysia’s international profile and bring in a lot more foreign investment.

"There is tough global competition for foreign investments these days," LaFleur said. "The special relationship established with the U.S. through an FTA would help Malaysia stand out from the crowd."

As an example, he noted that U.S. foreign direct investment in Mexico tripled as a result of a North America Free Trade Agreement. The U.S. is already Malaysia’s top export market and the biggest foreign investor.

Malaysia will join a list of 11 other countries with which Washington is currently negotiating free trade deals. The Bush administration announced last month it also plans to launch free trade negotiations with South Korea.

 source: AP