Washington wants rice included in FTA talks with KL
Business Times, Malaysia
Washington wants rice included in FTA talks with KL
9 June 2007
The US Government said Malaysia must open its rice market to reach a free trade agreement, opposing the protectionist stance of the South-East Asian nation.
"Rice needs to be included in the talks," US Assistant Trade Representative Barbara Weisel said in an e-mailed reply yesterday to questions. "We do not believe that inclusion of rice in the FTA would pose a threat to Malaysian farmers."
Freer access would threaten padi farmers’ livelihoods and may lose the Government votes, Agriculture Minister Tan Sri Muhyiddin Yassin said in an interview. More than two million people, including 500,000 growers, depend on the industry and rice is on "the exclusion list" for the talks, he said.
Weisel and Malaysian counterparts are seeking to bolster US$49 billion (RM169.05 billion) of two-way trade that includes electronics, clothes and textiles.
Neither side has said it will compromise on the rice market, creating a sticking point in the negotiations even after the US missed a March 31 deadline to conclude talks.
The US had sought to reach an agreement with Malaysia before April in order to push a deal through Congress before President George W. Bush’s trade promotion authority expires in July. The US still seeks "a comprehensive agreement" with Malaysia, Weisel said in her e-mail.
While Malaysia wants sales to the US to increase, the Government has a responsibility to its citizens, Muhyiddin said in the May 31 interview in Putrajaya, near Kuala Lumpur.
"We have to strike a balance," he said. "What is the role of government if not to protect your people? At the end of the day, they are the ones who are going to vote you in."
Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi, more than half-way through his first term in office, must call an election before early 2009.
Newspapers have speculated he may go to the polls as early as this year, after he handed one million civil servants a pay increase of as much as 42 per cent.
The US is Malaysia’s single biggest overseas market, accounting for almost a fifth of total exports.
The world’s biggest economy bought RM86 billion of Malaysia’s electrical and electronics goods last year, according to the Trade Ministry.
Removing the Malaysian Government’s 40 per cent tariff on US rice could "seriously undermine" local production, according to the FTA Malaysia Web site of the Third World Network, a Penang-based non-profit organisation. Some local analysts agree.
"Without any protection at all, of course we cannot survive," said Mad Nasir Shamsudin, professor of agricultural and resource economics at Universiti Putra Malaysia in Selangor.
Still, Muhyiddin’s opposition to the inclusion of rice in the negotiations clashes with the position of the Minister of International Trade and Indystry, Datuk Seri Rafidah Aziz.
In April, Rafidah criticised Malaysian lobby groups for arguing against a trade pact after the March deadline passed without a deal. Concern that US rice will flood Malaysia and put local farmers out of business is unfounded, she said.
Malaysia imports less than 400 tonnes of rice from the US each year, compared with more than 400,000 tonnes from Vietnam and 380,000 tonnes from Thailand, she said on April 6.
The US long grain rice that is imported is expensive and will never be grown locally, she added. - Bloomberg
Neither Malaysia nor the US has said it will compromise on the rice market, creating a sticking point in the FTA negotiations.
