US Threats To Halt FTA Negotiations - Malaysia Talks Tough. What Now?

Malaysia will maintain its position and sovereignty despite being threatened by the United States (U.S.) to cut off free trade talks with Malaysia over a US$16 billion (RM57.6 billion) energy development deal with Iran.

Deputy Prime Minister Datuk Seri Najib Tun Razak said Malaysia acknowledged that the Free Trade Agreement (FTA) would benefit the country's economy, but to ensure the principles of national sovereignty were protected, the government would not allow America to use the FTA to jeopardise Malaysia's domestic interests.

"We must protect our sovereignty such as (the decision) on purchases (by) the government, among others," he told reporters.

Najib said this in response to a warning by the U.S. House of Representatives Foreign Affairs Committee Chairman Tom Lantos, who demanded that US President George W. Bush suspend all FTA negotiations with Malaysia, in protest over the deal signed last month between Malaysia's SKS Group and the state-owned National Iranian Oil Company.

Congressman Tom Lantos, who heads the House of Representatives' top foreign affairs panel, minced no words when he described the Malaysia-Iran deal as "abhorrent". Lantos told a congress hearing he had written to the U.S. trade representative Susan Schwab, calling for suspension of bilateral US-Malaysia talks over a free trade agreement until and unless Kuala Lumpur quit the deal with Iran. Lantos also described the deal as a "disturbing development" over which the Bush administration must act swiftly.

The Iranian oil company and SKS signed the US$16 billion preliminary deal to develop Iran's southern Golshan and Ferdos gas fields and build plants to produce liquefied natural gas, Iranian state television reported on Jan 7.

Meanwhile, the visit by US deputy trade representative Karan Bhatia, who is in Malaysia to negotiate the FTA with the Malaysian government, is being closely monitored by U.S. politicians.

In reaction to U.S. move, Minister of International Trade and Industry Datuk Seri Rafidah Aziz yesterday said the U.S. had no right to stop Malaysia from having trade deals with any country, even after it had concluded a FTA with the U.S. Rafidah said in retaliation, she was prepared to advise the government to immediately suspend FTA talks with the U.S.

The United States and Malaysia began talks in June last year and have scheduled a fifth round on the proposed free trade agreement this month. U.S. negotiators have been under pressure to reach a deal by the end of March, but difficult issues remain.

The two countries had two-way trade in 2005 of US$44 billion. The United States is Malaysia's biggest trading partner and foreign investor, while Malaysia is the U.S. 10th-largest trading partner.

Najib said the FTA despite its benefits, should not be at the expense of the key national policies. (Bernama)

****** It takes guts to confront the United States and in this instance Malaysia must think of its sovereignty. If we give in now then we have to regularly kowtow to these imperialists. No doubt it is a difficult call for our government. Let us wait and see how this stalemate is resolved.
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UPDATE: Pak Lah Rejects Political Pressure in FTA Negotiations