Window For Malaysia-U.S. Free Trade Pact Closing Fast.

(Image - "Four Examples Of Stalemate": Source.)
The window for Malaysia to ink a free trade agreement with the United States is closing fast, Washington's top diplomat to the Southeast Asian country said Tuesday, and another opportunity like this may not come again for a while.

Trade talks between Malaysia and the U.S. appeared to have hit a deadlock as Malaysia refuses to budge on its procurement policy that favors ethnic Malay-owned companies.

"I hope we do not miss this opportunity because it won't come again for awhile," U.S. Ambassador to Malaysia Christopher LaFleur said. "It wasn't the president's party that won the last Congressional elections. Democrats won the elections." In U.S. politics, the Democrats are generally considered to be more protectionist on trade issues than Republicans.

Problems in the trade talks have raised doubts whether the negotiations can be concluded by the end of March so the proposed pact could be reviewed by U.S. lawmakers before President George W. Bush's special "fast-track" trade authority expires July 1. That authority allows Bush to submit a deal to Congress for a straight up-or-down vote without amendments.

LaFleur told reporters that no further rounds of negotiations are currently scheduled, only that trade negotiators have "identified areas" needed for further discussion with their respective administrations.

Malaysia is the United States' 10th largest trading partner with US$44 billion (€33.43 billion) in two-way trade in 2005, which officials say will double by 2010 if a free trade pact is signed.

However, critics of the proposed accord say it would lead to job losses, erode workers' rights and mark the end of cheap, generic drugs now available to those with HIV/AIDS and other diseases.

The key obstacle to the talks is Malaysia's affirmative action program that awards government tenders to Malay-owned companies to give them an advantage to compete with the wealthier Chinese minority. While some government contracts are open to bids from foreign firms, Washington wants more clarity and transparency in the bidding process.

"Our time is indeed limited, we have to operate under assumption," LaFleur said. "After June, its very hard to predict when the President will get the authority (again)."

He likened a successful agreement to the opening up of Malaysia's then agrarian economic focus to American electronics manufacturers nearly four decades ago that helped turn the country into a manufacturing base. "An FTA would be a big step forward in our relations and would represent a turning point for Malaysia comparable to the first investment made by U.S. electronics firms in this country about 35 years ago," LaFleur said at a talk on Malaysia-U.S. economic relations.

Malaysian Trade Minister Rafidah Aziz said Malaysian authorities would not alter the affirmative-action program.

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