March 8, 2006

US, Malaysia launch free trade talks

By Doug Palmer

WASHINGTON (Reuters) - The United States launched free
trade negotiations with Malaysia on Wednesday in a move aimed
at strengthening U.S. economic ties in the strategically
important Southeast Asian region.

"Malaysia has been at the forefront of the economic
dynamism transforming Asia in recent years," U.S. Trade
Representative Rob Portman said at a news conference with
Malaysian International Trade and Industry Minister Rafidah
Aziz and more than a dozen members of Congress.

"It already is our tenth largest trading partner, with $44
billion in two-way trade in 2005. Combined with a new trade
opening agreement, Malaysia's rapidly growing economy will help
generate meaningful export opportunities for our workers,
service providers and farmers," Portman said.

The proposed pact with the majority-Muslim country builds
on an existing U.S. free trade agreement in Southeast Asia with
Singapore and follows Washington's recent decision to negotiate
a free trade deal with South Korea.

Aziz said she was optimistic the two countries could reach
a deal by an effective deadline of early next year, without the
many problems that have dogged U.S. free trade talks with
Thailand that were launched two years ago.

Thailand has faced strong domestic opposition to a free
trade pact and recently suspended negotiations with the United
States as it struggles with a political crisis.

"As far as Malaysia is concerned, there is absolutely no
opposition to the FTA (free trade agreement)," Aziz said. "The
Malaysian people in large really believe this a very strategic
free trade agreement" that will expand export opportunities and
attract new U.S. investment, Aziz said.


Democratic and Republican lawmakers predicted easy approval
of a trade deal with Malaysia in contrast to last year's bitter
fight over a free trade agreement with Central America.

They stressed Malaysia's importance not only as a rapidly
growing market, but as an ally in the war on terrorism.

Rep. Greg Meeks, a New York Democrat, said the pact would
improve ties "in a region of the world where the United States
needs to make sure we have friends."

The National Association of Manufacturers estimated exports
of U.S. manufactured goods to Malaysia could double to about
$22 billion by 2010 if tariffs were eliminated.

Nearly 85 percent of Malaysia's exports to the United
States enter the U.S. market tariff-free under a unilateral
trade preference program, while U.S. exports are often faced
with tariffs of six percent or more, business groups said.

A trade deal with Malaysia would expand farm exports to a
country that is already a top market for U.S. wheat, soybeans,
fruits, vegetables and other farm products, U.S. Agriculture
Secretary Mike Johanns said.

The White House needs to finish negotiations with both
Malaysia and South Korea quickly to get them through Congress
before trade promotion authority expires in mid-2007.

That law allows Portman to negotiate trade deals Congress
has to approve or reject without making any changes.

Portman left open the possibility of launching more free
trade talks in the months ahead, but acknowledged next year's
expiration of trade promotion authority complicated that.