May 3, 2006

US automakers set big goal for Malaysia trade talks

By Doug Palmer

WASHINGTON (Reuters) - The United States should press for
comprehensive reform of Malaysia's highly-protected auto sector
in free trade negotiations next month, a spokesman for U.S.
automakers said on Wednesday.

"The Malaysian automotive market is the most unique in the
world today," Stephen Collins, president of the Automotive
Trade Policy Council, said at a Bush administration hearing in
preparation for the first round of U.S.-Malaysia free trade
talks the week of June 12.

U.S. automakers have been essentially shut out of the
second-largest auto market in Southeast Asia because of Kuala
Lumpur's decision two decades ago to create a Malaysian-owned
and operated automotive industry, Collins said.

The government has used layers of protective and
discriminatory policies to shield its "two chosen and heavily
subsidized national auto companies, Proton and Perdua," from
foreign competition, Collins said.

Last month, Malaysia unveiled a new national auto policy
that U.S. automakers believe is an encouraging step toward
liberalization of the industry, Collins said.

"But these reforms have to be understood in the context of
a government that has totally controlled this industry for
decades, and still clearly intends to hold on to many
protections for its local producers," he said.

The United States and Malaysia launched free trade talks in
March with the ambitious goal of finishing by the end of the
year. Malaysia is already the United States' tenth largest
trading partner, with over $44 billion in two-way trade in

"We know that we have significant work ahead, but are
optimistic that the two sides can complete this agreement in
the time that we have," Barbara Weisel, assistant U.S. trade
representative for the Asia Pacific, said at the hearing.

The Bush administration panel heard from various
manufacturing groups that also supported the pact, although the
dwindling U.S. athletic and rubber shoe industry warned against
cutting tariffs on imports from Malaysia.

U.S. film, music and software industries asked negotiators
to include strong criminal penalties and other measures in the
pact to reduce high rates of piracy in Malaysia.