TWN Info Service on Free Trade Agreements

04 July 2006

MITI Report on First Round of FTA Talks with US

We wish to bring to your attention a report by the Ministry of International Trade and Industry on the recently concluded first round of negotiations on an FTA between Malaysia and the US.

The discussion held were primarily “to clarify and understand each other’s positions, register interests and concerns and submit requests.” A total of 18 issues were discussed.

The Malaysian delegation was led by the Secretary-General of MITI and comprised 128 officers from various Ministries, Departments and Agencies. Representatives of industry associations and professional services bodies were also present.

The report on what transpired at the meeting is reproduced below.


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email: twnkl@po.jaring.my
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Media Statement By The Minister Of International Trade And Industry, Malaysia-US FTA Negotiations

Wednesday, June 28, 2006


The first round of negotiations was held on 12 – 15 June 2006 in Penang. This round was mainly used by both sides to clarify and understand each other’s positions, register interests and concerns and submit requests.


2. The negotiations covered eighteen issues which were discussed in separate working groups. They are:

* industrial goods
* agriculture
* textiles and clothing
* rules of origin
* customs procedures
* trade remedies
* technical barriers to trade
* services
* intellectual property rights
* financial services
* government procurement
* investment
* telecommunications
* environment
* competition policy
* e-commerce
* legal matters
* sanitary and phytosanitary measures

3. The Malaysian delegation was led by the Secretary-General of the Ministry of International Trade and Industry and comprised 128 officers from various Ministries, Departments and Agencies. Representatives of industry associations and professional services bodies were also present.


4. The discussion provided both sides an opportunity to assess common grounds and the different views and approaches on issues proposed for inclusion in the FTA.


5. On market access issues, both sides explored the possibility of further increasing trade through elimination of remaining tariffs. Malaysia submitted its request for early duty elimination for textile and garments, rubber and wood, ceramics, electrical and electronics and agricultural products, with current duties ranging from 5 – 32 per cent.


6. Tariffs on non-sensitive products have been proposed to be eliminated faster while sensitive products be given flexibility. Both sides also proposed that there should be adequate safeguard provisions to allow for remedial measures to be taken should injury to domestic industries occur as a result of liberalisation.


7. On investment the discussions focused on how to ensure the interests of investors as well as the host government can be protected. Malaysia raised the need to have adequate provisions in the agreement that would allow the continued pursuit of socio economic goals as contained in the various development plans.


8. On services, the US expects greater market access for its services suppliers. Malaysia will progressively liberalise its services sector taking into account its developmental status, the growth and contribution of the sector to the economy. The FTA provides an opportunity for Malaysia to build competitiveness in sectors, such as, telecommunications, computer related services, education, professional services and business related services through greater collaboration with US service providers.


9. On environment, competition policy and intellectual property rights, discussions are still at the preliminary stage, on what should be the scope to be covered in the FTA. Malaysia wants information sharing, technical cooperation and training to build capacity in enforcement of international agreements to be the primary objective of any agreement in these areas.


10. The Malaysia-US FTA negotiations commenced following the decision by the Government in November 2005. The basis for the Government’s decision was a cost-benefit study undertaken by the government, with inputs from the private sector. The outcome of the on-going negotiations will determine the cost and benefit to Malaysia in all sectors. Malaysia will only accept an agreement if it is satisfied that its interest in all sectors, have been taken into account.


11. Industry associations such as the Federation of Malaysian Manufacturers and Malaysian Textile Manufacturers Association have been working closely with the Government. These associations and other interested groups have provided inputs, and feedback, at the preparatory stage, as well as during the negotiations.


12. There is no specific timeline to conclude the Malaysia-US FTA negotiations. Five rounds have been scheduled, with the objective of completing the negotiations, if possible, before the expiry of the US Trade Promotion Authority in June 2007. However, Malaysia will seek whatever timeframe that is necessary, to negotiate an agreement, that would benefit Malaysia.


13. Malaysia will not accept any agreement, that does not contain adequate flexibilities, and safeguards, in all relevant areas of negotiations. These include longer time frames for liberalisation of sensitive products, and services sectors, and flexibility to undertake policy measures for Malaysia’s developmental needs.


Pejabat Menteri,

Ministry of International Trade and Industry

26 June 2006