TWN Info Service on Free Trade Agreements

22 April 2008


US to Continue Pursuing FTA with Malaysia Despite Uncertainties

The US seems determined to conclude a free trade agreement (FTA) with Malaysia and moves are afoot in the coming weeks to proceed with the talks. (Item 1) This is despite uncertainties in Washington and the lack of positive signs that a fast track authority will be given to the present administration.

The recent Congressional vote to remove the US-Colombia FTA from under ‘fast track’ rules (Item 2) has led some observers to believe that no fast track is likely to be issued for other US FTAs in the near future.

The Colombia FTA was presented to Congress on 8 April and was one of the last agreements submitted under the last fast track grant that expired in 2007. Under the fast track authority, the US President is allowed to present Congress with trade agreements that it can either accept or reject, without making changes to it. Congress needs to make a decision within 90 days of the submission.

However, on 10 April the House of Representatives voted on a ruling that effectively removed the US-Colombia FTA from under ‘fast track’ rules. The House voted 224-195 to eliminate the 90-days ruling which means that in all likelihood the Colombia agreement will not be considered this year, leaving it possibly for the next administration.

This move is unprecedented in the history of fast track and so is President Bush’s action in handing in the Colombia pact to Congress on 8 April without first getting the informal consent of members of Congress, many of whom have serious problems with some of the issues arising from the FTA.

By taking this latest step, observers believe that Congress is making it clear that the President is unlikely to get more fast track authority for other trade agreements either. Both of the Democrats competing for their party's nomination, Sens. Barack Obama and Hillary Rodham Clinton, have expressed skepticism about the benefits of free trade agreements.


Best wishes,

Third World Network
2-1, Jalan 31/70A
Desa Sri Hartamas
50480 Kuala Lumpur
Tel: +603-2300 2585
Fax: +603-2300 2595
email: twnkl@po.jaring.my
website: www.twnside.org.sg, www.ftamalaysia.org

------------------------------------------------------------------------------------------------------------


Item 1

U.S. Continues Work On Malaysia FTA Despite Elections Setback
Date: April 18, 2008

Assistant U.S. Trade Representative Barbara Weisel said on April 14 that she will travel to Malaysia within weeks to continue to explore the possibilities for concluding a free trade agreement with Malaysia despite recent elections there that have deprived the Malaysian government of a negotiating mandate.

The ruling party United Malays National Organization (UMNO)-led coalition of Malaysian Prime Minister Abdullah Ahmad Badawi lost its two-thirds majority in parliament on March 8. This led to a cabinet shake-up and the appointment of Muhyiddin Yassin to the post of trade minister.

Weisel said the Malaysians are now "getting their house in order" but do not now have a mandate under which to negotiate. "As a trade negotiator, I am eternally optimistic," she said.

She said that an investment chapter which allows 100 percent equity participation for foreign investors is a key demand of the U.S. in the talks but this is difficult for the Malaysians.

Weisel defended the Bush administration insistence on "WTO-plus" free trade agreements during a panel discussion held on the Association of South East Asian Nations (ASEAN) at the Heritage Foundation.

She said that doing goods-only agreements, such as those China wishes to pursue in the region, would not yield sufficient benefits for U.S. companies which have competitive advantages in services and high-technology. Such agreements could also undermine the position of the U.S. in the World Trade Organization Doha Round when it comes time to negotiate market access in those areas.

Weisel sought to highlight the so-called P4 talks beginning this year with Chile, Singapore, New Zealand and Brunei. New Zealand has pressed for these talks to lead to a comprehensive free trade agreement, a long-time goal, but Weisel indicated that the result
may limited to services and investment agreements. The U.S. already has FTAs with Chile and Singapore.

She said that it is unclear if the resulting agreement would have to be passed by Congress.

Senate Finance Committee spokesman Dan Virkstis said that Congress would look very closely at any agreement but declined to say whether ratification of a services and investment P4 treaty would be necessary.

------------------------------------------------------------------------------------------------------------


Item 2

http://www.nytimes.com/aponline/us/AP-Congress-Colombia.html?hp
House Puts Off Vote on Trade Agreement
By THE ASSOCIATED PRESS
Published: April 10, 2008

WASHINGTON (AP) -- The Democratic-led House, in an election-year showdown with the White House, on Thursday effectively denied President Bush a vote any time soon on a free trade agreement with Colombia, a key South American ally.

The House voted 224-195 to eliminate a rule forcing it to vote on the trade agreement within 60 legislative days of the president's submitting it to Congress. Bush sent the agreement to Capitol Hill on Tuesday, starting a 90-day clock for the House and then the Senate to either approve or reject the pact.

The House action in all likelihood kills consideration of the Colombia agreement this year, leaving it for the next administration. Both of the Democrats competing for their party's nomination, Sens.Barack Obama and Hillary Rodham Clinton , have expressed skepticism about the benefits of free trade agreements.

House Speaker Nancy Pelosi , who initiated the rules change, blamed Bush for submitting the agreement to Congress before a consensus was reached with congressional leaders on outstanding differences. She said whether the agreement is dead for the year ''depends on the good faith'' of negotiations between Democrats and the White House.

She said that in a phone conversation with Bush on Monday she warned him that the agreement would be defeated if a vote were taken now, and that the priority should instead being on measures to revive the U.S. economy.

Bush, she said, ''abandoned the traditions of consultations that have governed past agreements.''

''You forgot to consult with us,'' House Ways and Means Committee Chairman Charles Rangel, D-N.Y., said, referring to Bush. ''You did not deal with some of the issues we have.''

Bush, in a statement, shot back that the House vote ''is damaging to our economy, our national security and our relations with an important ally.'' He said: ''the message Democrats sent today is that no matter how steadfastly you stand with us, we will turn our backs on you when it is politically convenient.''

Republicans angrily condemned the rules change. It ''aligns with the goals of (Venezuelan President) Hugo Chavez and South America's narco-terrorists,'' said Rep. David Dreier of California, top Republican on the Rules Committee.

''This action today is nothing short of political blackmail,'' said Republican leader John Boehner of Ohio, contending that Pelosi was using it to force the president to deal with her agenda.

Top figures in the administration were equally strong in condemning the action. ''To change the rules in the middle of the game is, as I said, both unprecedented and unfair,'' U.S. Trade Representative Susan Schwab said Wednesday at a news conference attended by Secretary of State Condoleezza Rice , Treasury Secretary Henry Paulson and other Cabinet secretaries.

''From the perspective of American foreign policy and American interests, there is perhaps no more important free trade agreement in recent memory,'' Rice said.

The Democratic Congress did approve a free trade agreement last year with Peru, but has balked at moving ahead with Colombia, partly because of continued violence against organized labor inColombia and partly because of differences with the administration over how to extend a program that helps American workers displaced by foreign competition.

Rep. James McGovern, D-Mass., cited figures that in the first 12 weeks of this year, 17 trade unionists in Colombia were assassinated. ''When it comes to issues like human rights, I refuse to be a cheap date,'' he said.

Organized labor and human rights groups in the U.S. have generally opposed the Colombia deal because of the problems of labor leaders in the South American country. Business groups such as the U.S. Chamber of Commerce have actively lobbied for the deal, saying it will remove tariffs that impede American exports to the country.

Almost all Colombian goods already enjoy duty-free status when sold in the United States. Trade between the two countries reached about $18 billion last year.