US says Malaysia free trade talks on track
Malaysiakini
Nov  1, 2006

US officials today said that the third round of free-trade talks with Malaysia was progressing well and that they were confident of resolving the sensitive issue of government procurement.

Malaysian government procurement, in which lucrative contracts are awarded to the country's majority ethnic Malays as part of a system of positive discrimination, is seen as the biggest political hurdle in the talks.

"The first two days of the negotiations have gone extremely well," US Trade Representative and lead negotiator Barbara Weisel told the official Bernama news agency.

"There are a lot of areas where we already see eye to eye. We would need to see the inclusion of government procurement in the FTA (Free Trade Agreement) and I am confident that we will," she said.

US senior procurement negotiator, Jean Hillman Grier, said the US would free up some US$250 billion worth of government procurement contracts for goods and services to Malaysia under the pact.

Malaysian firms are presently barred from the sector until Kuala Lumpur opens up its own procurement market further.

Washington has also flagged Malaysia's protected auto industry and its financial sector as areas of concern while Kuala Lumpur wants to win more US access for its textiles, clothes and electrical products - the country's main export.

Ready market

Grier said that in 2004, Malaysia exported US$60 billion worth of electronics and information technology products worldwide, a third of which went to the US.

"Given the extent of Malaysia's exports of these products to the US and the US government's needs, Malaysian firms would find a ready market with the US government in this sector," she said.

The US is Malaysia's largest trading partner and foreign investor with bilateral trade worth more than US$44 billion in 2005.

Washington hopes to fast-track the negotiations with its 10th largest trading partner and pass the free-trade agreement well before June next year, when Congress will regain the right to amend any trade pact.

The next round of talks will be held in the US in December.