U.S. Aims to Conclude FTA with Malaysia by Second Quarter 2008
 

Washington aims to conclude free trade talks with Malaysia by the second quarter next year after missing an earlier deadline to fast-track the deal.

Both sides have made good progress to push forward negotiations, although differences remained over sensitive issues related to Malaysia's government procurement policy, said Barbara Weisel, a senior U.S. negotiator leading the talks on the free trade agreement.

Talks have been ongoing in small groups since April, and the two sides hope to schedule a formal round of talks by the end of the year, she said.

"Both sides recognize that we would like to finish this as quickly as possible and there is an ideal window to that. We would prefer it not to go on past next year second quarter just because you start losing momentum once these things go on too long," Weisel said.

Talks have stumbled largely over Malaysia's affirmative action program that awards government tenders to ethnic Malay-owned companies.

Weisel said Malaysia's government procurement policy remains a "very sensitive issue." Washington is confident it can address Malaysia's concerns with "flexibility and creativity," she said.

Trade Minister Rafidah Aziz told national Bernama news agency on Monday that Malaysia is seeking access for 600 products into the U.S. market and would pursue the FTA only if it was beneficial to both countries.

Malaysia is the 10th-largest trading partner of the United States, with US$44 billion (€31.93 billion) in two-way trade in 2005. Officials say the figure will double by 2010 if the pact is signed.

Other sticking points in the negotiations are Malaysia's highly protected car industry, its ban on majority foreign ownership of banks, poor intellectual property rights, and labor and environmental issues. As well, there are differences over liberalizing Malaysia's services sector.