Latest reports impress that both Malaysia and the United States are eager to seal a free trade agreement (tag) as soon as possible. On Tuesday, both parties announced a talk on a possible FTA. On Wednesday after the talk, they announced it will be fast-tracked. While I fear the US might be applying its muscle during negotiation, it appears that Malaysia might have a huge leverage against the US. That leverage is time.
As mentioned in various articles, including Financial Times article, the White House’s expedited power will expires in July 2007:
Trade promotion authority, which allows the administration to submit trade deals to Congress for an up or down vote with no amendments, expires in the middle of next year.
At the same time, the US seems extremely eager to strike a deal with Malaysia. If the deal goes through, Malaysia would be the second country in ASEAN to sign a FTA with the US. The US is in talks with Thailand but that talk doesn’t seem to be moving at the right pace by any respectable standard, especially when Thailand is in a major political crisis. The Philippines, another candidate for a FTA, doesn’t look too well either. So, Malaysian FTA might be the only deal the US could get this year.
Apart from that, some in the US consider a possibility of FTA as a way to counter terrorism. They insist that Malaysia is a moderate and the most progressive Islamic country, blah, blah, blah – you know the drill. I don’t care what they think but all these factors give Malaysia advantages to bring into the negotiating table.
Given the circumstances, Malaysia must utilize these advantages to the fullest extent. If Malaysia doesn’t, the United States will. Already the US ambassador to Malaysia was reported as saying that he expects an easy negotiation. Easy is a loaded word and it scares me to hear that. It is as if US expected Malaysia to acquiescent easily at the table.
Regardless what the general sentiment is in the US, Malaysia must not give too much ground without gaining substantial returns. Above all, Malaysia needs to be mindful of the recent US-Colombia FTA. In that FTA, Colombian tariffs on many US agricultural goods are torn down to zero while US quotas on Colombian export are not eliminated. Instead, it was merely increased. I don’t know how the Colombians feel about it but to me, that’s unfair.
This FTA is important to Malaysia because our country is a small open economy. Trade is our lifeline. However, no trade is better than a lop-sided trade. Bottom line is, I hate to see Malaysia be in the same spot as Colombia. More crudely, I don’t want to see Malaysia gets screwed.
p/s – w00t! The Simpsons is now live!
pp/s – Sirotablog is the first blog standing against Malaysia-US FTA that I know off. The blogger sounds like a protectionist. So, leftist Democrat, I think. A anti-globalization blogger for certain. Anyway, the way he describes Malaysian labor market is outrageous. He says Malaysian labors are oppressed because there is no minimum wage. Funny think is, Malaysians don’t think so. Do they?
One reply on “[745] Of Malaysia-US FTA on the move”
[…] have blogged earlier on how Malaysia has time as a leverage. I do think Malaysia is utilizing that leverage to the fullest. Standing on higher ground while the […]