TWN Info Service on Free Trade Agreements

20 April 2006
 

Minister Gives Assurances on US FTA

Attached below are two reports on Second Finance Minister, Tan Sri Nor Mohamed Yakcob’s comments on the Malaysia-US FTA.

Speaking in Parliament yesterday in response to DAP’s Lim Kit Siang’s earlier questions, Nor Mohamed said that Malaysia will not be bound by the US government’s FTA fast-track expiry timetable to conclude negotiations for the Malaysia-US FTA by early 2007.

The minister also assured that "The Cabinet would study in detail the proposals and agreements put forward and if the FTA proposed by the relevant ministry, which is the Ministry of International Trade and Industry, is not beneficial to Malaysia, then the Cabinet would not give its consent.

"The FTA is an instrument that if it's beneficial for Malaysia, the country would use it but if it is no longer in its interest, then Malaysia would not agree to a FTA."

He also added that before any decision is made by the Cabinet, it will ensure that the cost-benefit analysis is positive not only for the short-term but also in the long run. The Ministry of Finance is currently undertaking a cost-benefit analysis on the Malaysia-US FTA.


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Item 1

Malaysia-US FTA - two assurances by Nor Mohamed welcome
By Lim Kit Siang
Time & Date: April 20, 2006 @ 15: 15.02
(http://blog.limkitsiang.com/?p=458#more-458)

I welcome the assurance given by the second Finance Minister, Tan Sri Nor Mohamed Yakcob that Malaysia will not be bound by the United States Government’s Free Trade Association (FTA) fast-track expiry timetable to conclude negotiations for the Malaysia-United States FTA by early 2007.
Nor Mohamed gave this assurance during the winding-up on the Finance Ministry in the Ninth Malaysia Plan debate in Parliament this morning, in response to my specific query as to why Malaysia should be pressured to follow the United States’ fast-track expiry time-table to conclude negotiations by early 2007 for the FTA to be signed and sealed before July next year.

In the exchange with Nor Mohamed on FTAs, I had asked why no cost-benefit analysis had been done before Malaysia entered into FTA negotiations with the United States and other countries.

I pointed out that in April last year, when during his visit to Australia, the Prime Minister, Datuk Seri Abdullah Ahmad Badawi made the joint announcement with Australian Prime Minister, John Howard that the two countries would begin negotiations for an FTA, the Australian Trade Minister Mark Vaile was able to immediately state publicly that Australia’s economy could reap A$1.9 billion from a free trade agreement with Malaysia.
This was what Vaile said on the same day as the joint statement by the two Prime Ministers in April last year: “An FTA with Malaysia will be another significant step in opening access for Australian exporters regionally and will add to the Coalition Government’s proud record of achievement in this area.”

I asked why other governments could make cost-benefit analysis of what they could gain both at the beginning and end of FTA negotiations while this is not the case with Malaysia, as even now, the government has not been able to announce its cost-benefit analysis for the Malaysia-Japan FTA which had been concluded.

In his reply, Nor Mohamed said the Cabinet approval for FTA negotiations with the United States was for the talks to begin and that the Cabinet would scrutinise the outcome of the negotiations to ensure that Malaysia would benefit from the Malaysia-United States FTA and that future generations would not be cursing the FTA.

My rejoinder was that there could not be much public confidence in the wisdom and judgement of the Cabinet after its record involving the country in many disastrous decisions and scandals –including the Agusta-Proton scandal and the recent RM1.1 billion crooked half-bridge scandal.

However, I welcome the second assurance given by Nor Mohamed on my proposal for the establishment of a Parliamentary Select Committee on FTAs and his commitment to raise the issue in the Cabinet.
This proposal follows admission by the second Finance Minister that the Malaysian negotiation team is overwhelmed by the US negotiating team, who would come to the talks with 200 lawyers.
I hazarded that the Malaysian team might only comprise half-a-dozen officers in the face of such a battalion of US negotiators, with knowledge, experience and expertise stacked in favour of the US.

As Malaysia is outnumbered and overwhelmed in the FTA negotiations with the US, not only in personnel, resources, experience and expertise, especially as FTA cover many important subjects including new and very specialised ones, whether industry, investment, services, agriculture, technology transfer, intellectual property, biotechnology, I suggested the establishment of a Parliamentary Select Committee on FTAs where MPs and the civil society could give their inputs to help the government ensure fair and favourable terms for Malaysia in the FTA.

I will be pursuing this matter with Nor Mohamad in view of his commitment to get Cabinet approval for the establishment of a Parliamentary Select Committee on FTAs.

As FTA negotiations with the US will formally begin in Malaysia in June, such a FTAs Parliamentary Select Committee should be formed before the end of the current parliamentary meeting.

(For Kit Siang’s speech at the Parliament on 3 April 2006 where he posed a number of questions on the Malaysia-US FTA, please go to: http://www.ftamalaysia.org/article.php?aid=34)

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Item 2

April 20, 2006 20:16 PM

M'sia-US FTA On Only If Malaysia Stands To Gain
(http://www.bernama.com.my/bernama/v3/news_business.php?id=192809)

KUALA LUMPUR, April 20 (Bernama) -- Malaysia will not ink a Free Trade Agreement (FTA) with the United States if the country does not stand to gain from the agreement.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said that Malaysia will not be bound by the US government's FTA fast-track expiry timetable to conclude negotiations by July.

He said that as at this point, the Cabinet had only given approval for the start of negotiations with the US on the matter and that the results of the talks would be tabled at the Cabinet for a decision.

"The Cabinet would study in detail the proposals and agreements put forward and if the FTA proposed by the relevant ministry. which is the Ministry of International Trade and Industry, is not beneficial to Malaysia, then the Cabinet would not give its consent.

"The FTA is an instrument that if it's beneficial for Malaysia, the country would use it but if it is no longer in its interest, then Malaysia would not agree to a FTA," he said when winding-up his debate on the Ninth Malaysia Plan on behalf of the Ministry of Finance at the Dewan Rakyat here Thursday.

Malaysia and the US jointly announced the launch of negotiations for a FTA on March 9, with formal negotiations expected to commence in three months and its completion in early 2007.

The Ministry of International Trade and Industry (MITI) had said that the negotiations were expected to focus mainly on liberalisation of trade in goods, services and investment, including flexibilities and longer phase-in period for sensitive sectors.

It was to also promote and facilitate trade and investment flows and cooperation to address impediments to trade in the areas of Intellectual Property Rights, Standards and Conformance and development of Mutual Recognition arrangements.

Nor Mohamed said the government adopted a pragmatic approach to the FTA. If there are losses for the country in the long term and restrictions to its economic activities, there is no reason why the government should agree to it.

"We need to have a structure, and should be aware of the effects of the FTA on us and for that, we at the Ministry of Finance, are currently undertaking cost-benefit analysis and I am confident that other ministries, particularly the MITI will also carry out cost-benefit analysis.

"The cost-benefit analysis would become an important matter when the issue is brought back to the Cabinet with its schemes and suggestions.

"And before any decision is made by the Cabinet, we would have to ensure that the cost-benefit analysis is positive not only for the short-term but also in the long run as we do not want to put our great-great grandchildren in a position where they would end up paying royalties, paying to foreigners to carry out something in their own country.

"When the US comes to negotiate with us, has a dialogue with us, it brings along 200 lawyers while we are indeed a little short (of lawyers) and that is why we have to be careful... to ensure that we have enough resources and sufficient expertise in the matter, as it is very important.

"We have also discussed with many parties (that have undertaken FTAs with the US) including our neighbours and the Latin American countries to know more about the disadvantages and advantages faced by these countries," he said.

-- BERNAMA