TWN Info Service on Free Trade Agreements

23 January 2007


The Coalition Against the Malaysia-US FTA’s Correspondence with the Government

The Coalition Against the Malaysia-US FTA, a group of non-government organizations, political parties and civil society who are worried about the Malaysia-US Free Trade Agreement (FTA) negotiations, sent a memorandum to the Malaysian Minister of International Trade and Industry raising its concerns about the FTA. The Minister replied and made several promises. The Coalition then sent another memorandum highlighting issues that the Minister had not responded to. The full correspondence can be found at:

1. The Coalition’s first memorandum: http://www.ftamalaysia.org/article.php?aid=128
2. The Minister’s reply: http://www.ftamalaysia.org/article.php?aid=129
3. The Coalition’s second memorandum: http://www.ftamalaysia.org/article.php?aid=130

A summary of the correspondence is below.

1. The Coalition’s first memorandum

In October 2006, the Coalition wrote to the Minister, listing its concerns with the Malaysian Government’s decision to enter Malaysia-US FTA negotiations, which included:
1) That a detailed cost-benefit analysis has not been done for all sectors of the Malaysian economy and that analysis should be disclosed to the public.
2) That the USFTA goes beyond trade - into services, investors’ rights, intellectual property and government procurement - and yet they are being held in secret.
3) That Malaysia’s 296,000 rice farmers will suffer [if Malaysia’s tariffs on subsidized American rice are lowered].
4) That medicines prices will rise because the patent period will be extended.
5) Problems of expropriation cases for example for chemical additives that are dangerous to health.

2. The Minister’s reply

With respect to the points above, in a letter to the Coalition on 19 November 2006, the Minister asserted that:
1) ‘A cost-benefit analysis was done’ (however she did not release it to the Coalition or the public).
2) (No response was made and the negotiations still have not been disclosed to the public).
3) ‘The Government will not list rice and tobacco for market access by the United States’.
4) ‘The Government will ensure that this Agreement will not threaten the ability of Malaysians to access cheap medicines’.
5) (No response).

3. The Coalition’s second memorandum

On 21 December 2006, the Coalition handed its response to the Minister’s reply, as well as handed the memorandum to the Prime Minister on 10 January 2007. In this memorandum, the Coalition’s main concerns with respect to the above included the following points:
1) The cost-benefit analysis still needs to be made public.
2) The minutes of the negotiations and the issues discussed still need to be made public.
3) If it is true that rice and tobacco can be excluded from the FTA negotiations, what about the other farmers [such as pig farmers, cabbage farmers, chicken and egg farmers and dairy farmers who all currently benefit from tariff protection] who will also have to compete with US subsidized agricultural products when Malaysia’s tariffs on US farm products are reduced [to zero as USFTAs tend to require]?
4) The Coalition noted that all USFTAs except NAFTA have patent term extensions beyond the 20 years required by the WTO, and USFTAs also have a number of other intellectual property provisions [that are stronger than what the WTO requires], such as data exclusivity and linkage. The Coalition pointed out that these provisions have been predicted to significantly raise medicine prices and the full effect will not be felt for about 15 years after the USFTA is signed, according to the World Health Organization. The United Nations’ Special Rapporteur on the Right to Health, Ministers of Health and Trade, leading academics and non-governmental organizations have all expressed their concern at these provisions.
5) Its worries with respect to expropriation were not addressed by the Minister in her reply.

The Coalition was also concerned that a USFTA may lead to industrial job losses in Malaysia if the US issues its usual demand to reduce all tariffs on its products to 0%. The American National Association of Manufacturers has estimated that it could double its exports to Malaysia in the first two years of an FTA. It was unlikely that Malaysia could compensate by exporting more to the USA under an FTA [as most US tariffs are low already] and the few tariffs that are still high (for example for textiles) cannot be reduced by more than 50% by the US Trade Representative under current US law.

The Coalition also asked for a guarantee that the Malaysian government would only open to US companies those service sectors it lists (positive list) and expressed its skepticism based on UN and World Bank reports that a USFTA would increase foreign direct investment from the USA.



With best wishes,

Third World Network
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email: twnkl@po.jaring.my
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