US-Malaysia trade deal possible by March

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WASHINGTON - Malaysia could reach a free trade agreement with the United States by the end of March if the majority Muslim country can reform its long-standing preference programmes for native Malays, the top US negotiator said on Friday.


'We believe that the progress we've made this week has put us within striking distance of concluding within the next few months,' Barbara Weisel, assistant US Trade Representative for South-east Asia and the Pacific, told reporters near the end of a fourth round of talks on the proposed pact.

The toughest issue in the talks involves Malaysia's policies aimed at increasing the prosperity of ethnic Malays and other indigenous peoples, known collectively as bumiputras, she said.

'They're important programmes to them and they need to consider it carefully. This part of the negotiation is clearly the most challenging,' Ms Weisel said by telephone from San Francisco where the fourth round was held.

'I think there are ways to find resolution to these issues that don't undermine the policies that have been in place for a long time and allow the Malaysian government to open the market.'

The United States recognises that Malaysia is not going to completely eliminate preference programmes that reserve a substantial share of the government procurement market for bumiputra, but believes there still are ways the pact can open up that sector to more American firms, Weisel said.

In the wide-ranging services negotiations, the United States is most interested in liberalisation of the bumiputra preferences in telecommunications, financial services, express delivery, computers and energy distribution, she said.

The Bush administration needs to reach a deal by the end of March so it can be submitted to Congress before trade promotion authority expires on July 1. That legislation requires lawmakers to approve or reject trade pacts without making any changes.

The two sides had good overall discussions this week and have reached tentative agreement on many areas of the text, which contains 23 chapters, she said.

Talks on agriculture are going well and the two sides will getting soon be getting into the details of negotiations on textiles and automobiles, Weisel said.

Washington is looking for the elimination of tariff and non-tariff barriers in Malaysia's highly protected auto sector, while a top priority for Kuala Lumpur is increased access to the US clothing and textile market.

The next round will be held in February in Malaysia. -- REUTERS