US wants more access to Malaysian markets

(Source Article: US talks push for more Malaysian access - FT.com)

On Monday, the US began talks with Malaysia over a free trade agreement, including demands by Washington for increased access to Malaysia’s financial, construction and car markets, as well as a stronger attempt to rid the region of its rampant piracy of intellectual property. Of particular importance are current tariff barriers on foreign car imports; the US wants to reduce tariffs in order to increase Malaysia's access to US cars. Currently, the market is dominated by Proton, the national carmaker. However, a free trade agreement would also give Proton access to the much larger US car market.

The prime minister of Malaysia will probably face difficulty in trying to fulfill the US demands: he’s currently facing much criticism for his economic reforms, and the demands are politically sensitive given the region’s policy of affirmative action for ethnic Malays. Nevertheless, with the Bush administration’s ability to take advantage of “fast-track” legislative approval of international trade deals expiring in 2007, the two countries continue negotiating. The US is also working on a similar trade deal with Thailand, but is facing similar political problems while a newly elected Thai government makes the transition to power. (see Time running out for US-Thai deal– Houston Chronical)

If a new deal is reached, predictions have bilateral trade doubling by 2010. Malaysia, the United States’ 10th largest trading partner, is of particular importance to the US in that it’s a Muslim country of considerable tolerance, and has proven to be an important ally in the Muslim world. Further, the country takes more US imports than much bigger economies, like India and Indonesia. (see US, Malaysia launch negotiations for FTA – usembassy.gov)

An FTA would allow for increased US exports to Malaysia of a variety of goods and services. Currently, the US is most interested and economically focused on Asia, and thus hopes to cast a web of FTAs, like that which is coming to fruition in Malaysia, throughout the region. (see Malaysia-US trade will double by 2010 – thestar.com)