Malaysians question US free-trade
deal By Chee Yoke Heung
KUALA LUMPUR - A popular movement opposing
government plans to negotiate a free-trade
agreement (FTA) with the United States is gaining
momentum in Malaysia. This represents the latest
hurdle to Washington's plans to overhaul its terms
of trade with Southeast Asia's export-dependent
economies.
When negotiations formally
opened in Washington, DC, on March 8, Malaysian
Minister of International Trade and Industry
Rafidah Aziz declared that there was no domestic
opposition to the bilateral trade proposal. The
Consumers Association of Penang, Friends of the
Earth Malaysia and the Third World Network, among
others, beg to differ, and are raising public
awareness of
the
deal's implications, which they contend will cause
more economic and social harm than good.
To take advantage of President George W
Bush's fast-track authority, which expires in
mid-2007, the US aims to complete the negotiations
by early next year, meaning negotiations with
Malaysia are likely to be fast and furious when
they get down to business this June.
For
Malaysia, the economic stakes are particularly
high. The US is currently Malaysia's largest
export market, absorbing nearly 20% of all
exported goods and services. The US is also the
largest foreign investor in Malaysia, with an
emphasis on electronics-related manufacturing, one
of the Southeast Asian country's largest
industries. The Malaysian government hopes that an
FTA will further enhance trade and investment
flows - but because of its small size and
overdependence on the US market, Malaysian
negotiators are at a substantial disadvantage,
trade analysts say.
That's exactly what
has so many of Malaysia's civil-society groups up
in arms. In a recent petition addressed to the
government, non-governmental organizations
together with people living with the AIDS virus,
human-rights groups, labor groups and other
concerned individuals said the scope of the
negotiations would have profound impacts on
national sovereignty, including likely adverse
impacts on jobs, food security and access to
affordable medicines, as well as the viability of
small farms, firms and service providers.
Minister of International Trade and
Industry Rafidah Aziz said she has done the
"arithmetic" and concluded that a deal would be in
the broad national interest, but she failed to
provide details of her calculations. While US
trade groups have commissioned cost-benefit
studies of a deal, so far there has been no
independent assessment conducted in Malaysia of
the likely economic impacts, according to a
Ministry of Finance official.
The
civil-society movement is particularly concerned
that decisions on such important matters are being
made in the absence of any consultations with the
general public and without parliamentary
oversight. Opposition leader Lim Kit Siang has
likewise protested about the lack of transparency
surrounding the FTA process. "To march into full
negotiations with the US without such a
[cost-benefit] assessment is akin to flying blind,
and is an irresponsible step," warned Lim.
Such complaints are notably similar to
those being lodged against the government of
Thailand, where negotiations toward an FTA with
the US have been shrouded in secrecy and
undertaken without parliamentary oversight. The
recent popular protest movement that dislodged
Prime Minister Thaksin Shinawatra from power took
particular hard aim at the US-Thailand FTA, which
if completed, opponents contended, would undermine
national sovereignty and disproportionately
benefit politically connected big businesses.
Sticks and carrots The US has
dangled FTAs as a reward to governments that have
cooperated closely with Washington's
post-September 11, 2001, counter-terrorism
policies. That's been particularly true in
Southeast Asia.
Singapore and Australia,
the United States' closest strategic regional
allies, were first to seal bilateral deals with
the US. Thailand, which serves as the United
States' counter-terrorism hub in the region, was
next in line for a deal. Malaysia and Indonesia,
which at first resisted US pressure to crack down
on alleged terror suspects but later stepped in
line, have both belatedly been offered trade
deals.
The political component of the
deals has come under scrutiny, which many trade
analysts believe undermines the greater potential
economic benefits pursued under the World Trade
Organization's multilateral approach. Unlike
previous US-brokered bilateral trade pacts, which
targeted specific goods or projects, the present
generation is more comprehensive, covering
investment, services and tougher
intellectual-property protections. They are also
more restrictive: governments can be sued or face
trade sanctions in cases where US companies feel
they have been treated unfairly.
The US
position at FTA negotiations surrounding
intellectual-property issues is by law
non-negotiable, and controversially includes the
suspension of so-called compulsory licensing
agreements, which under the WTO allow countries to
produce generic drugs during times of national
emergencies. Similar agreements have been signed
with Australia, Chile, Morocco, Singapore, Bahrain
and Central American countries, and all contain
provisions that oblige these countries to tighten
their legislation on intellectual-property rights
well beyond internationally agreed standards.
One particular area of concern in Malaysia
and Thailand regards future access to life-saving
anti-retroviral treatments for people with the
human immunodeficiency virus (HIV), which can
cause AIDS. A group of Malaysians living with HIV
under the banner "Positive Malaysian Treatment
Access and Advocacy Group" has written to Prime
Minister Abdullah Badawi expressing its concern
that generic medicines will be banned and
US-patented treatments rendered unaffordable under
the tougher intellectual-property provisions in a
US-Malaysia FTA.
The proposed pact is
already making political waves. Former prime
minister Mahathir Mohamad has warned that an FTA
with the US could harm the economy by undermining
the New Economic Policy, which was promulgated in
the 1970s to give ethnic Malays and other
indigenous groups special privileges to narrow the
wealth gap with Chinese-Malaysians. Malay business
associations have already called for excluding
government procurement from the trade talks, which
would go against the "national treatment"
provisions other US bilateral trade deals have
entailed.
US companies would likely
leverage an FTA to get greater access to
Malaysia's financial sector, where ethnic Malays
still have tight control over the industry.
Similar domestic concerns surround the Proton
national automotive project, which has survived
over the years behind high protectionist walls
that an FTA would aim to dismantle.
Narrowing the gap According to
US Trade Representative Rob Portman, the FTA will
provide market-opening opportunities for US
companies, particularly in telecommunications,
financial services, energy distribution, health
care, audiovisual, and other professional
services. The US also hopes to expand its
agricultural exports to Malaysia beyond the
current US$400 million level, he said. Malaysia
currently imposes a 40% tariff on imported rice,
which aims to discourage imports and enhance food
security.
Malaysia currently imports about
$3 billion worth of food a year, and its rice
farmers would be particularly vulnerable to
cheaper US imports, analysts say. They point to
the example of the North American Free Trade
Agreement (NAFTA), where exports of cheap corn
(maize) to Mexico rapidly tripled under
market-liberalizing measures and forced nearly 2
million Mexican farmers to abandon their land.
A bilateral deal could seriously erode
Kuala Lumpur's current trade surplus. According to
the trade representative's office, Malaysia's
tariffs are on average twice as high as US
tariffs, a situation that an FTA would aim to
rectify. The US-based National Association of
Manufacturers estimates that US manufacturing
exports to Malaysia could more than double to $22
billion by 2010.
If the experience of
other FTA countries is any indication, Malaysia
can expect a narrowing trade surplus and possibly
less trade altogether. In the case of the
US-Australian FTA, it was found that in the first
12 months after the agreement came into effect,
Australian trade with the United States had
actually decreased, leading to a trade deficit
with the US.
Historically, Malaysia has
resisted many of the US-led initiatives at the
WTO, including demands to open government
procurement, investment and competition policy,
which Kuala Lumpur feared would undermine its
various national projects aimed at lifting the
country to developed-nation status by 2020.
However, it was easier to fight back in
unison with other developing countries at the WTO
along developed- and developing-economy lines. In
this era of US-led FTAs, export-dependent
countries such as Malaysia are in danger of having
to bend to US demands - even if it hurts the
interests of its own people.
Chee
Yoke Heong is a freelance writer based in
Kuala Lumpur.
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