Malaysia says US will abandon trade pact negotiations
Posted: 19 November 2009 0403 hrs

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KUALA LUMPUR: Malaysia said Wednesday that Washington had indicated it will abandon a bilateral free-trade deal under negotiation since 2006, and will instead work towards a regional trade pact.

"It was made very clear to us that bilateral FTAs are not a priority for the US," Trade Minister Mustapa Mohamed told reporters. "Their focus is now on a regional approach."

US-Malaysia trade talks which began in March 2006 have dragged on for eight rounds, bogged down in sensitive areas including Malaysia's system of affirmative action for Muslim Malays who dominate the multi-racial population.

In particular, the US had sought access to lucrative Malaysian state contracts that favour Malays and indigenous groups, or "bumiputras" as they are known.

Mustapa said US Trade Representative Ron Kirk informed him of the US thinking on the sidelines of the Asia-Pacific Economic Cooperation (APEC) forum in Singapore last week.

"It is confirmed they are not keen. They have told us verbally. It is good as gone. (But) we have nothing formal yet. But it is as good as formal," he said in a briefing.

Mustapa said Malaysia was disappointed by the US decision as both countries had put in substantial work over several years.

"We are keen for an FTA (as it provides) business opportunities. We are disappointed," he said.

Malaysia's economy is largely export-driven and the United States is a key customer of Malaysia's electrical and electronics goods, which account for about 40 per cent of total exports.

Mustapa said the US instead wanted to pursue the Trans-Pacific Partnership (TPP), currently signed by Brunei, Chile, New Zealand and Singapore.

The obscure trade bloc was brought to prominence when President Barack Obama said last week that the US would "engage" with the grouping.

"I will tell cabinet that the US does not want a FTA but wants TPP," Mustapa said.

Summit host Singapore has said it hopes Washington's accession to the deal will galvanise other economies to participate, allowing the TPP to form the seed for a massive free-trade zone covering all of APEC's 21 members.

The US embassy was not immediately able to comment on Mustapa's comments.

- AFP/yb