MIER: US-MSIA FTA, MODEL FOR OTHER MUSLIM COUNTRIES

By Tengku Noor Shamsiah Tengku Abdullah

KUALA LUMPUR, Sept 1(Bernama) -- The United States is keen to sign a free trade agreement (FTA) with Malaysia and to use it as a role model for the world's largest economy to sign similar agreements with other Muslim countries, says Prof Emeritus Dr Mohammed Ariff Abdul Kareem, Executive Director of the Malaysia Institute of Economic Research (MIER).

He said the US was very eager to sign an FTA agreement with East Asian
countries as it wanted to return to East Asia in a big way.

With the previous administrations, Mohammed Ariff said East Asia was somehow
ignored and now they want to come back as a player and be engaged with East Asia
economically.

" So, I think they are very keen especially with Malaysia, because this is
the only moderate Muslim country which they want to have an agreement with.

"It will be a role model for similar agreement which they will ink with
other Muslim countries and so on and so forth. So, this is why I think the US is
very keen on concluding this FTA with Malaysia," he told Bernama in an
interview.

When asked whether it will be relevant for Malaysia to sign the FTA,
Mohammed Ariff said, " I'm not a fan of FTA, I am a fan of freer trade. I think
Malaysia is a trade dependent economy.

"Trade is our life blood and without trade, we can't grow and therefore, we
want to see a freer global trade regime. The World Trade Organisation (WTO), is
an institution created precisely for this purpose aimed at global multilateral
trade liberalisation," he said.

If one country gives a concession, he said it applied to all countries in
the world.

In that sense, Mohammed Ariff said it was not discriminatory and "it is
based on principles of the most favoured nation and that's clean."

He said the FTA route is somewhat different as it is bilateral between the
two countries which now have to resolve based on reciprocal basis.

"You give concessions, you take concessions, you negotiate, so it is
reciprocal, not a case of multilateral trade negotiation. That's not too
bad but when it comes to negotiation, reciprocal sounds fair".

"You give some, you take some. But when you deal with a powerful country,
then you are at disadvantage," said Mohammed Ariff.

Acknowleding that the US is strong and big, he said, "They have been
negotiating deals here and there. We are no match to the US".

In the process, he said there is a tendency for the US, or big economies to
twist the arms of small economies to obtain good deals which are more favourable
to them. This is why, sometimes, "we hear complaints from countries which
have negotiated in the past, such as Korea and Australia, that they have
been shortchanged.

"I am not saying that US is doing a disadvantage to all these countries.
The reason is multilateral negotiations is not going anywhere, as such, many
countries are resolving to FTAs.

"Simply because the WTO round, so called the Doha Round talks was not
moving. Therefore many countries were taking the bilateral route to negotiate,"
he explained.

Mohammed Ariff said the deal is something better than nothing, the second
best solution as freer trade is better than restrictive trade, he said.

He said, " Although it (FTA) is not a perfect route to take, it is an
unsatisfactory way to liberalise trade."

"But we have no choice as other countries are doing it, we have to
do it, too. Because Singapore has started the ball rolling by having agreements
with Japan, with the US, Australia and others," he said.

Mohammed Ariff said competitors were already having bilateral agreements and
enjoying some preferential treatment in those countries.

"We will lose out if we do not have similar agreements with others and enjoy
similar trade in those countries," he said.

He was of the opinion that if more countries were to sign an FTA, it would
really remove the initial advantage of a market access.

In the case of US-Malaysia FTA, he said: " Although the US may have certain
negotiation advantages, I don't really think the US is exploiting that
advantage.

"In fact, the US is very keen on signing the agreement with East Asian
countries because they really want to come back to East Asia in a big way.

Of course, Mohammed Ariff said certain controversial items on the
negotiating table which related to government procurement, pharmaceutical
industry and labour still remained contentious issues.

"So there are some touchy issues involved, but I think we should, if
it can be resolved immediately, go ahead with the agreement with the
understanding to study those areas further and addressed them later on.

"We must also have a timeline for those things to be gradually reduced or
addressed over a longer period of time and not immediately," he said.

Mohammed Ariff added that whatever agreement Malaysia signs with the US
would bring more benefit to the latter.

"U know why? even is there's a sudden restrictive clauses over there, the
fact remains that the US is a huge market and Malaysia is a tiny market.

"The access that the US can have into Malaysia's market far outweighs the
comparative advantage we can have in the US market . So, this is why you know, I
think it will be silly on our part to let this opportunity just pass-by," he
said.

He said Malaysia should enter into an FTA with the US as nobody would lose
but gain from it.

"I don't think, even in a most disadvantaged agreement, that a country will
end up a loser.

"They may gain less than other parties but they will gain," he added.
-- BERNAMA