January 30, 2007 20:43 PM

US, Msia To Lose Growth Opportunities Without FTA

KUALA LUMPUR, Jan 30 (Bernama) -- Malaysia will not face any retribution if the free trade agreement (FTA) with the US does not work out, but both countries stand to lose tremendous growth opportunities over the next ten years, said an expert.

Dr Gary Clyde Hufbauer, a Reginald Jones Senior Fellow at the Peter G. Peterson Institute for International Economics, Washington, said although it would be a missed opportunity if the FTA did not come into existence, the US would not go out of its way to discriminate countries it did not have FTA with.

"Will it (trade between both countries) grow? Yes. But not as fast as it should with the agreement in place," he said via teleconferencing with local experts on "Free Trade and Economic Development" here today.

He said this in reply to a question on what Malaysia could expect of the US in the absence of the FTA.

Hufbauer, a former Deputy Assistant Secretary for International Trade and Investment Policy at the US Treasury, said Malaysia remained an important trading partner to US.

"So there is not going to be any kind of retribution or punishment if the FTA does not work out," he said, adding that it was a complicated area and a major decision for Malaysia to make.

"An FTA is a commercial marriage, not an engagement. Both partners have to be sincere to make it work. I hope it works. But if it doesn't, I hope we'll stay friends," he said.

He also said the US was the most demanding country when it came to free trade.

"There is no country more demanding than the US," he said, when asked why it was easier for Malaysia to conclude an agreement with China and Japan under the Association of South-East Asian Nations banner, but difficult to do so with US.

Hufbauer said there were more diplomacy with these countries, particularly China, than with the US.

"Our institute's view is that the agreements with China and Japan are not very demanding. The US is the most demanding in reaching what a free trade means," he said.

He said where there were conflicts of interests, Japan tended to use negotiations while the US would use arbitration in defending its rights.

"That is quite a cultural difference between both countries," he said, noting that intellectual property was also a main concern in any FTA with US, while some countries did not stress on it.

On the interference of non-governmental organisations (NGOs), Hufbauer said they could offer their views on the terms to be concluded, but not at every stage of the FTA negotiations.

"I do not see how you can conclude if everything is open. There need to be some closure.

"I do not think NGOs or any private party has the right to be in any government-to-government negotiations," he said.

He said if the Doha Round failed to be revived, there might not be such a round for at least another ten years.

"I agree that if the Doha Round fails, it will be a big blow to the world economic system and this will affect those, including the smaller African countries, where they have small voice except at the World Trade Organisation.

"It is a gamble whether it is going to be a success or not. There have been too much emphasis on agriculture while focus should be on services, and subsidies are exaggerated," he said.

-- BERNAMA