Malaysia Fails To Seal Free Trade Agreement With US

Malaysia and the United States have terminated the negotiation of a bilateral free trade deal. While many Malaysians felt that Malaysia has finally gotten rid of this unequal Malaysia-US Free Trade Agreement (MUSFTA), there is a need for Malaysia to ponder on why MUSFTA could fail after going through eight rounds of negotiation since 2006. This failed trade negotiation has reflected the reality that in Malaysia's economic construction process, Malaysia has ignored or tried to outsmart the free trade negotiation pattern that is generally accepted by the international community as standard. Malaysia is afraid that other countries might have already noticed Malaysia's failed trade agreement with the United States. It is likely that other nations would not agree with the way Malaysia handles bilateral Free Trade Agreement (FTA). As such, when other countries want to engage the FTA with Malaysia in the coming days, they will give Malaysia very specific requirement as a base to negotiate for trade deal.

Maintaining National Dignity
Through this failed experience, the Malaysian Government should realize that in terms of logical global economic trend, it is difficult for Malaysia to insist on using traditional economic policy to negotiate with another country at trade negotiation table.

Another lesson the Malaysians can learn from this failed MUSFTA experience is that the maintenance of the national dignity should involve the full cooperation of all citizens.

Protection of Intellectual Property Right
In retrospect, the trade issues involved at MUSFTA were quite basic issues that the international community has considered norm. In principle, Malaysia should understand that when Malaysia talked to the US trade negotiation team, those trade issues and items that both parties put on the negotiation table, including issues such as lowering tariffs, opening trade market, management of workers' rights plus issues relating to the protection of Intellectual Property Right (IPR) and environment have already been considered as global consensus. As such, the US requests for the US companies like Microsoft or GE's products to enter the Malaysian market as well as issues on strengthening environmental conservation were but normal request. This is also the global trend when booming developing countries begin to seek FTA with other countries.
Since those MUSFTA negotiation items and issues were also what many countries engaging in trade deals would pursue vigorously, negotiations based on those suggestions have become rule of the game in the international community. As such, there is a need for Malaysia to follow such rule of the trade game when engaging FTA with other countries.
It would be useful for Malaysia to, based on the eight rounds of MUSFTA negotiation, to review FTA negotiation stand from both sides of the view and understand why MUSFTA could finally fail to go through.
It seems that at the seventh round of trade negotiation, trade negotiation representatives from both countries have already narrowed down trade differences substantially leaving about 20 items for further discussion. Areas that were close to reach mutual agreement have included trade in services, pharmaceuticals, and intellectual property. However, unexpectedly, at the eighth round of MUSFTA negotiation table, the US trade negotiation team suddenly requested the binding tariff ceiling condition of few hundred products, such as the tariff rate of not more than 10 percent on agricultural products, and not more than 20 percent tariffs on industrial products, In additional, the US trade negotiation team also quoted the General Agreement on Trade in Services and required Malaysia to have a substantial opening up of Malaysia's financial services, telecommunications, tourism, transportation; and other ideas for the creation of new market. To Malaysia, the sudden expansion of items for the negotiation of trade deal at the eighth round of trade negotiation was quite massive and the impact of it was far-reaching. Apparently, at the eighth round of MUSFTA negotiation, the United States has taken advantage of Malaysia's weakness in wanting to seal MUSFTA deal quickly. As such, the United States has asked for additional items for tariff reduction. However, it was also a fact that some of the tariffs on goods and products in the Malaysian market were indeed quite high. In addition, the doors of some of the market and services in Malaysia were also very tightly guarded without opening them up for fairer negotiation. Malaysia should learn from this experience that during critical period of trade negotiation, good communicate with negotiation partner would be beneficial for the removal of trade barriers.
On the negotiation on environmental protection, the United States did not have thorough understanding of the implementation of environment protection in Malaysia. It could also because information received by the United States on Malaysia's effort to do conservation work was different from the actual situation in Malaysia. If Malaysia and the United States could strengthen communication in environmental protection work, it would be beneficial to help Malaysia's work on conservation of nature at the same time to reduce the misunderstanding of the United States over Malaysia's effort in conservation of nature.

Trademark and Patent Violations
However, on IPR negotiations, the United States insisted that patent law under negotiation should also include the importation of genuine goods that universally consider without "prohibition." The United States also repeatedly pressed the issue that Malaysia's judicial authorities should severely punish trademark and patent violations. The stand taken by the United States over the IPR issue has given Malaysia a negative impression that the United States tried to intervene with Malaysia's legislative and judicial independence. Therefore, Malaysia deeply regret that, as a country that so proudly hails the operation of the separation of powers and checks and balances to take tough stand and total disregard of Malaysia's judiciary independence was indeed not acceptable during MUSFTA negotiation. Similarly, the country also regret the Malaysian representatives have failed to stand firm on what they aimed to achieve for MUSFTA. Instead, they have taken advantage of the intention of the US companies like Microsoft in wanting to open their market share in Malaysia to set a precondition for the United States to allow the bumiputera (the Malays) to enjoy preferential treatment in their share market. The use of the Malay special rights to exchange for open market are what Malaysia deeply disagrees.

Why MUSFTA Failed?
Although MUSFTA failed to go through during the final stage of negotiation, there is a need for the Malaysian Government to reflect on a trade deal that failed.
First, against the accusations coming from the United States, the Parliament should accelerate the enactment of labor rights and environmental protection legislation. The enactment of these laws should eventually help the Malaysian Government to reduce pressure coming from home and abroad. Second, Malaysia should continue to keep the US trade mission posted on information on Malaysia's enactment of trade laws such as the labor laws. There is also a need for the Malaysian Government to show to the world that Malaysia would take concrete action in the implementation and executive of these laws. This is because according to the US trade representatives who directly involved in MUSFTA negotiation, they have remarked that Malaysia was only good to file paperwork but could not produce concrete result of what they put on paper. As such, the United States has lost confidence and patience to continue the FTA negotiation with Malaysia. In other words, what the US trade team demanded was concrete results, but a nice packaged copies of "Program."
Finally, whether it is in the lowering tariffs, opening markets, strict enforcement of intellectual property protection provisions, as well as the implementation of the provisions of the conservation of wild animals, it is inevitably that the sealing of these deals with a foreign country will bring inconvenience to companies and individuals. However, if the Malaysian Government put the national interest as the top priority, all Malaysians, including NGOs should abandon their selfish needs or self-centered perspective, so that Malaysia can move toward trade liberalization, internationalization, and modernization in the new era.

Taiwan Sets Up ASEAN Studies Center

As Taiwan strives forth to sign cross-straits ECFA (Economic Cooperation Framework Agreement] with mainland China and as Taiwan tries to make contact with ASEAN to negotiate for a Free Trade Agreement (FTA), Chung-Hua Institution for Economic Research, the Taiwan government's think tank, launched its first ever Taiwan ASEAN Studies Center recently. Of note was that Taiwanese President Ma Ying-jeou personally attended the launch and gave the opening speech. The presence of President Ma at the launch has highlighted the importance of Southeast Asian countries to Taiwan.
In his address President Ma Ying-jeou has again said that Taiwan planned to sign the ECFA with mainland China and hoped that Taiwan could become one of the members of "ASEAN Ten-plus-Four" (ASEAN Ten plus China plus South Korea plus Japan plus Taiwan.)
However, Rodolfo C. Severino, a former ASEAN Secretary General, who also attended yesterday's launch of Taiwan ASEAN Studies Center, opined that if Taiwan had the intention to sign FTA with ASEAN, the possibility of success would not be too optimistic. To him this was because FTA was essentially a political document. In fact, the Taiwan ASEAN Studies Center was already in operation on 1 October 2009.

Focused Center for Studies of Southeast Asian Nations
According to our understanding, this Taiwan ASEAN Studies Center is a comparative more focused center for the studies of Southeast Asian nations. It is also the first ASEAN Studies Center sponsored by Taiwan's Ministry of Foreign Affairs. The new Center does carry with it certain political significance. Prior to the establishment of this Taiwan ASEAN Studies Center, all think tanks or research units associated with Southeast Asian countries or ASEAN were funded by Taiwan's Economic Development Council or the Ministry of Economic Affairs.
In this regard, the Taiwan ASEAN Studies Center would indeed assume the role to help Taiwan promote the signing of FTA with the ten ASEAN nations. When asked to comment, Associate Professor Lin Qin Ming of Tamkang University opined that although Chung-Hua Institution for Economic would expect this new Taiwan ASEAN Studies Center to play the role to facilitate the sealing of FTA between Taiwan and ASEAN, this government think tank would probably also expect the new Taiwan ASEAN Studies Center to do more. It would expect the new Taiwan ASEAN Studies Center to help facilitate diplomatic ties and to build stronger political ties with all the 10 ASEAN nations.
In his address at the official launch of the Taiwan ASEAN Studies Center, President Ma has emphasized the need for Taiwan to pay attention to the integration of countries in ASEAN as the bloc has become an increasingly important economic power in the region. Ma also said that through the Taiwan ASEAN Studies Center, the government think tank could establish a dialogue mechanism between Taiwan and ASEAN and that through such dialogue Taiwan and ASEAN could enhance bilateral and multilateral cooperation.

Economic Cooperation Framework Agreement
President Ma pointed out that the total Gross Domestic Product (GDP) of the Asia-Pacific countries accounted for more than half of the world total GNP. In term of trade volume, Asia Pacific region has accounted for half of total world trade volume. In term of population, the Asia Pacific region accounted for 40 percent of world population. In addition, the intra-regional trade in Asia has grown from 40 percent in the last century to the present 52 percent. In 2000 there were only three FTAs signed in Asia. However, in August this year the total FTAs signed in Asia were as high as 56. President Ma added that within the Asia-Pacific region, countries that have not signed any FTA with other countries were Taiwan and North Korea only. As such, he said Taiwan must strive hard to become part of the regional economic integration in the Asia-Pacific region. He also said that after Taiwan signed the Economic Cooperation Framework Agreement (ECFA) with mainland China, Taiwan could, through the EACE look forward to broader interactions with ASEAN members, as well as to increase Taiwan's participation in regional forums.
In fact, because of political and economic consideration, Taiwan has already begun its 'Look South" policy during the mid 1990's. During that period, the Taiwanese government encouraged Taiwan businesses to invest in Southeast Asian countries. Taiwan's national policy then was to "look south" to Southeast Asian nations in order to balance the "westward expansion" of trade to mainland China. However, most Chinese businesses still preferred to invest in mainland China. As of today, mainland China has already become Taiwan's largest export market. Taiwan's total export market to mainland China now is as high as 40 percent. However, the ASEAN 10 is still Taiwan's second largest export market. Taiwan's export value to the ten Southeast Asian countries combined has accounted for about 15 percent of Taiwan's export trade in 2008. In other words, mainland China and Southeast Asia are Taiwan's two main export platforms.

Trade by Regional Organizations
Beginning 1 January 2010, the ASEAN Ten Plus China (ASEAN plus One) FTA will become effective. By then Taiwan's goods will still have to pay higher tariffs as compared with countries within the region. In order to prevent Taiwan's export goods to mainland China and to ASEAN countries from losing competitive edge in prices, it is thus Ma Ying-jeou government's desire to seal the ECFA deal with mainland China and also to sign FTA with ASEAN nations to prevent Taiwan from being marginalized in trade by regional organizations.
According to the interpretation of the Ma Ying-jeou government, the way for Taiwan to move toward regionalization is to sign the ECFA trade deal with Beijing first in order to remove the political hindrance coming from mainland China.
However, when we talked to the former Secretary-General of ASEAN, Rodolfo C. Severino who attended the launching function of the Taiwan ASEAN Studies Center yesterday, Severino felt that the possibility for Taiwan to enter a FTA with ASEAN was not optimistic. At this movement Severino is also the head of the ASEAN Studies Center in the Institute of Southeast Asian Studies in Singapore.
Severino pointed out that the crucial factor was that by nature "FTA is essentially a political document. He said FTA involved trade tariff and trade tariff has to be established between governments. Moreover, the signing of FTA would also involve taking oath to maintain friendly bilateral ties and encourage mutual investment and bilateral trade interaction. FTA also included the significance to support FTA partner's integration into regional organizations.

Political and Economic Interest
When we asked Rodolfo Seveino to comment if the success rate of Taiwan to sign FTA with individual ASEAN country could be higher if the cross-straits ECFA were signed, or when the cross-straits ties between China and Taiwan have continued to improve, Severino said the difficulty faced Taiwan to do that would also not be an easy one. According to Severino, the reason was that all ASEAN nations support the "One China" policy. This was in addition to the reality that the relationship between mainland China and Taiwan, and the Taiwan's relationship with other trading partners were two separate issues. Severino also said that ASEAN countries still have to take into account their own national interests. To the majority of ASEAN members, China today is definitely more important than Taiwan in term of ASEAN countries' respective political and economic interest.
In response to Seveino's comments, Associate Professor Lin Qin Ming of the Institute of Asian Studies, Tamkang University, also agreed with Severino's assessment of Taiwan's FTA situation with ASEAN nations. Lin pointed out that if it were a decade ago, it would be much easier if Taiwan wanted to sign FTA with individual ASEAN nation. Lin said that the opportunities and chips for Taiwan to do so then would be relatively better because during that period China has yet to emerge as an influential power. Moreover, during that period, there were also more Taiwanese investments and businesses in Southeast Asian countries. More importantly, to Associate Professor Lin, the signing of bilateral FTA would depend on the motivation usually coming from private industries from industry.

India-European Union Summit

The 10th one-day India-European Union (EU) Summit was held in New Delhi on 6 November 2009. At the conclusion of the summit, India and the EU have signed a major accord for cooperation in the civil atomic energy field and pledged to conclude an ambitious Free Trade Agreement (FTA) between them within a year. The agreement was signed by Atomic Energy Commission (AEC) chairman Anil Kakodkar and European Commissioner for External Relations and Neighbourhood Policy Benita Ferrero-Waldner.

Boosting Trade Ties
The agreement is aimed at facilitating India’s participation in the International Thermonuclear Experimental Reactor (ITER) project for fusion research. Prime Minister Manmohan Singh led the Indian side at the summit while the EU was represented by Swedish Prime Minister Fredrik Reinfeldt, in his capacity as chairman of the EU Council and EU President Jose Manuel Barroso.
The ITER project on fusion energy is said to be the costliest experiment of its kind that will cost some 10 billion euros. The first fusion reactor is expected to be operational in Cadarche in southern France by 2016.
India and the EU have been negotiating an FTA since 2007 but have not been able to firm up the accord due to differences over the EU’s attempts to link trade with climate and other extraneous issues. Both sides are of the view that a political push was need for the agreement to be wrapped up by next year. With trade talks not making much headway due to the EU’s insistence on labour standards although both sides hoped to clinch it within a year, the Indian Prime Minister pressed for a freer visa regime and identified the easier movement of people as one of the prime areas of cooperation.
Joint Statement
Meanwhile, in a joint statement, the two sides shared the understanding that the development of nuclear energy for peaceful purposes should take place in conformity with the highest standards of safety, security and non-proliferation. The two sides also signed a pact to promote joint research in nuclear fusion.
The joint statement said India and the EU welcomed the renewed momentum in global disarmament talks while reaffirming their shared interest in working together for disarmament and for countering the proliferation of weapons of mass destruction and their delivery systems. In this context, they stressed the importance of strengthening national export control laws.

Eliminating Terrorism
On terrorism, the EU condemned the terrorist attacks in Mumbai in November 2008 and reiterated the need for intensifying global cooperation in combating international terrorism. Without any reference to Pakistan, the two sides emphasised the utmost importance of bringing the perpetrators of the crime to justice. The EU and its member stated extended full cooperation to India’s bid for membership of the Financial Action Task Force (FATF), which will further reinforce India’s commitment to combat terrorist financing and money laundering.
EU and India resolved to expedite work on greater information-sharing on issues relating to terrorism and introduce closer coordination between the Europol and Indian security agencies.

Toward Global Financial Crisis
On international financial crisis and global economy, the two sides reiterated their commitment to continue to sustain a strong policy response until the recovery was secured, to prepare internationally coordinated and cooperative exit strategies to be implemented once the recovery has taken hold, to strengthen and reform financial regulatory and supervisory systems to ensure global financial stability and prevent further crises, and to ensure that the international financial institutions reflect contemporary economic realities.

Pakistan-Sri Lanka Cooperation

The bilateral ties between Pakistan and Sri Lanka are extremely great. The bilateral trade does not match the bilateral political relations, despite Free Trade Agreement. The volume of bilateral trade stands at $250 million. Sri Lanka produces the best tea in the world. All the civilians who were killed or injured in the decisive battle were killed or injured by Tamil Tigers themselves. The Army did not use heavy weapons in the final phase to ensure security of the civilians. These views were expressed by Air Chief Marshal Jayalath Weerakkody, Sri Lankan High Commissioner.

Weerakkody said that Pak-Sri Lanka ties were established in 1949. The relations between the two countries have flourished ever since, he added. He further said that we are the dwellers of the same region. We are thankful to Pakistani friends who, with their training and cooperation, helped us successfully face the challenges to the integrity and security of our country.

Strong Defense Sector
Weerakkody further said that the relations between Pakistan and Sri Lanka are very strong in the defense sector. However, the economic and trade relations are very weak. He told that Pakistan and Sri Lanka had signed Free Trade Agreement in 2005. After this agreement, the volume of trade has, showing a slight increase, risen to $250 million from $180 million.

Weerakkody said that Sri Lanka produces the best tea in the world and this tea is not very costly either. The tea that the Pakistani friends use is of a very low quality. He further said that the prospects of promoting cultural relations between Pakistan and Sri Lanka are quite wide. The remnants of Taxila and Gandhara civilization in Pakistan are regarded as sacred places of worship by the Sri Lankans. However, because of a lack of awareness the religious tourists of our country turn to India rather than Pakistan.

He further said that the game of cricket is also an important reason of the friendly relations between the two countries. Regarding the terrorist attack on the Sri Lankan team in Lahore, he said that the Pakistani officials keep giving them informal information on the investigations being carried out into the incident. He said that the concerned Sri Lankan authorities have not been included in the investigations into the attack on the Sri Lankan team.

Literacy Issue
As far as 96 percent literacy rate achieved by Sri Lanka is concerned, Air Chief Marshal Jayalath Weerakkody said that ever since its independence in 1948, Sri Lanka has pursued the policy of providing free education in order to spread education. During President Bandranaike era in 1956, Education Minister Dr. C C W Khanana took revolutionary steps. Education was made compulsory and free up to the university level. The students were provided free books and uniforms up to the secondary level. All the following governments pursued the same policy.

Weerakkody said that Sri Lankan population is around 20 million. Currently, there are some 175,000 teachers at Sri Lankan schools and colleges, leaving aside the teachers at private institutions.

Launching Separatist Movement
Commenting on the separatist movement launched by Tamil Tigers, Weerakkody said that Tamils are 2 million out of a total population of 20 million; while, in India and other parts of the world, the Tamils number 20 million. This population supports the separatist movement launched by the Sri Lankan Tamils. India also played mediatory role with a view to end this dispute. As a result, the Sri Lankan Tamil language was declared to be the official language of Sri Lanka. The Tigers are running a movement for the establishment of a separate country. It is because of their stubbornness that Indian mediation has been ineffectual.

Sri Lanka is a small island and partitioning this small island was not acceptable at any cost. In order to crush, this separatist movement, we had no option but to fight a decisive battle. Weerakkody added that the Tamil Tigers have started to use civilians as human shield to in the last phase of the war, and the Western world, because of its unawareness, has made the Sri Lankan Government butt of criticism.

Tamil Terrorism vs Terrorism in Pakistan
In response to a question about the comparison between the Tamil terrorism and the terrorism in Pakistan, the Sri Lankan High Commissioner said that although the terrorist attacks are common between the two, both have different objectives. Tamil Tigers were separatists while here attempts are being made to give religious explanations of terrorism in order to gain power. It is something that is a controversial issue among the ulema themselves.

In the end, it can be said that Sri Lanka is paying attention to rehabilitation of the affected Tamil population and reconstruction of the destroyed infrastructure. It is the major problem facing Sri Lanka at this hour.

Chilean President Visits India

Chilean President Michelle Bachelet, who recently paid a State visit to India, expressed hope that the "intellectual and actual perpetrators" would be identified soon and brought to justice. During her talks with Prime Minister Manmohan Singh, she condemned the "heinous and cowardly terrorist attacks" which posed a threat to human safety on a global scale. The two leaders called for enhanced international cooperation and exchange of information to enhance the ability of the Governments to fight terrorism.

Joint Statement
A joint statement issued after the talks stated that the two leaders reiterated that early conclusion of the Comprehensive Convention on International Terrorism was imperative to consolidation of counter-terrorism efforts within the UN.

The two countries signed four pacts, including one on cooperation in exploration and utilisation of outer space for peaceful purposes.

India and Chile also signed four pacts, including one on cooperation in exploration and utilisation of outer space for peaceful purposes. The two countries also decided to support each other’s candidature for non-permanent membership of the UN Security Council for 2011-12 (India) and 2014-15 (Chile).

Chile has backed India's efforts for a permanent seat in the UN Security Council and expressed solidarity in the aftermath of the Mumbai terror attacks by demanding that its perpetrators be brought to book. Bachelet, Chile's first woman President, declared her support for India's permanent membership of an expanded UN Security Council.

India and Chile signed a Memorandum of Understanding on Cooperation in the field of New and Renewable energy and an agreement on cooperation in the exploration and utilisation of outer space for peaceful purposes.

The two sides also signed a pact for cooperation in the field of education and an MoU on Cooperation in the field of Geology and Mineral Resources.
Bachelet and Singh agreed on the commitment to continue negotiations within the framework of the Bali action plan to reach an agreed outcome for the implementation of the UN Framework Convention on Climate Change.

The two countries also agreed to promotion on joint initiatives in R&D on advanced clean technologies with the objective of finding concrete and innovative solutions to the issue of climate change.

In the field of science and technology, Chile has invited India to join its 2009-10 Scientific Antarctic Expedition by sending an expert to participate in an ice coring research project.

Free Trade Agreement
India and Chile evinced interest in exploring the feasibility of entering into a Free Trade Agreement (FTA) and expressed satisfaction on the initiation of a process to broadening and deepening of the existing Preferential Trade Agreement in force since August 2007. Chile expects to double its trade with India over the next five years by strengthening cooperation in areas such as IT and bio-technology.

Preferential Trade Agreement between Chile and India since August 2007, has increased bilateral trade to $2.3 billion in 2008 from $300 million in 2004. The two countries would like to make the conditions ripe for doubling of the trade between them in the next five years.
To foster trade relations, Chile will also set up a commercial office at its embassy in New Delhi in 2009. Chile offers to India a bridge for trade with other Latin American nations.