Talks target No. 10 in trade

U.S. officials yesterday started free-trade talks with Malaysia, the second Asian country in two weeks to start negotiating such a pact, as the Bush administration tries to bolster economic ties in the region.

The administration hopes to complete talks with South Korea and Malaysia, the United States’ seventh- and 10th-biggest trade partners, by year end. Negotiations with Thailand stalled early this year and may not resume until after October elections in the Southeast Asian country, if at all.

The administration is trying to strengthen economic and political relations in the region as part of a broader effort to boost U.S. exports, counter China’s rising clout and deal with security issues.

“The hope is that the stronger trade relationship will have knock-on effects — it will improve the environment for working together on political and security issues,” said Jeffrey Schott, a senior fellow at the Institute for International Economics, a Washington think tank.

Talks with South Korea started last week. The country is allied with the United States in trying to contain communist North Korea’s nuclear weapons development.

Malaysia is a majority-Muslim country that borders Thailand and Indonesia, the world’s most populous Muslim nation. All three countries have been staging grounds for terrorist groups.

U.S. companies see an opportunity to gain greater access to two of the region’s bigger economies.

The Korean and Malaysian trade agreements would be the most significant since Congress approved the North American Free Trade Agreement, with Canada and Mexico, in 1993.

“These are both huge. We are very excited about both of them,” said Christopher Wenk, the National Association of Manufacturers’ director of international trade policy.

NAM, a Washington trade group, estimates that U.S. exports to Malaysia would more than double, from $10.5 billion last year to about $22 billion after five years of a free-trade deal.

The United States last year had a $23 billion trade deficit with Malaysia.

Top U.S. imports from Malaysia, where Dell Inc. manufacturers all of its laptops, are computers, telecommunications equipment, semiconductors, and computer parts and accessories. Top U.S. exports are semiconductors, computer parts and accessories, measuring and controlling instruments, and computers.

U.S. companies want the deal with Malaysia to open the country’s relatively closed market for autos, motorcycles, financial services and government contracts.

U.S. negotiators face a tight schedule with both the Malaysian and Korean pacts.

President Bush’s Trade Promotion Authority expires in mid-2007, making December the practical deadline to conclude talks. Each deal would then be written into legislation and submitted for congressional approval as part of a process that typically takes several months.

Story Continues →