Intensive talks are under way this week in San Francisco to forge a free trade agreement between the United States and Malaysia, a high-technology center and moderate Muslim nation in strategic Southeast Asia. Should a deal be done with Malaysia — this country’s 10th-largest trading partner — tariffs and quotas would fall and liberalized investment and services rules would come into play.
The S.F. Chronicle reports further that U.S.-Malaysian trade accounted for $44 billion in two-way trade in 2005, with the U.S. exporting in $10.5 billion — computers, machinery and chemicals — while importing $33.7 billion in goods from Malaysia.
A free trade agreement would help narrow the trade deficit, make doing business in Malaysia more transparent for U.S. firms and help prevent future over-regulation of business procedures there, said Joseph Alhadeff, vice president for global public policy at Oracle Corp., which has operations in Malaysia and backs a deal.
The NAM has a fact sheet and testimony on the proposed U.S.-Malaysia FTA available here.
Meanwhile, Vietnam is set to become the 150th nation to join the World Trade Organization, in the process reducing tariffs on more than 94 percent of industrial and consumer goods, as well as allowing previously banned products into the market. Vietnam’s accession is good news for U.S. manufacturers, Manufacturing.net reports:
“Vietnam is one of the fastest growing markets in Southeast Asia, increasing over 50 percent since the 2001 Bilateral Trade Agreement,” said National Association of Manufacturers Director of International Trade Policy, Christopher Wenk. “There are no drawbacks here now that Vietnam is part of a rules-based trade system.”
The two industries that likely have the most to gain from the announcement are high-tech products and motorcycles.
For all the talk about the new, Democratic-controlled Congress being hostile toward trade, we think the case for expanding U.S. export opportunities is still persuasive and, in the end, will carry the day. A recent Wall Street Journal op-ed by Senator Max Baucus, D-Mont., shows that the chairman of the Senate Finance Committee is certainly open to the debate, most notably endorsing renewal of fast-track authority:
The current grant expires in June, and trading partners will not negotiate trade agreements with us unless Congress gives the president the ability to bring these agreements to fruition. The success of America’s ranches and farms, as well as the success of businesses big and small, requires that the president have this ability. Exports account for 10 percent of GDP [gross domestic product]; our $62.4 billion in agriculture exports alone generated an additional $92 billion in additional economic activity last year. My home state of Montana exports fully 60 percent of the wheat grown there.
While Baucus does call for “better trade enforcement capability and better environmental and labor provisions,” his advocacy of renewed fast-track authority proves that expanded trade enjoys support on both sides of the political aisle. With jobs and economic growth at stake, that fact does not suprise us a bit.
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