Wacana UTS FTA - Presentation Dr Syakila 140707

8/14/2019 Wacana UTS FTA - Presentation Dr Syakila 140707

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Malaysia-US Free Trade Agreements(FTA):

Assessing the Potential Positive andNegative Impacts

Associate Professor

Dr. Shakila Yacob

University of Malaya

Wacana Urustadbir Soleh siri 3

FTA: Benarkah Rakyat Sengsara?

Anjuran JK SAKSI, JIM

14 Julai 2007

Pusat Komuniti JIM, Pusat Bandar Melawati, KL


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Malaysia (Potential)

Malaysia 's objectives in negotiating FTAs are to: seek better market access by addressing tariffs and non-

tariff measures;

further facilitate and promote trade, investment andeconomic development;

enhance the competitiveness of Malaysian exporters; and

build capacity in specific targeted areas through technicalcooperation and collaboration.


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The FTAs or Comprehensive Economic Partnership (CEP)agreements currently pursued with selected countries are notconfined to liberalisation and market opening measures alone.

They are comprehensive and include investment, tradefacilitation, intellectual property rights (IPR) as well aseconomic cooperation in areas such as: competition policy; standards and conformity assessment; information and communication technology;

science and technology; education and training; research and development; financial cooperation; Small and Medium Enterprises (SMEs) development; and paperless trading.


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Benefits:

Increased intense competition will lead to lowerprices for consumers for example in the areas of IT

hardware; Breaking up the monopoly of local giants and gives

more choice to local consumers; Local or domestic producers will be compelled to raise

productivity, invest more in research and development

(R&D), thus increasing the quality of goods andservices; in the areas of bio-tecnology: food technology,foodstuff.


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Chilean example:

From 2003-2005, Chilean exports to the United Statesincreased by over 80 percent.

Increases in U.S. exports to Chile have also beenspectacular with over 90 percent growth. Chile took on the hard work ofundertaking the necessary

economic reforms to ensure a key role of the private sectorin the productive process, general openness,macroeconomic stability, and overall competitiveness.

Chile managed to achieve these reforms in conjunction withenactment of social programs to reduce poverty thatwere missing with NAFTA.


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US-Malaysia FTA

Serve as an impetus for Malaysia to leap-frog its way tobeing an R&D hub in the region, as local manufacturers willfocus on R&D as a branding tool for market distinction, explore

international joint-ventures (IJVs) with US firms for technicaltransfer on a wider basis (i.e. the expansion of IJVs inMalaysia), taking advantage of the increase exposure to thefree flow of goods and services as a means to test and engagein comparative analysis for the purpose of quality improvement;

More employment opportunities for Malaysia as it has an

educated and sophisticated population which speak English.Representative offices, sales and marketing agencies, etc. willbe set up by US firms to facilitate the transactions and liaisonsbetween the two countries;


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US-Malaysia FTA

A prelude to the a freer cross-border movement oflabour, thus granting the privilege and right to Malaysiansto have more opportunities of seeking employment in theUS without having to go through stringent immigrationcontrols or naturalisation process. Thus, Malaysia neednot worry about suffering a brain-drain since it is more anissue of geographical mobility within a globalised economyrather than migration per se.

More transparency in the awarding of contracts andtenders, reversing the cronyism trend and promotingefficiency in the delivery system.


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Losses - 1

National pride would be impacted in the area of governmentprocurement, if the US insists that it should be incorporated into theFTA; To Malaysia it means the erosion of NEP indirectly.

Government procurement in Malaysia includes the area oftelecommunications, banking and insurance, construction, utilities(water and electricity).

Unlike our closest neighbour, Singapore we are not ready to be asopen. Among the more competitive U.S. service sectors that will enjoynon-discriminatory treatment in Singapore under the agreement aretourism, express delivery, telecommunications, advertising, constructionand engineering, and financial services, including banking andinsurance.

Malaysian GLCs like MAS, Tenaga , Telekom Malaysia areconsidered as strategic national assets which is vital to thegovernment agenda of economic development.


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Losses - 2

Dilution of the symbolism of national icons such as Proton, andperhaps other strategic national assets;

Downsizing of the bureaucracy in the backroom officesbecause of business process outsourcing (BPO);

The increase in the price of branded medical supplies becauseof intellectual property rights (IPO) protection, thus burdeningthe Malaysian consumers, and hampering equitable healthcareaccess;

Real danger of trade deficit with the US with the MalaysianRinggit further weakening instead of appreciating since de-pegging in order to stall the deficit. One implication is thatinflation will continue to rise, burdening the lower incomegroups.


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Losses - 3

Malaysian Agricultural sector would be affected as Malaysiawould not be able to compete with American agricultural products interms quality, price and varieties. The signing of the FTA would quash

the PMs vision to turn the agricultural sector to be the third engine ofgrowth in the Malaysian economy.

For example in Australia-US FTA (2004) improved the overall U.S.trade deficit situation with Australia creating a trade surplus withAustralia which rose 31.7% in the first quarter of 2005, compared tothe same timeframe in 2004. U.S. exports to Australia increased

11.7% in the first quarter of 2005 to nearly $3.7 billion for the quarter.Agriculture exports to Australia were up 20%.


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CONCLUSION

Overall the signing of the US-Malaysia FTA wouldgenerate positive impact in certain sectors but the

disadvantages outweighs the advantages in othersectors in particular agriculture. With the expiration of the Fast Track, there is a likelihood

that the US-Malaysia FTA would not be signed in the nearfuture.

This allows for a period of reflection on the part of Malaysiato continually assess the positive and negative impact ofsigning the FTA. Probably Malaysia should carry outdomestic reforms to enhance its competitiveness in theglobal market.

Wacana UTS FTA - Presentation Dr Syakila 140707

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