Identifier
Created
Classification
Origin
06KUALALUMPUR1838
2006-10-02 05:22:00
UNCLASSIFIED
Embassy Kuala Lumpur
Cable title:  

TRADE AGREEMENT COMPLIANCE AND MONITORING

Tags:  ETRD ECON MY 
pdf how-to read a cable
VZCZCXYZ0000
RR RUEHWEB

DE RUEHKL #1838/01 2750522
ZNR UUUUU ZZH
R 020522Z OCT 06
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC 7645
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/USDA FAS WASHDC
RUEHKL/ASEAN COLLECTIVE
UNCLAS KUALA LUMPUR 001838 

SIPDIS

SIPDIS

STATE FOR EB/TPP/MTA - EKOCH
STATE PASS USTR FOR B. HIRSCH, B. WEISEL AND J. JENSEN
COMMERCE FOR TCC/4110 - BVAUGHAN
USDA/ITP/FAS FOR BERTSCH

E.O. 12958: N/A
TAGS: ETRD ECON MY
SUBJECT: TRADE AGREEMENT COMPLIANCE AND MONITORING

REF: STATE 152063

UNCLAS KUALA LUMPUR 001838

SIPDIS

SIPDIS

STATE FOR EB/TPP/MTA - EKOCH
STATE PASS USTR FOR B. HIRSCH, B. WEISEL AND J. JENSEN
COMMERCE FOR TCC/4110 - BVAUGHAN
USDA/ITP/FAS FOR BERTSCH

E.O. 12958: N/A
TAGS: ETRD ECON MY
SUBJECT: TRADE AGREEMENT COMPLIANCE AND MONITORING

REF: STATE 152063


1. Embassy Kuala Lumpur's Economic, FCS, and FAS Sections jointly
monitor and respond to trade barrier complaints consistent with each
office's areas of expertise. All three offices interact closely
with the American-Malaysian Chamber of Commerce (AmCham),a very
pro-active organization that also tracks unfair trading practices in
Malaysia that affect U.S. commercial interests. On many trade
compliance issues involving U.S. firms, Embassy officials and AmCham
representatives coordinate our approaches to Malaysian government
officials to strengthen their impact. Compliance is an important
consideration in our ongoing free trade agreement negotiations with
Malaysia.


2. Embassy point of contact for trade compliance issues is Deputy
Economic Counselor John Finkbeiner, FinkbeinerJM@state.gov, tel:
(60-3)2168-5092, fax: (60-3)2168-4993.


3. The following cases provide examples of some of post's recent
trade compliance efforts:

A) UPS Operations Center: In June 2006, UPS filed a request with
the Ministry of Transportation to transfer its Kuala Lumpur
operations center from Kuala Lumpur International Airport (KLIA) to
Subang Airport. GOM policy promotes the use of KLIA, but other
express courier services have been permitted to move to closer-in
Subang. Post has been advocating with MOT on behalf of UPS, citing
our bilateral air agreement that calls for fair and equal treatment
of all competitors.

B) Marketing of Child Nutrition Products: Malaysia's Ministry of
Health is studying the imposition of tighter restrictions on the
marketing of children's nutrition products (e.g., infant formula).
The new rules could potentially exceed WHO agreed standards. Post
has urged the Minister of Health to consult with industry in the
development of any new marketing standards.

C) Distributive Retail Trade Sector: Malaysia's Ministry of Domestic
Trade and Consumer Affairs (MDTCA) has proposed new guidelines that
would negatively impact the ability of foreign investors to
participate in Malaysia's retail trade sector. One aspect of the
guidelines would require that hypermarkets reserve 30% of their
shelf space for products manufactured by Bumiputera (ethnic Malay)

companies, a provision that appears to be incompatible with
Malaysia's WTO TRIMs commitments. Post has been pursuing this issue
with the MDTCA, up to the minister level, and the issue is being
discussed with ongoing FTA negotiations.

D) Auto Policy: Automobile imports to Malaysia are controlled by the
requirement that every such import receive an approved permit, which
effectively imposes a quota on auto imports. The government also
recently announced that it would determine, without the input of
importers, the value of vehicle imports for customs and tax
purposes. Both policies appear to be inconsistent with Malaysia's
WTO obligations. Malaysia's automobile policy, including these
provisions, is being discussed as part of our ongoing FTA
negotiations.

E) WTO SPS Agreement Compliance: FAS has been somewhat successful in
persuading Malaysia to follow the WTO Agreement on the Application
of Sanitary and Phytosanitary Measures (SPS Agreement),which
advocates the use of established, science-based international
guidelines in dealing with SPS issues affecting trade. In accordance
with World Organization for Animal Health (OIE) guidelines, Malaysia
reopened the market to US boneless beef under the age of 30 months
in February 2006, after closing the market in December 2003.
Malaysia also reopened the market to US poultry in August 2004,
following the outbreak of highly pathogenic avian influenza (HPAI)
in Texas in early 2004. As a result of extensive discussions and
information exchange, Malaysia's Department of Veterinary Services
has also agreed to regionalize import restrictions from any future
HPAI outbreaks, and has agreed not to impose trade restrictions
following outbreaks of low pathogenic notifiable AI or from
detection of AI in wild birds. All of these measures are in accord
with OIE guidelines, which Malaysia previously did not follow. In
addition, Malaysia agreed to modify import protocols for swine
genetics to recognize clinical freedom from certain diseases of
concern, rather than require testing or disease-free declarations.
As a result, the US is making our first sales of swine breeding
stock since 2001.

F) Restrictive Import Licensing for meat and poultry: Malaysia
requires import licensing for meat and poultry imports, in addition
to veterinary certification. Its administration of import licenses
often acts as a de facto quota system to restrict imports. (For
poultry meat and pork, Malaysia reserved the right to implement a
TRQ in the Uruguay Round but has never formally done so.) Import
licenses are distributed based on domestic supply conditions. Both
importers and food processors apply directly for import licenses.
Importers are often refused import licenses or they are granted for
less than the quantity requested. Food processors sometimes have
more success in obtaining import licenses, especially if the end
product is for export. Pork imports are further restricted to offal
and processed pork products, rather than meat cuts. However, DVS has
recently allowed imports of meat cuts in response to domestic
shortages.

SHEAR