MALAYSIA VIEWS FTA AS STILL WITHIN REACH

UNCLAS KUALA LUMPUR 000309

SIPDIS

SENSITIVE
SIPDIS

STATE PASS USTR FOR B. WEISEL AND J. JENSEN
USDOC FOR 4430/MAC/EAP/BAKER
TREASURY FOR OASIA

E.O. 12958: N/A
TAGS: ETRD EFIN EINV MY
SUBJECT: MALAYSIA VIEWS FTA AS STILL WITHIN REACH



1. (SBU) Summary: MITI Minister Rafidah is putting pressure
on her colleagues to make the compromises necessary for a
successful conclusion of the FTA negotiations. The Cabinet
is expected to meet to decide whether to continue the
negotiations on February 28. MITI Secretary General Rahman
has indicated that his team is ready to meet continuously
during March to conclude an agreement, if the Cabinet gives
the go ahead. Leading elements of the Malaysian private
sector also appear eager to make a last-minute push. From
the Malaysian point of view, an FTA remains within reach.
End summary.


2. (SBU) Minister of International Trade and Industry (MITI)
Rafidah Aziz briefed the Cabinet February 14 on the status of
the U.S.-Malaysia FTA negotiations and what she is calling
the "58 issues" that still need to be resolved. Rafidah and
Deputy Prime Minister Najib (chairing the meeting in the
absence of PM Abdullah) reportedly pressed ministers to find
ways to move the process forward. Rafidah was optimistic
following the discussion. Ministers now will consult with
staff to determine what flexibilities are possible and are
expected to decide whether to go ahead at their February 28
meeting (after the Chinese New Year holiday period).


3. (U) After staking out a tough public line during the week
of FTA Round 5 (held February 5-12),Rafidah has been both
more flexible and more colorful in talking to the press
following the Cabinet meeting. Frequently drawing an analogy
with Malaysian marriage customs, Rafidah has observed that
there often are arguments about the size of the dowry, the
timing of the wedding and so on. For example, when asked
whether Malaysia wants the FTA more than the U.S., she
responded, "It's like getting married; do you want to get
married more than he does?" She also has been publicly
pressing her colleagues to take responsibility for the
outcome, saying: "It is not MITI's position alone, it is the
position of every ministry and agency involved that
constitutes Malaysia's position. So ( it is very important
that every ministry and agency concerned understand the full
implications of the position they put forward for the Cabinet
and the government to consider."


4. (SBU) While Rafidah has continued to fudge the timeline
in public, comments from her colleagues indicate they are
aware that the U.S. faces a deadline due to the expiration of
Trade Promotion Authority (TPA). Plantation and Commodities
Minister Peter Chin told the press following the Cabinet
meeting that "we have to act soon as the talks are to be
wrapped up in the next month." MITI Secretary General Abdul
Rahman Mamat, Malaysia's lead negotiator, clearly understands
the situation. He has indicated privately that Rafidah
believes an agreement can be concluded before the end of
March and has directed her ministry to operate accordingly.
He offered to meet "continuously" until March 31, if the
Cabinet gives the go ahead to conclude the agreement.


5. (U) Federation of Malaysian Manufacturers (FMM) President
Yong Poh Kon, who was clearly well informed on the internal
GOM deliberations, assured the Ambassador February 16 that
his organization is prepared to help the GOM sort through the
issues. He reported that there had been a shift within the
GOM toward a more positive assessment of the FTA's prospects
following this week's cabinet discussion. FMM was ready to
work with the GOM to make a final push to secure an
agreement. He admitted that there remained areas, e.g.,
financial services and government procurement, in which the
Malaysian side had yet to determine how they could go beyond
statements of general principle. However, he also noted that
many U.S, proposals jibed with directions already set forth
in the GOM's own long-term policy guidelines, and he felt the
GOM could yet come up with ways to bridge the gaps.


6. (SBU) Comment: Rafidah, and it now appears DPM Najib,
are putting the pressure on Malaysian officials to be more
flexible and forthcoming. Finding solutions to all of the
sticky issues will be challenging, but Malaysians are famous
for making heroic efforts at the very last minute. As one
press headline put it this week, "It's not over until it's
over." From the Malaysian point of view, an FTA is still
within reach.
LAFLEUR