AMBASSADOR'S MEETING WITH MALAYSIA'S NEW MINISTER

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000422

SENSITIVE
SIPDIS


DEPT FOR EEB/TPP/BTA AND EAP/MTS,
TREASURY FOR OASIA AND IRS,
STATE PASS FOR USTR - WEISEL AND EHLERS,
STATE PASS FOR FEDERAL RESERVE AND EXIMBANK,
STATE FOR FEDERAL RESERVE SAN FRANCISCO TCCURRAN,
USDOC FOR 4430/MAC/EAP/J.BAKER,
USDA FAS FOR OA/BIG, ITP/AAD,
COMMERCE FOR 4430/MAC/MICHAEL HOGGE,
GENEVA FOR USTR

E.O. 12958: DECL: 11/12/2018
TAGS: ECON ECIN ETRD SOCI PGOV PTER MA
SUBJECT: AMBASSADOR'S MEETING WITH MALAYSIA'S NEW MINISTER
OF INTERNATIONAL TRADE AND INDUSTRY

Classified By: Economic Counselor Matthew J. Matthews, reason 1.4 (b an
d d).


1. (C) Summary: Malaysia's new Minister for Trade and
Industry told the Ambassador during their initial meeting
that the Najib government was completing an FTA stocktaking
exercise and he hoped to have an opportunity to meet USTR
Kirk on the margins of the Cairns Group to discuss how to
move forward on the negotiations. The Ambassador noted that
the U.S. was holding its own trade policy review and it would
be necessary for Malaysia to signal it was ready to negotiate
the FTA with a comprehensive mandate to break the impasse.
The Ambassador also raised U.S. concerns about the trade
restrictive nature of Malaysia's new halal standards and its
ban on pork imports which Malaysia needed to notify the WTO
of such measures in a timely fashion and Mustapa offered to
look into these issues. The Ambassador encouraged Malaysia
to move forward on export control legislation and related
training and suggested that Malaysia begin to consider trade
policy linkages of future carbon trading proposals that could
be discussed at the COP-15 Conference in Copenhagen. Mustapa
promised to look into these issues as well. End Summary.


2. (C) Comment: Mustapa was well prepared, at ease and upbeat
during the meeting. He a key member of PM Najib's team and a
serious interlocutor. He clearly signaled Malaysia's
interest in continuing our bilateral FTA negotiations and
indicated that Malaysia's ongoing policy stocktaking exercise
was designed to create more negotiating flexibility. A bilat
on the margins of the Cairns Group meeting may not be
possible given logistical constraints, but a pull aside with
USTR Kirk could provide Mustapa with the opportunity to
indicate if Malaysia will be able to table a comprehensive
FTA negotiating mandate. End Comment.

FTA and Trade Issues


3. (C) During an initial meeting with the Ambassador,
Malaysia's new Minister for International Trade and Industry
Mustapa Mohamad expressed hope for bilat meeting with USTR
Ron Kirk on the margins of the June Cairns Group meeting to
discuss WTO issues and the FTA. Noting that it had been
nearly a year since the last FTA round, Mustapa said, and the
Najib administration was now completing a stocktaking
exercise to see how Malaysia could move forward on the FTA.
He said he would be looking for an indication from the US
side on how to move forward. The Ambassador noted that the
Obama Administration was conducting a trade policy
stocktaking exercise as well and suggested to Minister
Mustapa that it would be necessary for Malaysia to signal
that it had a cabinet mandate to negotiate on all issues
covered in the FTA negotiations to move things forward.
Mustapa promised to touch base with the Ambassador when he
was prepared to reply and he expected the Malaysian
stocktaking exercise would be completed in the next four to
six weeks. In a pull aside at the end of the meeting,
Mustapa responded to the Ambassador's suggestion that the way
to advance was for Malaysia to signal it had a mandate to
address all issues in the FTA. Mustapa indicated he was
engaged in an effort to do just that.

Possible Visit to Washington


4. (C) Mustapa noted that PM Najib had been pleased with the
results of Foreign Minister Anifah's recent visit to
Washington, particularly his meeting with Secretary Clinton.
Mustapa added that in accordance with the PM's clear
instruction to increase senior level interaction, he too
would be looking for an early opportunity to visit Washington
in two to three months time for official meetings with USTR
and other counterparts. Building on the positive momentum
created by Foreign Minister Anifah's recent meeting with
Secretary Clinton was a high priority for PM Najib, he said,
and everyone needed to fall in line with the PM's thinking on

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this. Ambassador Keith agreed that FM Anifah's visit to the
U.S. had gone well and welcomed additional cabinet level
visits to strengthen our senior-level bilateral dialogue.

Importance of Export Control Law


5. (C) The Ambassador noted to Minister Mustapa that export
controls was one high priority area in our bilateral
relationship where progress was needed. The Ambassador told
Mustapa that the MFA was moving slowly on preparing the draft
export control law and was not moving to facilitate export
control training, including training on export licensing that
was relevant for MITI. Mustapa noted that MFA had the lead
but agreed that MITI had an interest on the licensing side
and would look into the training issue.

Pork Ban and Halal Issues


6. (SBU) Raising concerns about Malaysia's imposition of a
ban on pork imports, the Ambassador told Minister Mustapa
that the ban was not science-based and should have been
notified to the WTO. The Ambassador pointed out that Malaysia
also had failed to notify the WTO on certain new halal
standards which were trade restrictive. Mustapa said the
pork ban was just a precautionary measure but agreed to have
his staff check to ensure that the responsible agencies were
meeting WTO reporting requirements on this measure.
Recalling his previous job as Agriculture Minister, Mustapa
said halal was a bit more complicated but again offered to
follow up and ensure that Malaysia was meeting its obligation
to notify the WTO of new measures which affected trade.

Climate Change and Energy Policy


7. (SBU) In preparations for the COP-15 climate change
conference in Copenhagen later this year, the Ambassador
suggested to Minister Mustapa that MITI might find it useful
to coordinate with ministries that were responsible for
environmental policy as issues relating to carbon trading
potentially had significant implications for trade policy.
Mustapa agreed that this would be a big issue and that MITI
would need to consult with other ministries on it. With the
climate change discussions in mind, the Ambassador also
suggested that it was time for Malaysia to develop its new
energy policy. Mustapa assured the Ambassador that internal
discussions were underway on this topic, recalling a recent
discussion he had with Exxon Mobil Managing director on the
importance of having an updated energy policy to ensure
future foreign investment in this key sector.
KEITH