ada apa dengan FTA?

A total of RM714.6 million.

This is the amount that Malaysia is expected to gain from the signing of a Free Trade Agreement (FTA) with the United States.

The amount is equivalent to the price of a Boeing 747.

According to the Deputy Minister of International Trade and Industry, Datuk Husni Hanadzlah, Malaysia would initially save RM714.6 million in duties when the FTA is enforced, and the savings will grow accordingly with exports.

"The current duty rates for these products vary between 5% and 32%. When the US abolishes duties for these products, Malaysian manufacturers and exporters will have an edge in competitiveness compared with other countries which do not have a FTA with them," he said in a reply to a question posed by Lim Kit Siang in Dewan Rakyat on 29 August 2006.

Since then several round of negotiations have been held with the US.

According to the Minister of International Trade and Industry, Datuk Seri Rafidah Aziz , negotiations for a free trade agreement (FTA) between Malaysia and the United States are still ongoing but in smaller groups and not big delegations as before.

"We have agreed on some areas and there are also areas that need further discussions, which are mostly at the technical level," she said when asked on the progress of the FTA negotiations during a question-and-answer session at a business seminar held in Seoul on 17 July, 2007.

On a macro level, signing a free trade pact with the US makes perfect sense.

The US, afterall, is Malaysia’s largest trade partner.

Malaysia’s exports to the country amounted to RM105 billion in 2005.

The country is also one of the largest foreign investor in Malaysia.

The US had invested about RM2.2 billion in Malaysia in 2006 and about RM1 billion for the first half of 2007.

According the United States’ Ambassador to Malaysia, James Keith, there are over 150 US-based firms who have set up shop in Malaysia, out of which 18 firms are involved in the semiconductor and electronics industry. This translates into 54,000 jobs in Malaysia.

About 44% of Malaysia’s total export volume comprised of goods from the semiconductor and electronics industry and about ¾ of this output are exported to the US.

Nevertheless, statistics alone should not the sole determining factor in inking a free trade pact with the US.

There are other factors that ought to be considered.

Already there is evidence of how countries which have signed FTA with the US have lost out from these agreements.

For example, Australia failed to achieve significant additional market access for its main exports of beef and sugar after signing the FTA with the US.

And while Mexico was able to increase its vegetable exports to the US, the US gained much more market access for maize — Mexico’s main crop — and other key agricultural products.

After the Singapore-US FTA came into force in January 2004, the Singapore trade deficit with the US has increased from USD1.4 billion in 2003 to USD4.3 billion in 2004, USD5.5 billion in 2005 and USD6.9 billion in 2006.

Furthermore, there are no evidence linking greater inflow of FDI with the signing of FTA.

Studies conducted by the United Nations and the World Bank have found that stronger investor protection in FTA has not led to increased foreign direct investments.

And while the US is seen as the leading advocator of free trade, in practice the country makes no qualms to use proctectionism whenever it serves their interest.

Two multibillion deals were recently blocked by the US lawmakers on "national security concerns."

The first, involving Dubai Ports World, a port operator owned by the government of United Arab Emirates, which was prevented from taking over the operation of 6 major ports in the United States.

China National Offshore Company (CNOOC), on the other hand, was denied by Congress from acquiring Unocal Corporation, the ninth largest oil company in the world. CNOOC, a subsidiary of the state-owned China National Offshore Oil Corporation, had announced on 23 June, 2005 to acquire Unocal at US$18.5 billion.

In view of these facts, is it still wise to proceed with the signing of FTA with the US?