M'SIA-US FTA MAY BE DELAYED DUE TO FINANCIAL CRISIS, SAYS FORMER ENVOY

By Nor Baizura Basri

KUALA LUMPUR, Oct 18 (Bernama) -- The proposed free trade agreement
(FTA)being negotiated between Malaysia and the United States may face a delay
following the impact of the global financial crisis especially on the American
economy, a former US diplomat said.

"On global trade agreements with our partners, there's going to be some
serious rethinking on financial services," John Wolf, a 34-year career diplomat
and who was Ambassador to Malaysia from 1992-1995, told Bernama in an interview
Saturday.

"With the financial turmoil playing havoc on markets, there are going to be
some questions on what an open market looks like," said Wolf, who was here to
attend a regional conference organised by the Eisenhower Fellowships of which
he is president.

He said: "How do you reach agreement when you don't quite know the
international financial architecture, that is going to be difficult."

He pointed out that among issues that need to be addressed under the new
financial architecture include hot money and money laundering.

Wolf, who has been involved in several trade negotiations before and at one
time was US Ambassador to Apec, said against such a backdrop, "there could be a
delay in reaching a pact with Malaysia."

"Washington's new administration would first have to think out what the
global approaches would be particularly as regards to financial services and
related regulations.

"With the worsening US financial crisis, there is a need for a new
financial
architecture, not only in the US but also in other countries which are
experiencing the same financial turbulence," he said.

The US financial woes, which started off with sub-prime mortgage crisis,
severely affected the broader American economy over the past few months forcing
large corporations like Lehman Brothers into bankruptcy.

With the turmoil getting worse, the US government urgently proposed a
US$700 billion (US$1=RM3.48) rescue plan to bail out troubled financial
institutions.

Wolf said: "They have to think through on whether or not we are talking
about a global architecture where one needs international cooperation in order
to monitor and effectively regulate. Some serious works need to be
done."

"Between no regulation and total regulation, what you need is effective
regulation.
"We will think through what are the regulatory and monitoring mechanisms
necessary to insure safety and stability in the market," he said.

He said the US was not as effective in implementing laws and regulations
that were already in place.
"Nevertheless, both countries would have more time to negotiate without
sacrificing their national interests prior to signing the proposed FTA," said
Wolf.

Malaysia and the US, which began FTA talks in June 2006, concluded their
eighth round of negotiations in Washington in July this year with both sides
showing willingness to resolve outstanding issues.

Both sides are expected to draw up a specific follow-up work plan which is
targeted for completion by Oct 1 to facilitate further negotiating rounds in the
future.

The eighth round of the negotiations held from July 14-18 focused on six
working groups addressing issues on services, investment, intellectual property
rights, agriculture, sanitary and phytosanitary measures as well as legal and
final provisions.
-- BERNAMA