AN FTA WITH THE U.S. WILL BENEFIT MALAYSIA
AN FTA WITH THE U.S. WILL BENEFIT
American Embassy Kuala Lumpur
March 9, 2006
CEMENTING MALAYSIA’S KEY ECONOMIC RELATIONSHIP
• A bilateral free trade agreement (FTA) with the U.S. would cement Malaysia’s most important economic relationship. The U.S. is Malaysia’s largest export market and largest source of foreign investment. Through an FTA, our economies, and our people, will grow closer, to the benefit of all.
SUPPORTING MALAYSIA’S NATIONAL DEVELOPMENT GOALS
• To meet its Vision 2020 objectives and spread the benefits of development more widely, Malaysia must build on its success in exporting electronics and diversify into other forms of manufacturing and services. This FTA represents an opportunity for Malaysia to jump-start that diversification in its largest export market — the United States.
• Diversifying Malaysia’s exports will require investment in both factories and human capital. Historically, free trade leads to more investment and U.S. FTA partners have seen increased foreign direct investment (FDI) because foreign investors have greater confidence in their markets.
o U.S. FDI in Mexico tripled following NAFTA — $4.4 billion prior to the FTA and $13.2 billion after.
o Singapore and Australia also experienced increased FDI after signing FTAs with the United States
• To become a “knowledge based” economy and a market leader in new hi-tech industries, such as biotechnology, Malaysia needs more foreign investment. FDI is not just a transfer of capital, but also of technology and “know how.” An FTA will help Malaysia stand out from the crowd of countries competing for this FDI.
• With greater levels of FDI and more two-way trade than ever before, Malaysia’s economy will expand to meet Malaysia’s development agenda. Traditional economic theory suggests that Malaysia would see far greater gains
from increased trade than the U.S. As it is now, Malaysia has a 3-to-1 trade surplus with the United States.
BENEFITTING MALAYSIAN CITIZENS
• Growth in investment and exports will create more jobs — and better paying jobs. Studies have shown that workers in firms that concentrate on exports are more productive and earn higher wages than those of firms that produce mainly for domestic markets.
• Malaysian consumers have more disposable income than ever before and they demand high quality goods at affordable prices. With an FTA, Malaysian consumers will have greater access to U.S. goods and services, and at lower prices.
2006 Trade Agenda. A Presentation Of U.S. Trade Representative Ambassador Rob Portman, February 15 2006, To The House Ways And Means Committee Hearing. 23 pages.
Pages/slides 1-18 present quick facts on FTAs and their impact on the U.S. and the global economy.
Free Trade Agreements: Impact On U.S. Trade And Implications For U.S. Trade Policy by William H. Cooper. CRS Report for Congress, December 6 2005. 16 pages.
This report describes FTAs and their economic benefits, and provides an overview of FTA developments under the Bush Administration.
FOR FURTHER INFORMATION
Click on http://www.ustr.gov/
The office of the USTR (United States Trade Representative) is responsible for developing and coordinating U.S. international trade, commodity, and direct investment policy, and oversees negotiations with other countries. The U.S.
Trade Representative is a Cabinet member who serves as the president’s principal trade advisor, negotiator, and spokesperson on trade issues.
Other pertinent information may be obtained from the following web links: