Go for Fair Trade, Not Free Trade
LAST week, Malaysia began talks with the United States to establish a free trade agreement (FTA) between the two countries, with the idea of boosting bilateral trade by rolling back or dismantling tariffs and non-tariff barriers.
For most, this seems like too much information on a subject so arcane, complex and dry, especially with our attention consumed by the World Cup in Germany and political intrigues at home.
For a long time, external trade has been a subject best left to the Government. Many of us have little ability to think about it, when in fact we should. It could potentially affect all of us, for better or worse.
The main issue for any country embarking on an FTA is how much it is willing to offer in return for better access for its goods and services.
Market access at its most basic is akin to horse-trading, with each country deliberating the cost-benefit of any agreement in the interest of the economy and people.
Previously, trade talks were conducted solely at multilateral platforms like the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organisation (WTO). But the need to deal with so many countries, and their many varied interests, led to such talks being protracted and contentious. The outcomes, in the opinion of many, were rather lame.
This prompted many developing nations especially to launch bilateral talks at the periphery of the WTO with the aim of speeding up liberalisation initiatives beyond the stifling and slow multilateral process.
Malaysia’s FTA talks with the US were born of the same idea. FTAs with others, including South Korea, India, Pakistan, Chile, Australia and New Zealand, are in the works.
Last December, Malaysia signed an FTA with Japan, called the Japan-Malaysia Economic Co-operation Partnership (JMEPA), which essentially allows Japanese manufactured goods, including cars, easier access into Malaysia in return for equal treatment for our vegetables and fruits.
Japan
For most, this seems like too much information on a subject so arcane, complex and dry, especially with our attention consumed by the World Cup in Germany and political intrigues at home.
For a long time, external trade has been a subject best left to the Government. Many of us have little ability to think about it, when in fact we should. It could potentially affect all of us, for better or worse.
The main issue for any country embarking on an FTA is how much it is willing to offer in return for better access for its goods and services.
Market access at its most basic is akin to horse-trading, with each country deliberating the cost-benefit of any agreement in the interest of the economy and people.
Previously, trade talks were conducted solely at multilateral platforms like the General Agreement on Tariffs and Trade (GATT) and its successor the World Trade Organisation (WTO). But the need to deal with so many countries, and their many varied interests, led to such talks being protracted and contentious. The outcomes, in the opinion of many, were rather lame.
This prompted many developing nations especially to launch bilateral talks at the periphery of the WTO with the aim of speeding up liberalisation initiatives beyond the stifling and slow multilateral process.
Malaysia’s FTA talks with the US were born of the same idea. FTAs with others, including South Korea, India, Pakistan, Chile, Australia and New Zealand, are in the works.
Last December, Malaysia signed an FTA with Japan, called the Japan-Malaysia Economic Co-operation Partnership (JMEPA), which essentially allows Japanese manufactured goods, including cars, easier access into Malaysia in return for equal treatment for our vegetables and fruits.
Japan