The third round of the Free Trade Agreement (FTA) talks with the United States has been postponed until at least end of October, said the Ministry of International Trade and Industry (Miti).

When contacted, Principal Assistant Director of Bilateral Trade at MITI, Mastura Ahmad Mustafa, said the reason for the postponement of yesterday's trade talks was due to its new secretary-general, Abdul Rahman Mamat, taking over as chief negotiator.

She also denied when asked if the postponement was due to the reluctance of Malaysia to meet US demands on the liberalisation of procurement, restriction of foreign equity ownership and the opening of markets on the manufacturing and service sectors.

"Not at all. It isn't on those terms we're postponing the talks. It's just that we have changed our chief negotiator that's all," she stressed.

Bigger than one person

However, University Malaya economics professor Dr Rajah Rasiah said the talks should have continued even with Abdul taking over as the new negotiator.

"The institution of Miti is bigger than an individual the likes of the new secretary general. There should be a continuity with the discussions between the ministry and US trade mission," he added when contacted.

Asked if the possible reasons for postponing the talks was because of Malaysia's insistence on protecting its government procurement market, he said, "The negotiations on the issue hasn't even started. And these are agreements that have to be worked out under the FTA."

He pointed out that it was impossible for the government to evade negotiations with the US on this issue.

Under the FTA, Malaysia will have to open up its government procurement markets which is protected due to the affirmative action policies to help ethnic Malays boost their share of equity in companies.

In view of that, the US FTA trade mission has also pressed for transparency in the tendering processes and has brought up the lack of procurement opportunities due to the government's economic policies.

In August, MITI minister Rafidah Aziz said the government had no objections to the procurement process but was against any reversal of the economic policy that places 30 percent of equity ownership in Malay hands.

Services sector

Rajah also said another possible reason for the postponement could be related to the issues of liberalising the services sector.

He said the government was cautious in opening its services market to American competition as the Malaysian workforce had not fully developed its potential to enter and compete in a free market in the US or at home.

"My gut feeling is the government is not ready at all to negotiate with the Americans. I think the government has no idea what sectors to liberalise, be it banking or insurance or which industrial sectors to open up to the FTA," added the lecturer.

He said Malaysian companies were not on par with their US counterparts in terms of technical and human resource capabilities.

"Does the Umno-led government want to protect crony businesses or allow competition so that companies can learn to be efficient and competitive?" he asked.

The Malaysian market has foreign restriction on equity and participation to help local businesses grow. The US FTA will remove these barriers.

The bilateral trade agreement, if approved by both nations, will increase trade between the two countries by opening up markets in the financial, services and manufacturing markets as well as government procurement.

The US trade mission has acknowledged the financial services, utilities, healthcare, high-tech manufacturing/services sector as areas where market access in Malaysia is limited and US companies are highly competitive.

The US is expected to come up on top from the FTA as Malaysia has more trade barriers in the manufacturing and industrial sectors - with tariffs at 9.1 percent against US tariffs of 3.7 percent.

A FTA would allow key Malaysian industries to avoid paying an estimated RM714.6 million in import duty.