Let's Move Forward The U.S.-Malaysia Bilateral Relationship Address by Ambassador Marie T. Huhtala To the ASLI Strategic Issues Forum May 23, 2003

The U.S.-Malaysia bilateral relationship is a hot issue at the moment. The past few months have seen a very public airing of differences between the two countries over the issue of Iraq.  Many are asking the question, can the relationship be restored to the warm ties we enjoyed just a year ago, when PM Mahathir was invited to the Oval Office by President Bush?

It would appear this is something both sides want.  On May 8 our AmCham organized a luncheon meeting to hear Foreign Minister Syed Hamid Albar's ideas on the U.S.-Malaysia relationship.  The Foreign Minister stressed that Malaysia is committed to maintaining a strong and close relationship with the United States, in spite of our differences of opinion on Iraq.  He referred in glowing terms to American ideas and ideals that have been a major influence on Malaysia's economic and political development, notions such as free enterprise, a federal structure of government, and the rule of law and democracy.  The Minister also acknowledged that the bilateral relationship with the United States affects Malaysia more than its relations with any other nation.

Of course we welcomed that message from the Foreign Minister.  At the same time, it is impossible to deny that our bilateral relationship has been strained recently.  Malaysia’s opposition to the Coalition action against Iraq was well known, and was not in itself a problem from Washington’s point of view.  Many countries around the world disagreed with us on Iraq.  But some of the public statements by senior Malaysian officials have castigated the U.S. in antagonistic, occasionally offensive, terms. American officials at the most senior levels in Washington were especially taken aback to hear the victims of the September 11 terrorist attacks dismissed as mere "collateral damage," and irritated by allegations that the U.S. was pursuing a war against Islam, a policy based on racism and an effort to dominate the world.

These are not helpful statements by any standard, and I’m here to tell you that Washington does take note of them.  They are bound to have a harmful effect on the relationship.  But we also realize that actions often speak louder than words, and we recognize the important cooperation between Malaysia and the United States on key issues that have remained strong throughout this period of rhetorical hostility.  For example, we continue to work closely together on counter-terrorism activities, both on the law enforcement front and through diplomatic initiatives.  We are pleased that Malaysia has agreed to host an ASEAN-wide Counter-Terrorism Center.  Our companies continue to be welcome in Malaysia.  And we appreciated Acting Prime Minister Abdullah Badawi’s statement to the Malaysian people, at the outset of military action in Iraq, that no harm should come to U.S. property and citizens in Malaysia.

We therefore have a strong platform to work from in order to bring the relationship back to a more even keel, as long as there is a desire on both sides to do so.  There are several areas in particular where we can move forward to better relations.

First, Malaysia can play a key role in assisting Iraq to become a vibrant and successful member of the world community of nations again.  The U.N. Security Council has just passed a resolution that will lift the sanctions burden on the Iraqi people, encourage the international community to help build a free and peaceful Iraq, and define a role for the United Nations in Iraq, through the appointment of a Special Representative.  That Special Representative will coordinate participation by the international community in humanitarian assistance and economic reconstruction, and support the Iraqi people in developing a representative government.  He will also support international efforts to contribute to civil administration, to promote legal and judicial reform and human rights, and to help rebuild the civilian police force.

As an Islamic nation that is democratic, multi-ethnic, and economically developed, and especially in its role as Chairman of the NAM, Malaysia could play a crucial role in rallying support for these efforts.  Washington would be impressed and appreciative if your government did so.

There has been much discussion of how Iraq's oil revenues will be handled in the post-Saddam era.  Under the U.N. resolution, Iraq's oil revenues will be deposited in a Development Fund for Iraq to be held by the Central Bank of Iraq.  Revenues will be used for the benefit of the Iraqi people, including humanitarian needs and reconstruction.  Funds will also be used to meet the costs of the Iraqi civilian administration.  The Fund will be audited by independent public accountants, who will report to an international advisory board that will include representatives from the United Nations and international financial institutions.  The use of the oil revenues will be transparent and visible to all.

Even though Malaysia is currently not a member of the Security Council, it has a very important role to play as chair of the Non Aligned Movement, and as prospective chair of the Organization of Islamic Conference.  My government would like that to be a helpful role and, to that end, we are in close discussions with the Malaysian government here, in Washington, and in New York. Malaysia has a clear interest in assisting Iraq's recovery, as do we.  We are talking with our Malaysian counterparts about reconstruction and other aspects of the Iraq situation in which Malaysia could play a helpful role and provide a good example of how the new Iraq might best function.

Major progress has already been made on Iraq’s reconstruction.  Railway links are being restored, power is coming back across the country.  The schools have reopened, at least 10,000 Iraqi police officers are back at work, and emergency payments have been made to half a million civil servants to facilitate their return to work.

Much remains to be done, however.  Malaysians have been generous in their donations via Mercy Malaysia to help support hospitals.  We hope there will also be opportunities for Malaysian companies to become involved as subcontractors on some of the reconstruction work that must be done.  I want to stress that, even though Malaysians may have read otherwise in fanciful media stories, there is no "black list" of countries whose companies are considered off limits for sourcing our contracting.

Most of the U.S. Government-funded assistance will be administered by the U.S. Agency for International Development.  That agency must follow U.S. government guidelines on procurement, which include the requirement to buy from American companies whenever possible.  Many other countries have similar restrictions on their development assistance funds.  That does not prohibit companies from other countries, such as Malaysia, becoming involved in sub-contracting or supply contracts, however.  As the economic picture becomes clearer in Iraq, there will no doubt be attractive opportunities for investors and companies from many other countries.

Malaysia could also play a constructive role in supporting our current initiatives to improve the situation of the Palestinians, an area where your government has long urged the U.S. to be actively involved.  We would appreciate it very much if Malaysia supported the combined efforts of the UN, the EU, the United States and Russia (the Quartet) to bring lasting, secure peace in the Middle East.  Secretary of State Powell met personally with leaders in the region earlier this month, and President Bush has spoken out repeatedly about the U.S. commitment to peace in the region.  He has promised to expend an intense personal effort to support the “Road Map” which was drawn up to make it possible for the two states of Israel and Palestine to live side-by-side in peace.  The President has called on all sides in the conflict to take concrete steps.  The Palestinians must crack down on terror, and continue on a bold path of political reform and expanded democracy.  Israel must take tangible steps to ease the suffering of the Palestinians and show respect for their dignity.  As progress is made towards peace, Israel must also stop settlement activity in the occupied territories.  The President also called on Arab nations to join the fight against terror in all its forms, and to recognize that Israel has a right to exist in a state of peace with its neighbors.

President Bush also announced a proposal to establish a U.S.-Middle East Free Trade Area within the next decade.  This initiative will build on the existing free trade agreements with Israel and Jordan, and the agreement currently being negotiated with Morocco.  We will also work with our partners to provide loans to small and medium sized businesses, reform the judicial systems, and develop essential laws on property rights and good business practices.

As you know, my country has also been actively pursuing Free Trade Agreements in Southeast Asia.  The AmCham audience was very pleased to hear the Foreign Minister say that Malaysia is "keen" to move forward on discussions on a Free Trade Agreement with the United States.  This was in response to a proposal made last year under the Enterprise for ASEAN Initiative, in which the United States offered bilateral FTA's to the ASEAN countries who are members of the WTO.  Just recently the U.S.-Singapore Free Trade Agreement was signed during Prime Minister Goh Chok Tong's visit to Washington.  That agreement was the result of more than two years’ hard work to bring to fruition, and in fact initial discussions started a decade ago.  So we are talking about a long process, but one that can bring important benefits to both sides.

The first step in the process of reaching an FTA with Malaysia would be to sign a Trade and Investment Framework Agreement, or TIFA.  This is becoming standard practice, and last year we proposed TIFA’s with countries throughout ASEAN.  The TIFA can be used as a platform for further discussions on all sorts of trade and economic issues, including a Free Trade Agreement.

I will be honest with you – any FTA negotiations would be long and complicated.  In order for a Free Trade Agreement to be compatible with our commitments in the World Trade Organization, it must cover "substantially" all trade.  That means we can't pick and choose the easiest areas to come to agreement on and sign up for free trade in only those sectors.  Both Malaysia and the United States have substantial agricultural sectors, so that would likely be an area for tough negotiations, more contentious than with Singapore, which has no agricultural sector to speak of.   The United States would also ask for substantial openings in the services sector, such as banking and insurance.  Malaysia would probably be interested, in turn, in being able to compete to provide Islamic banking services in the United States.

One of the issues we would be sure to raise in any discussions under a Trade and Investment Framework Agreement is protection of Intellectual Property Rights.  Malaysia has excellent laws on the books, and makes regular efforts to crack down on IPR pirates, such as those who sell illegal VCDs, DVDs and CDs.  The government's announcement that they are going after illegal duplicating centers is even better news.  We need to see success in prosecuting the kingpins of the illegal trade, and in closing the factories.  Optical disk piracy is one of the most visible IPR crimes in Malaysia, but others, such as copying of branded consumer goods, and industrial design theft, also cause losses to U.S. companies.  We look forward to continuing to work with the government as Malaysia moves toward an environment in which intellectual property theft is vigorously prosecuted as the serious crime that it is.

Even though we will have many issues to resolve, both the United States and Malaysia can benefit from an expansion of our trade ties.  We are already very close in economic terms, with Malaysia clocking in as the United States' 11th largest trading partner, far ahead of many other countries with much larger populations.  We should also work to conclude a bilateral tax treaty and a mutual legal assistance treaty, both of which would greatly enhance our bilateral cooperation and provide solid benefits for our citizens.

That is why it is so crucial that we all work to bring our countries together, that we make sure that our relationship is well grounded and multi-faceted.

The list of issues that unite our two countries is much longer than the list of our differences.  I hope that both sides will take a deep breath, come to that vital realization, and dedicate themselves to resolving our differences and moving forward on areas where we have common interests.

It is not surprising that we have had differences with Malaysia – in fact we have differences from time to time with even our closest allies.  The important thing is to foster an open dialogue, as befits a mature relationship, and treat each other seriously, as the friends we are.  If we can manage that, we will indeed be able to move forward and strengthen the bilateral relationship so important to us all.
 

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