In recent years, there has been a significant increase in the number of free trade agreements (FTAs) in which two or more countries agree to significantly reduce trade barriers. Large parts of the world are now negotiating such agreements, joining strong regional trade blocs, or at least not being left out of coalescing blocs in many parts of the world. Occasionally involved in frantic efforts.
FTAs are seen as an efficient means of promoting trade growth, opening markets and reducing trade barriers. China’s FTA with ASEAN in 2004 can be cited as a benchmark. In four years, trade between China and ASEAN increased by at least 20% each year.
Similarly, the United States and the European Union have shown a steady interest in entering into FTAs with countries across the region. Free trade, economic integration and market access are of paramount importance for countries that rely on trade. And it goes without saying that the most sought-after markets are the largest.
Although FTAs are generally regarded as economic agreements, their political significance is great. For example, in retrospect, when the United States had to scale back its military presence in South Korea and confront both rising anti-American nationalism and China’s aggressive diplomatic efforts, the United States decided to give South Korea her FTA. I responded by proposing.
The same was true of many FTAs across the region. His FTA across Asia was becoming increasingly political as countries vie for position.
Between 1997 and 2007, the number of FTAs increased from 7 to 38, making an already complex international trading system even more complex.
In his book A History of Western Philosophy, Bertrand Russell predicted that Western culture would eventually engulf and absorb all foreign cultures.
On the other hand, Victor Davis Hanson, in his book Why the West Has Won, argued that cultural differences eroded in the 20th century, leading to the efficiencies of capitalist ownership and legal protection of capital accumulation. It further alleges that it hindered the adoption of the Western view it emphasizes.
By adopting a Western approach, Japan, and later Singapore, Hong Kong, Taiwan, and South Korea, went from being one of the poorest countries in the world to being one of the richest.
Proposed Malaysian-US Free Trade Negotiations
Capitalism offers sufficiently attractive incentives to a wide range of people to appear to be a powerful weapon against extremism. Along these lines, former US Ambassador Christopher J. Lafleur had praised Malaysia: It emphasizes cooperation, emphasizes economic development, and emphasizes political rights and freedoms.”
On March 8, 2006, then-US President George Bush announced that negotiations for a free trade agreement with Malaysia had begun. He expects a mutually beneficial relationship, noting that Malaysia is her 10th largest trading partner for the United States and the United States is Malaysia’s largest source of imports.
America’s status as Malaysia’s largest foreign market and long-standing major source of investment has been an incentive for the agreement. The FTA will increase and diversify Malaysian exports and stimulate investment in Malaysia.
The United States hoped to strengthen its moderate Muslim allies. An FTA with Malaysia appears to have strong bipartisan parliamentary support, thanks to Malaysia’s credibility, openness and multiculturalism in the fight against terrorism, with officials calling Malaysia “transforming Asia.” A country that stands at the forefront of economic dynamism,” he praised. recent years”.
In short, this trade deal can be seen as a strategic one to help the Muslim country, which is known for its tolerance.
After five rounds of negotiations, negotiations stalled and there was no chance of an agreement in time to give Congress the three months it needed before the president’s Trade Promotion Authority (TPA) expired. Each side had a “no trespassing” area that could not be moved. Market access issues such as the entry of US companies into Malaysia’s protected financial, automotive and services sectors were discussed, but Malaysia refused to discuss affirmative action policies in favor of the Bumiputera.
The TPA expired a long time ago, so any legislation that would allow it would have to be considered by Congress without limit. In the current scenario, economic nationalists influencing the administration of President Joe Biden are making many changes to American trade policy. The Biden administration, for example, has focused on “worker-centered trade policies that promote inclusive prosperity,” rather than pending negotiations or reopening new his FTAs.
The use of FTAs reflects political and economic desires. The current general belief is that liberalizing trade between countries will bring economic benefits.
The United States in particular emphasizes free trade in an effort to shape the world into a rational, Western image. Capitalism is seen as the key to countering Islamic extremism. It can therefore be argued that FTAs can sometimes be a foreign policy tool (a figurative/aphorical carrot).
Competing for economic leadership in East Asia
In the field of international strategy and diplomacy, competition is usually a negative paradigm. Strategic competition is risky and tends to be counterproductive: territorial disputes, freedom of navigation battles, and arms races. In other domains, however, competition should be welcomed. For example, in a market economy, competition leads to innovation and efficiency. So what should be avoided between China and the US should be encouraged between Apple and Samsung.
In other areas, competition is neither entirely good nor bad, but a delicate scenario to manage. Asian trade diplomacy is one area with competing agendas for trade liberalization, as evidenced by the emergence of the ‘noodle bowl’ of free trade agreements in East Asia.
Will the United States lose to China in the long-term geopolitical race in East Asia? Are smaller Asian nations leaning toward China for economic gain at the expense of U.S. interests? Biden’s Does foreign policy create room for China to expand its influence in Asia?
We must thank Japan for counterbalancing China, the rising dragon, and the United States, which does not want to fall from its position.
Malaysia has no grace. Sooner or later we will have to formulate a great power policy. Undoubtedly, it will be driven by domestic political imperatives, especially economic interests. We cannot become a reclusive nation.
In the final analysis, change is inevitable, relentless and all-encompassing against the backdrop of the unfolding world situation. Like the kancil of the wise proverb, an open economy like Malaysia must learn to dance to the gigantic movements of the international trading system while making the necessary structural changes in government and economy. must be In this context, the proverbial Sang Kancil is known for its agility and wit. Strategy and timing are key. When dancing with Goliath, you must be careful not to be trampled by Goliath. Instead, you should play by the accepted rules and reap the maximum benefit.
Samirul Ariff Othman is a widely cited independent analyst. He was previously with a leading local think tank.