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PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0570/01 0880239
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P 290239Z MAR 06 ZDK
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC PRIORITY 6280
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBY/AMEMBASSY CANBERRA 2090
RUEHWL/AMEMBASSY WELLINGTON 0499
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/USDA FAS WASHDC

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 000570 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR FOR WEISEL AND JENSEN 
USDOC FOR 4430/MAC/EAP/BISBEE AND BAKER 
 
 
E.O. 12958: DECL: 03/29/2016 
TAGS: ETRD EAGR KIPR EINV MY AU
SUBJECT: AUSTRALIA-MALAYSIA FTA TALKS: A PREVIEW OF 
U.S.-MALAYSIA FTA NEGOTIATIONS 
 
REF: A. 2005 KUALA LUMPUR 4374 
     ¶B. 2005 KUALA LUMPUR 4048 
 
Classified By: Ambassador Christopher J. LaFleur for reasons 1.4 (b) an 
d (d) 
 
¶1. (C) Summary:  Australian trade officials negotiating an 
FTA with Malaysia believe their negotiations are back on 
track after a four month hiatus.  Recent talks in Canberra 
led to progress on a goods chapter, and Australia recently 
reached agreement with Malaysia on halal certification of 
Australian beef exports.  Malaysia continues to resist 
significant opening on services, however, particularly in the 
financial services sector.  Malaysia also continues to stymie 
Australia,s attempt to negotiate an FTA chapter on 
government procurement.  As our FTA discussions with Malaysia 
will soon be moving in tandem, we will continue to engage 
with Australia to share our experiences.  End summary. 
 
¶2. (C) In a March 22 breakfast hosted by Australian High 
Commissioner James Wise, Australian trade officials discussed 
their ongoing efforts to secure an FTA with Malaysia. 
Michael Mugliston, the Australian lead negotiator (he heads 
the Asia Trade Task Force in the Australian Department of 
Foreign Affairs and Trade), told the Ambassador and emboffs 
that last week,s FTA round with Malaysia in Canberra (their 
first formal round of negotiations since November) saw 
significant progress in the goods sector, but less progress 
on negotiating a services chapter.  Australia,s target date 
for completing the FTA has now slipped from mid-year to the 
end of 2006. 
 
¶3. (C) Mugliston said that Australia was pleased at the 
increased level of Malaysian government participation in last 
week,s round compared to earlier rounds.  He noted, however, 
that the absence of officials from Bank Negara and the 
Finance Ministry, due in part to their participation in the 
U.S.-Malaysia FTA rollout in Washington, precluded any 
progress on financial services or government procurement. 
Mugliston said that, even with the appropriate officials 
present, Australia has not so far been able to persuade 
Malaysia to make any meaningful movement in either sector. 
Among the other service sectors of particular importance to 
Australia are legal services and educational services, but 
Malaysia so far has continued to impede greater market access 
in these areas as well.  Mugliston said that even after 
several rounds Malaysian officials remain circumspect about 
Australia,s negative list approach to the negotiations, 
neither rejecting it outright nor clearly agreeing to it. 
 
¶4. (C) Australia is pleased with recent progress on halal 
rules on agriculture, in particular regarding beef exports to 
Malaysia.  Mugliston acknowledged that the personal interest 
of Prime Minister Abdullah had spurred the GOM to reach an 
agreement with Australia to certify Australian slaughtering 
techniques as halal.  Australia still seeks Malaysia,s 
commitment in an FTA to transparency and consultations for 
any similar problems in the future, but the religious aspect 
would continue to make this issue a delicate one.  Mugliston 
noted that, as in the United States, Australia relied on 
non-government Islamic centers to certify its 
slaughterhouses, which limits the Malaysian government,s 
ability to control the process. 
 
¶5. (C) Mugliston said that Malaysia is pushing strongly for a 
separate chapter in the Australia FTA on economic 
cooperation.  The GOA is not enthusiastic about including a 
chapter in an area not directly related to trade and 
investment (Mugliston said that for similar reasons Australia 
does not seek chapters on environment or labor either). 
Australia provides significant capacity building to Malaysia 
already; Mugliston mentioned the example of an upcoming IPR 
training session as one in a series that Australia is 
organizing.  Although Malaysia is happy to participate in 
such programs, the GOM is resisting Australia,s push to 
include a separate IPR chapter in their FTA.  The Ministry of 
Domestic Trade and Consumer Affairs has not proven to be a 
responsive negotiating partner on IPR, he added. 
 
¶6. (C) Mugliston,s current visit to KL concerns ongoing 
negotiations to forge an FTA among Australia, New Zealand, 
and ASEAN.  He noted that negotiating a plurilateral 
agreement among 12 countries was slow-going, but that 
Australia nevertheless hoped to reach an agreement by 
mid-2007, in part to present completion of an FTA while 
 
KUALA LUMP 00000570  002 OF 002 
 
 
Australia holds the APEC chair.  Mugliston was hopeful that, 
given Australia,s existing FTAs with Singapore and Thailand 
and its near-FTA with Malaysia (the three Southeast Asian 
countries represent the bulk of Australian trade with ASEAN), 
an ASEAN FTA by mid 2007 was not an unreasonable expectation. 
 
¶7. (C) Comment:  Australia,s FTA negotiations with Malaysia 
continue to preview some of the challenges that the U.S. will 
face as we begin our own negotiations with Malaysia.  Our 
discussion with Australia,s trade negotiators revealed a few 
surprises, such as Malaysia,s reluctance to negotiate an IPR 
chapter; we have not heard similar comments from Malaysia 
regarding our proposal to include an IPR chapter.  Malaysia 
likewise has not raised with us a possible chapter on 
cooperation, though we had developed a significant program of 
such assistance through our Trade and Investment Framework 
Agreement that preceded the launch of our FTA talks.  We 
would not be surprised if finalization of the 
Australia-Malaysia FTA continues to slip and perhaps even 
falls behind U.S. talks with Malaysia.  With the 
U.S.-Malaysia FTA taking up more of the GOM,s resources, 
Malaysia may not feel the need to rush through an agreement 
with Australia (which does not operate under a deadline, as 
we do under TPA).  As our FTA negotiations begin to move in 
tandem, Embassy will continue to engage our Australian 
colleagues regarding our shared experiences.  End comment. 
LAFLEUR