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RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASH DC

C O N F I D E N T I A L SECTION 01 OF 02 KUALA LUMPUR 001643 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS USTR FOR B. WEISEL AND J. JENSEN 
COMMERCE FOR 4430/MAC/EAP/J. BAKER 
TREASURY FOR OASIA 
GENEVA FOR USTR 
 
E.O. 12958: DECL: 09/01/2016 
TAGS: ETRD EFIN EINV MY WTO
SUBJECT: USTR SCHWAB MEETINGS WITH MALAYSIAN POLICYMAKERS 
 
Classified By: Chrage' David B. Shear for reasons 1.4 (b & d). 
 
¶1.  (C) Summary:  Malaysian Cabinet ministers assured USTR 
Schwab that they understood U.S. objectives for the FTA and 
that the Malaysian government remains committed to the 
negotiations.  MITI Minister Rafidah conceded no ground on 
the key substantive issues that have surfaced so far, but 
acknowledged Schwab's position that the agreement needs to be 
comprehensive.  While uncomfortable with using a "negative 
list" for services, she yielded to Schwab's insistence on 
this approach.  Minister Rafidah expressed frustration with 
media and NGO criticism of the FTA and observed that some of 
her public statements were necessary to deal with political 
pressures she is facing.  Schwab and Rafidah also discussed 
the Doha Round and Schwab's ideas for reviving these 
negotiations.  End Summary. 
 
¶2.  (U) U.S. Trade Representative Ambassador Susan Schwab 
visited Malaysia August 23-26 for the ASEAN Economic 
Ministerial (AEM) Meeting.  Outside the AEM she engaged in a 
series of meetings with Malaysian Cabinet ministers, 
including two meetings with Minister of International Trade 
and Industry (MITI) Rafidah Aziz, Malaysian and American 
business representatives, and local labor leaders.  She also 
visited Penang, where she met with Chief Minister Koh Tsu 
Koon and representatives of U.S. businesses with facilities 
there. 
 
¶3. (U) USTR Schwab's calls on Malaysian policymakers focused 
on our negotiations on a bilateral free trade agreement 
(FTA).  She was accompanied on all her ministerial calls by: 
Ambassador Christopher Lafleur, Assistant USTR Barbara 
Weisel, USTR Chief of Staff Timothy Keeler, USTR Press 
Advisor Sean Spicer, and Economic Counselor Colin Helmer 
(notetaker). 
 
--------------------------------------------- -- 
Ministers Affirm Commitment to FTA Negotiations 
--------------------------------------------- -- 
 
¶4.  (C) USTR Schwab met with most of Malaysia's top economic 
policymakers, including Deputy Prime Minister Najib Tun 
Razak, MITI Minister Rafidah, Finance Minister II Nor Mohamed 
Yakcop, Minister of Domestic Trade and Consumer Affairs 
Shafie Apdal and Bank Negara Governor Zeti Akhtar Aziz.  In 
all her meetings, Ambassador Schwab stressed how the FTA is 
consistent with and supportive of Malaysia's economic 
development plans.  She suggested that we have a common view 
of the ultimate outcomes we want to achieve in the FTA, and 
that the negotiations thus should be largely about the scope, 
sequencing and pace of implementation. 
 
¶5.  (C) All of the Malaysian ministers deferred to MITI 
Minister Rafidah on the details of the negotiations, but 
assured USTR Schwab that they understood U.S. objectives for 
the FTA and that the Malaysian government remains committed 
to the negotiations.  DPM Najib noted the FTA is "a very good 
opportunity for us."  He observed that Malaysia "wants to be 
seen as investor friendly" and that "as a small country we 
need to do more to get on the radar screen."  Ambassador 
Schwab assured him that the FTA "would provide a spotlight 
for the business community." 
 
--------------------------------------------- ----- 
Rafidah Talks Tough, But Says It's For the Gallery 
--------------------------------------------- ----- 
 
¶6.  (C) Taking her customarily tough line, Minister Rafidah 
conceded no ground on the key issues that have surfaced so 
far in the negotiations.  However, in response to Ambassador 
Schwab's comment that "everything has to be on the table, but 
not everything has to change," Rafidah acknowledged the need 
for a comprehensive agreement.  Rafidah also acceded to the 
use of a negative list for services -- a point Schwab 
stresseded as "a deal breaker" for the U.S. -- but clearly 
was uncomfortable with this type of approach.  She and Schwab 
discussed alternatives for using some term other than 
"negative list," but she did not appear satisfied with any of 
the options suggested.  Schwab set milestones of exchanging 
market access offers in the third round and having a second 
exchange of offers before the fourth round.  She also called 
for agreement on a bracketed text in the third round. 
Rafidah acknowledged Schwab's targets. 
 
¶7. (C) Rafidah complained at length about the pressure she is 
 
KUALA LUMP 00001643  002 OF 002 
 
 
getting from the media and anti-globalization NGOs.  "They 
don't want to understand," she said, "they just want to fuel 
the fire."  She also complained about former-Prime Minister 
Mahathir, saying "the same source that is the problem with 
Singapore is going to be a source of problems with the U.S. 
(FTA)."  Referring to some of her own public comments on the 
FTA she said "the pressure sometimes makes you do things you 
don't want to do."  She assured Schwab that "I think we are 
like minded.  Our officers need to be more practical when it 
comes to the details." 
 
------------------ 
Discussion of Doha 
------------------ 
 
¶8.  (C) Ambassador Schwab urged Rafidah to come to a meeting 
of the Cairns Group in Australia next month, not for the 
formal discussions but for conversations on the Doha Round 
that will be held on the margins.  Schwab observed that the 
current negotiating structure has broken down and that 
something needs to replace it.  Rafidah agreed with Schwab 
that Indian Minister Kamal Nath is a big part of the problem 
and complained about her own dealings with him.  Schwab 
proposed that a group of "open minded, not necessarily like 
minded" parties get together to discuss Doha outside the 
usual channels.  Rafidah said she liked the idea of getting a 
small group together to "grapple with the numbers" and would 
look into whether she could come to Cairns. 
 
¶9.  (SBU) USTR has cleared this message. 
 
SHEAR