This year, we have been confronted with a significant test to your sovereignty. And the most worrying part is most Malaysians do not know what’s going on.
I was driving the northern regions recently and casually asked Pak Haji, a padi farmer and Umno stalwart in the late 50s, if he’d heard on the Malaysia-United States Free Trade Agreement (FTA) and that is currently being negotiated. He said he’d read about it inside Malay newspapers yet , didn’t know very well what it was exactly about.
I told to him which the FTA became a legally binding document between our country and also the US which may abolish many tariffs and non-tariff trade barriers, and gives each other preferential access to the other’s market. I was met using a blank expression on his face. He then talked about, “What’s inside for me?”
Good question. I told him that currently there exists a 40 percent tariff on rice imports to safeguard people like him and also to enable us to get almost self-sufficient in rice above the next few years. I explained that had been part of the answer why he saw people smuggling rice during his shopping trips to Padang Besar with the Thai border.
He desired to know what would happen when the US could freely export their rice into Malaysia. I had to see him that this US as well as other developed countries had very high subsidies on farming which in some cases it had been better to certainly be a cow in Europe than the usual farmer in sub-Saharan Africa (the normal Euro cow gets US$2 — RM7 — daily of subsidy and that is more than what half the people within the developing world survive).
His laughter trailed off quickly when I told him that US rice farmers were so heavily subsidized actually able to sell at 25 % below production cost which means US rice could flood our market and force Pak Haji and 116,000 other padi farmers jobless.
He said surely the us govenment wasn’t planning to commit to this absurd agreement. I couldn’t provide him a reply. Although I knew the us govenment doesn’t want to add rice inside the market access list for that FTA, the US was pushing hard because of its inclusion. It may well be on the list of 58 contentious issues that your Minister of International Trade and Industry alluded to when she was asked recently concerning the status in the talks without actually saying whatever they were.
That’s just rice. The litany of concerns surrounding this FTA is considerably long. Apart from rice, the agricultural sector overall has cause of worry.
Currently our applied tariff for foodstuffs range from 10-40 percent, tending to be effectively removed within the FTA. This will have a very profound relation to the agricultural sector that’s experiencing a brand new lease of life underneath the Prime Minister’s green revolution.
After Mexico inked the North American Free Trade Agreement (NAFTA) together with the US and Canada, at the least a third in their farmers were impoverished a result of the subsidized US corn that flooded in their market.
The US is notorious for safeguarding their farmers, and in some cases then you cannot assume all American farmers benefit since only one percent of farms (usually rich, corporate farms) receive almost 25 percent of subsidies.
And as you move the whole point on the FTA is reciprocity, to put it differently what you produce I provide you with equally, market access for your agricultural products towards the US may continue to be stymied notwithstanding the agreement.
Tariffs aren’t the sole way to block imports, and our agro-exporters continues to confront arbitrary health standards and photon-sanitary conditions designed to defend the American consumer from disease.
The issue here is the fact that sometimes these technical standards are certainly not the product of scientific evaluation but the dictates on the domestic food lobby inside US.
There can be the issue of tariff escalation. We may be hoodwinked into believing that tariffs for your agricultural produce is going to be eliminated. This may be true for recycleables that meet US health requirements, but if your food items are processed in Malaysia as well as the higher-value added items exported, it are going to be met with higher tariffs. These barriers are created to preserve higher value-added economic activity inside US and effectively consigning developing countries on the basic (and fewer lucrative) stage from the supply chain.