Malaysia is one of Asia's biggest employers of foreign labour. But recently, cases of deaths, abuse and forced labour have come to light. What is going on? Who is protecting these migrant workers?
Firstly, an FTA is a give and take agreement and not a unilateral action. In all agreements, there are negotiations, and all parties are to make concessions to reach a happy ending. The intention of an agreement is for both parties to benefit from that agreement.
<P>In the post Multi-Fibre Agreement quota era, textile and apparel manufacturers are searching for competitive advantages. Without quotas, pricing plays a major role in determining who has a competitive advantage. As textiles and apparel are fine margin products, the elimination of import duties is one certain way to give us
that competitive edge. </P><P>Whether the import duty will be eliminated either
immediately or phased out over a period of years is a topic for negotiation. The
Malaysian textile and apparel industry has been ready to start with zero duty
from day one of the FTA negotiations with the US. </P><P>Malaysian exports to
the US in 2005 totalled US$678mil (RM2.35bil), and in 2006 US$686mil (RM2.38bil).
The issue of an increase in exports with or without an FTA is not the question.
The real question is how much more can exports increase with or without an FTA.
</P><P>Without an FTA, we foresee a minimal increase, and over a period of time
the figure is likely to decline. Once the quota restriction imposed on China is
lifted at the end of 2008 and with more exporting countries signing FTAs with
the US, competition will further intensify. </P><P>With an FTA, the MTMA foresees
a 200% increase in exports to the US, with an annual increase of 30% to 40%. </P><P>Players
in the industry – who have been searching for lower cost countries to relocate
to – and their Malaysian plants have re-looked their Malaysian operations with
a view to expanding their capacity when the FTA negotiation started last May.
</P><P>In fact, some have already made known their intention to expand. The MTMA
believes that an FTA can be a catalyst to more local and even foreign investments
into the Malaysia textile and apparel industry. It is beneficial and definitely
a positive step forward. </P><P>Singapore, which signed an FTA with the US on
Jan 1, 2004, has never been known as a major textile and apparel-manufacturing
centre. Singapore’s apparel export has been decreasing since 2000, even before
implementation of the FTA. Today, Singapore has managed to sustain its exports
at a credible US$150mil a year. </P><P>The MTMA is fully aware that the Rule of
Origin (ROO) under an FTA is the Yarn Forward Rule. This rule is not new. It has
been in existence for many years. Recognising the stringent rule and restriction,
the US has given flexibilities to this rule. </P><P>The flexibilities are in the
Short Supply List, Single Transformation List and the Tariff Preference List.
Therefore, the yarn forward rule must be read together with these three flexibilities.
</P><P>The Short Supply List relates to items that are in short supply in either
the US or Malaysia. When the raw materials are unavailable in commercial quantities
in a timely manner in either territory, the FTA partners may source these items
– mostly yarns and fabrics – from anywhere in the world. </P><P>Under the Single
Transformation List, more often known as the Cut and Sew, as long as the items
are cut and sewn within the US and Malaysia, the final product will qualify for
zero duty. </P><P>The Tariff Preference List contains fabric items that are allowed
to be sourced from anywhere in the world within the limit of Square Meters Equivalent,
and enjoy a lower tariff rate or zero tariff as agreed in an FTA. </P><P>The MTMA
is requesting a Cumulation Rule of Origin (CRO) in the FTA under negotiation.
A CRO will enable us to work and cumulate the inputs of raw materials and processes
with all US FTA partners to be eligible for lower or zero import duty for our
products going into the US market. </P><P>The US had also signed the Asean-US
Trade and Investment Framework. This allows us to accumulate the raw materials
and processes with our Asean neighbours and qualify for zero duty within an FTA.
</P><P>The MTMA will ensure that a Malaysia-US FTA is not only a Free Trade Agreement
but also a Fair Trade Agreement for the domestic textile and apparel industry.</P><P><B>DATUK
Y.H. TAN, </B></P><P><B>President, </B></P><P><B>Malaysian Textile Manufacturers
Association.</B></P><P><I>Source: http://thestar.com.my/news/story.asp?file=/2007/3/23/focus/17227120&sec=focus</I>
Address: Wisma MTUC,10-5, Jalan USJ 9/5T, 47620 Subang Jaya,Selangor | Tel: 03-80242953 | Fax: 03-80243225 | Email: sgmtuc@gmail.com.com