An online publication has revealed that US negotiators involved with the bilateral free trade talks has expressed willingness to allow Malaysia to reserve more of its government procurement market for certain domestic suppliers.

According to Inside US Trade , an informed source has told them that US is showing more flexibility on this matter compared to previous free trade agreements (FTAs) with other states.

"The US is willing to offer higher dollar thresholds at which Malaysia would open its contract to foreign firms than it has offered in other FTAs.

"These thresholds set dollar amounts which contracts may be subjected to preferences but (those) above (the threshold) must be subject to an open bidding process," the report stated.

The Malaysia-US FTA talks that started last year have been bogged down by issues considered sensitive including the services sector, investment and government procurement.

The US is seeking access to lucrative Malaysian state contracts, which favour the country's majority ethnic Malays and indigenous groups, or 'bumiputeras' as they are known.

In return for this flexibility, the report said the US hopes to get better concessions on other FTA chapters that are of great importance to US business.

These business include banking, telecommunications and hospital services.

Malaysian preference

The report also stated that the US has accepted the Malaysian preference for tackling government procurement issue only at the end of the negotiations.

"Doing so earlier might generate more domestic opposition to the deal [...] that could negatively affect those areas that still remain to be negotiated," it read.

According to the internet publication' private sector sources, Malaysia's negotiators have not been given authority to negotiate on this matter due to the government's preference to discuss it later.

Whilst there are no texts on government procurement, chapters such as labour, competition policy and issues concerning the environment are also missing from discussions.

The US has made it clear that environmental and labour chapters must be included in an eventual FTA in order for it to stand a chance of approval in the US Congress.

Malaysian and US negotiators concluded the fourth round of negotiations less than two weeks ago in San Francisco.

Next week's fifth round talks in Sabah between the US and Malaysia are seen as a last chance to establish a deal before US President George W Bush's powers to strike free trade deals expire in June.

However International Trade and Industry Minister Rafidah Aziz has said she doubts the negotiations will meet the deadline.