Malaysia will not compromise on its sensitive agricultural sector in the next round of free trade negotiations with the United States.

Minister of International Trade and Industry Muhyiddin Yassin said this to a query by Opposition Leader Dr Wan Azizah Wan Ismail (PKR-Permatang Pauh).

He argued that the government has considered every aspect of the agreement and considered it to be beneficial to the country.

To a supplementary question from Khairy Jamaluddin (BN-Rembau), Muhyiddin added that the government would not allow the FTA agreement to affect the livelihood of Malaysian farmers and fishermen.

"In the FTA agreement negotiations (between us and the US), we have maintained our stance that the agricultural sector is a sector that we cannot compromise," answered the minister.

"The agriculture sector is important to the country and we will not compromise if we feel that any agreement is likely to negatively affect farmers," said Muhyiddin.

"This is the reason why we did not agree to include the planting of padi (for example) in the negotiations," he added.

"We are very clear in this stand and will not compromise to such an extent that we sacrifice our sovereignty, our national interests must be defended."

Khairy had asked if Malaysia's products would be given equal access to the American market under the FTA.

The first-time MP wanted to know if the FTA agreement would affect the agricultural sector because of US' ability to sell its agricultural products at a very low price.

The US government, said Khairy, had been heavily subsidising its agricultural sector and therefore can afford to sell its agricultural products 25 percent lower than that of Malaysia's.

Remaining competitive

On the original question, Wan Azizah wanted to know the implication of the agreement as well as the country's ability to compete with other nations that have signed FTAs with the US.

"At the moment, only one nation has signed the FTA with the US and that is Singapore. However, the FTA between those countries has little effect on Malaysia," said the minister.

The Pagoh MP said that Malaysia was Asean's second biggest trading nation and was also the US' 13 th biggest imports source.

However, Muhyiddin conceded that Singapore was still ahead of Malaysia when it came to attracting investments from the Americans.

"According to the (American) Congressional Research Service report, in 2006, Singapore is the third largest investment hub for Asia Pacific. The amount (of investment) received by that country increased from US$40.9 billion in 2001 to US$60.4 billion in 2006," he said.

But Malaysia, said the minister, was constantly monitoring the progress of Singapore and other countries pertaining to free trade matters and will always strategise accordingly in order to keep the country constantly competitive with its neighbours.

Difficulties in getting investment

Wan Azizah also asked whether the the rise of unemployment could possibly be caused by the absence of new foreign investments into the country.

To this Muhyiddin admitted that the competition was increasing given the economic growth of once undeveloped nations like China, India and even Vietnam.

He also said that attracting investments was not as easy anymore.

"Our region is becoming more competitive economically and it is becoming extremely vibrant when it comes to (other country's) measures to attract foreign investment," said Muhyiddin.

"But let me assure you that the government has done all that it can to ensure that we won't meet future predicaments in attracting foreign investments," added the minister.

As an example, the minister said that although last year saw Malaysia's manufacturing products and services trade with the US decreased, the country's product exports have significantly increased in the Asean market.

As for unemployment, Muhyiddin said that the investments that Malaysia was seeking for was no longer the type of investments that required the country to import foreign labourers to the extent of neglecting domestic employment.

"What we need instead is to develop high technology industries along with the initiative to train local workers so that they can compliment the growing need for skilled workers," he said.

The minister also reckoned that the unemployment issues in this country can be caused by "mismatching" where the education provided to the locals do not fit the requirements of the market.

Deal under fire

The US-Malaysian FTA has been severely criticised by anti-free trade groups and NGOs in this country as a gateway for a new form of colonialism dubbed economic imperialism.

Many quarters have tried to stop the government from pursuing the US-Malaysian FTA negotiations.

The Malaysian government however believed that FTA agreement will not affect the country's trading position but will instead enhance it.

The negotiations, which began in March 2006, reached an impasse at the seventh round held in Kuala Lumpur in January, after a year-long pause.

The US hopes a deal could be struck before President George W Bush leaves office at the end of the year.

Malaysia's list of sensitive areas - including environmental protection and the practice of giving Malay companies a leg-up in lucrative government contracts - have bogged down the protracted talks.

US assistant trade representative Barbara Weisel has warned that the FTA could be shelved if an agreement is not reached before the end of Bush's term in January 2009.

Further talks on the deal will resume in July.