A secret European Union document leaked to the United Kingdom daily, The Guardian , yesterday has revealed the EUs demands for full-scale privatisation and liberalisation of Malaysias crucial public services in exchange for its agreement to scrap the common agriculture policy which currently imposes high tariffs on non-EU agricultural imports.

Malaysia, among a list of 29 other countries listed in the 1,000-page document including Singapore, Indonesia and Argentina, is asked to remove its existing restrictions on foreign ownership of crucial public services such as energy, water, waste management and transportation.

By putting pressure onto its trading partners to open up sectors crucial to public interests, the EU stands to benefit as this means breaking the domestic industries of these countries and forcing them to compete with established private interests from the EU.

Ironically, according to The Guardian , the EU themselves have been unable to liberalise their own economies to non-EU imports, which has been a point of contention for many of its trading partners, particularly developing countries.

The EUs demand to Malaysia includes the elimination of the maximum 30 percent cap on foreign ownership of domestic companies and foreign investment, and to do away with the need to obtain expressed approval from Malaysia if foreign shareholding is above 30 percent.

Other demands on the list include the complete removal of restrictions on projects wholly-owned by foreign governments, and to eliminate the restriction on the purchase of real estate for the purpose of speculation.

Protectionism not subsidy

Trade barriers protecting the EUs agricultural sector, as expressed in the common agriculture policy, are written in such a way as to make them quite difficult to be termed a subsidy in the legal sense. This prevents such protectionist measures from being labeled as illegal under the World Trade Organisations rules.

In reality, agricultural products of developing countries face stiff competition from subsidised European agricultural prices, as subsidies have increased rather than decreased, despite the WTO.

By insisting that its protectionism of the agricultural sector as not amounting to a subsidy, the EUs current demands for the privatisation of foreign public service sectors is a matter of increasing the EUs bargaining power on global trade rules, and allowing it to squeeze greater concessions out of its trade partners.