SINGAPORE - An influential US business lobby group today urged Washington to begin free-trade negotiations with Malaysia to further grow its 120-billion-dollar annual trade with Southeast Asia.

Meanwhile, negotiations with Thailand for a free-trade agreement (FTA) will be launched on March 23 in the United States during a visit by Thai Deputy Prime Minister Somkid Jatusripitak, said Ernest Bower, president of the US-Asean Business Council.

He hopes the negotiations will be completed, or near finished, within the year and an agreement passed in 2005. This will make Thailand the only second Southeast Asian country after Singapore to ink such an accord with the United States.

After Thailand, Bower said the business council will lobby for the start of free-trade negotiations with Malaysia given the improved political environment following Prime Minister Abdullah Badawi's assumption of office last October.

The United States and Malaysia are to sign a Trade and Investment Facilitation Agreement (TIFA) in May which will form the framework for possible FTA talks.

"US-Thai negotiations will begin in earnest this year. We hope to encourage our government to negotiate a good agreement with the Thais and hope to pass it in 2005," Bower told reporters at the council's regional office here.

"We also told our government that we think Malaysia will be the next Asean country to enter FTA negotiations with the United States behind Thailand."

Talks with Philippines, Indonesia later

The Philippines and Indonesia have asked to defer FTA negotiations because of scheduled presidential elections this year.

Bower said he believes agriculture will be the main challenge in the talks with Thailand, especially after a controversy over the recent US-Australia FTA.

At the same time, if successful, a US-Thai pact could form "the precedent and the template" for future FTA talks with Southeast Asian countries having large farm sectors.

"So the stakes are very high and we will be lobbying for the US to give a very comprehensive offer to the Thais on agriculture. We will also be asking the Thais to give a lot.

"This will be a very, very interesting negotiation. Probably the most interesting part of the US-Thai negotiations will be the agriculture chapter."

Washington has embarked on a "building blocs" approach to broaden trade ties with Southeast Asia, its third biggest export market.

This is done by forging bilateral FTAs with individual Asean countries instead of negotiating with the group as a whole. China, Japan and India are negotiating FTAs with Asean as a group.

Asean's other members are Brunei, Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand and Vietnam.

Aggressive agenda

Two-way trade with Asean totalled more than 120 billion dollars last year, with Southeast Asia buying 40-50 billion dollars worth of goods and services.

US companies invested 88 billion dollars in Asean last year, more than the money they poured into China, Mexico, Brazil and Japan.

Elections this year in the United States and some Asean countries should not detract efforts to move the trade agenda forward, Bower said.

"We have to keep pushing. If you allow a political environment to cow you from setting an aggressive agenda you'll lose momentum," he said.

The council also wants to see the United States normalise trade relations with Laos and Vietnam getting membership in the World Trade Organisation. - AFP