The United States, accelerating a drive to tear down barriers to its goods in fast-growing Asia, announced Wednesday it was launching talks to hammer out a free-trade deal with Malaysia.

At a crowded press conference in Congress attended by lawmakers from both major US parties, Trade Representative Rob Portman (right)and Malaysian trade minister Rafidah Aziz said they hoped to wrap up the talks by the end of this year.

"Malaysia has been at the forefront of the economic dynamism transforming Asia in recent years," Portman said.

"Combined with a new trade opening agreement, Malaysia's rapidly growing economy will help generate meaningful export opportunities for our workers, service providers and farmers," he said.

US President George W Bush celebrated the talks, saying an agreement "will improve our ties with the Southeast Asia region and strengthen our engagement in Asia."

"The United States and Malaysia share strong trade and investment ties and a commitment to generating prosperity through openness, democracy, and freedom," Bush said in a statement.

After a 90-day consultation period with the US Congress, Malaysia will become the third Asian country currently to be in free trade talks with the United States, along with South Korea and Thailand.

The announcement came after Malaysia reopened its market to US beef imports, ending a lengthy ban imposed to keep out mad cow disease.

Greater access

Rafidah said Malaysia is not about to throw open sectors such as automobiles and banking overnight, but would phase in greater access for US companies along the lines of its first-ever free trade agreement (FTA) with Japan.

"Let there not be a pre-nuptial agreement which is so ridiculous that the wedding is off from the beginning," she said.

The two countries have been in exploratory talks for more than a year to add Malaysia to the list of 14 nations that have signed FTAs with the United States, including Malaysia's neighbour Singapore and Australia.

"I think given the fact we have laid the groundwork carefully ... I think we can complete this within in the year," Portman said of the talks with Malaysia.

The White House is striving to get negotiations on bilateral FTAs, and at the World Trade Organisation, out of the way before Congress regains the power to unravel trade agreements next year.

Republican Senator Kit Bond of Missouri said more than just trade was at stake in the FTA with Malaysia, a staunch military ally of the United States.

A deal would promote US strategic interests "at a time when China is enhancing its influence in the region and Southeast Asian nations are on the frontlines of ... the second front of the war on terror", he said.

But some Democrats were critical. California Representative Brad Sherman noted that Muslim-majority Malaysia has no diplomatic ties with Israel and boycotts its goods.

He urged the administration not to present the FTA to Congress "until Malaysia had at least changed its official policy" on Israel.

Top trading partner

The United States is Malaysia's top trading partner. Malaysia is the 10th largest trading partner of the United States.

According to US government figures, two-way trade totalled US$44.2 billion last year, with Malaysia enjoying a surplus of US$23.2 billion thanks to booming exports of wood and electronics.

Business groups applauded the prospect of US manufacturers, farmers and service providers winning greater access to markets in Malaysia and further afield in Southeast Asia.

"This announcement signals that Washington is committed to engaging this vibrant and growing region," said Dan Christman, the US Chamber of Commerce's senior vice president for international affairs.

As a net importer of food, Malaysia poses no threat to US farmers. US banks, however, have been concerned at Malaysian restrictions on their operations.

Rafidah noted that Malaysia has now lifted capital controls that were imposed during East Asia's financial crisis in 1997, and said it remained committed to "progressive liberalisation" in financial services