Malaysia will not sign a Free Trade Agreement (FTA) with the United States if it does not stand to gain from the deal, Second Finance Minister Nor Mohamed Yakcop said today.

Nor Mohamed also told the official Bernama news agency that Malaysia will not be bound by the US government's aim to fast-track negotiations and strike agreement before the administration's ability to negotiate expires in July 2007.

He said that the cabinet had only given approval for talks to start and that the results of those negotiations would then be tabled to ministers.

"The cabinet would study in detail the proposals and agreements put forward and if the FTA proposed by the (trade ministry) is not beneficial to Malaysia, then the cabinet would not give its consent," he said.

"The FTA is an instrument that if it's beneficial for Malaysia, the country would use it, but if it is no longer in its interest, then Malaysia would not agree," he said.

Sticking points

Malaysia and the United States announced the launch of negotiations for an FTA in March, with the formal talks expected to begin in the next few months and expected to be completed early next year.

Among the likely sticking points are Malaysia's reluctance to throw open its auto and banking sectors.

Nor Mohamed said Malaysia would baulk if the FTA brought too many losses to the country over the long-term and restrictions on its economic activities.

"We need to have a structure and should be aware of the effects of the FTA on us and for that, we at the Ministry of Finance are currently undertaking cost-benefit analysis," he said, adding other ministries were following suit.

"We would have to ensure that the cost-benefit analysis is positive not only for the short-term but also in the long run as we do not want to put our great-great grandchildren in a position where they would end up paying royalties, paying to foreigners to carry out something in their own country," he said.