Malaysian manufacturers today said a trade pact with the United States would allow the local industry to compete against China which enjoys a lower cost advantage.

"Preferential treatment gained through the FTA will provide Malaysian manufacturers the competitive advantage over competitors that are able to produce at lower cost such as from China," the Federation of Malaysian Manufacturers (FMM) said in a statement.

Malaysia and the US will conclude Friday the first round of the Free Trade Agreement (FTA) talks in the northern resort island of Penang.

Throwing its support behind the Malaysia-US FTA, it said the US should cut import duties on footware, textile and ceramic tableware.

"While US import duties are generally low for manufactured goods, there are some products of interest to Malaysian manufacturers that have high import duty such as footware, textile, apparel and ceramic tableware," it said.

FMM said exports of textiles and clothing from Malaysia to the US remained relatively unchanged in 2005 at RM2.93 billion (US$813 million) compared to RM2.94 billion in 2004.

"The lowering of tariffs under the FTA creates additional opportunities for Malaysian exports with regard to market access," it said.

The US remains the leading destinations for Malaysian exports accounting for 19.7 percent of total exports. Among Malaysia's main exports are electrical and electronics, wood and rubber products.

Press for concessions

The FMM however warned local industries protected by high import tariffs that they would face greater competition when the duties are reduced.

"While the threat of imports could be intensified, the opportunities for expanded exports into the US market appear to be greater.

In 2005, the US was Malaysia's largest trading partner, accounting for 16.6 percent of Malaysia's global trade and is US 10th largest trading partner.

The United States delegation signalled on Monday that it would press for concessions in Malaysia's protected automotive industry and the finance sector, and push for more transparency in government procurement procedures.

US assistant trade representative for the Asia-Pacific Barbara Weisel said that despite the sensitive issues on the agenda, she was hopeful of wrapping up the negotiations by the end of the year.

The US is rushing to complete the pact before July 1 next year when the Congress will regain the right to amend any pact negotiated by the reigning administration.

However, activists and consumer groups say that an FTA could undermine job and food security and the nation's economy.