The US government said Friday it was pressing ahead with free-trade talks with Malaysia despite controversy over a mammoth energy deal between the Southeast Asian nation and Iran.

US Trade Representative Susan Schwab said she had yet to see a letter from influential Democratic lawmaker Tom Lantos, demanding a suspension of the talks owing to the "abhorrent" deal between Malaysia and nuclear renegade Iran.

But she stressed to reporters: "We are pressing ahead with our negotiations with Malaysia for a free trade agreement."

Malaysia's government said earlier Friday it was ready to suspend the free-trade talks with the United States after Lantos's criticism, and warned it would not be "held hostage" to political demands.

Schwab noted that the two nations would head into a fifth, and make-or-break, round of talks next week in a bid to secure the FTA in time before the US administration loses its "fast-track" trade promotion authority.

Tough negotiators

Both sides have already expressed fears that they will fail to wrap up the pact in time, with talks bogged down in sensitive areas including the services sector, investment and government procurement.

"The Malaysians are tough negotiators. I think we're tough negotiators," Schwab said.

"But we will press ahead in the hopes of getting a free trade agreement that is in the interests of both countries."

Lantos, the head of the US House of Representatives' top foreign affairs panel, has denounced the US$16 billion deal signed in January between the state-owned National Iranian Oil Company and Malaysia's SKS Group.