The United States today said it made progress during this week's free-trade talks with Malaysia, held after a year-long pause, and still hopes a last-minute deal can be struck.

Earlier rounds of talks towards a trade pact became bogged down over a number of issues, including Malaysia's affirmative action policies for its majority ethnic Malays.

"The US side is... hopeful that the progress we achieved this week will propel these negotiations to a successful conclusion," US assistant trade representative Barbara Weisel said after the four-day round.

She said the two sides had moved ahead on the narrow range of issues they chose to tackle this week, including goods, services and investment, intellectual property and legal issues.

"We will continue to work toward concluding this agreement by this summer," she said. "But there is much work ahead and the two sides need to stay focused on how they can close the remaining gaps, many in sensitive areas.

"The United States continues to believe that while challenging, this is not an insurmountable task. We will need political will on both sides to sustain and direct our work and to conclude this agreement."

Washington had been racing to conclude the agreement before June last year when US President George Bush lost his Trade Promotion Authority (TPA) which enabled him to "fast-track" trade deals through Congress.

New deadline

But now it faces a new deadline, to strike an agreement before Bush leaves office this year, failing which the FTA with Malaysia will likely be shelved, Weisel said.

"It would be fair to say that if we have been negotiating this agreement for three years and had been unable to reach conclusion, it would be difficult to see a new administration want to take up the initiative and try to close it."

"Unless we were extremely close and then I think if we were that close we would probably try to do it during this administration," she said.

Decades-old legislation that provides special privileges to indigenous and ethnic Malay-owned firms has become a sticking point for US negotiators.

Weisel confirmed Thursday that the "government procurement" issue must be embraced within the FTA.

However, Malaysia has said it will not sacrifice its national interests in order to forge a deal with the US.