Profit from increased U.S. free trade with Malaysia

March 11, 2006

The U.S. Dept of Trade will negotiate a bilateral free-trade agreement with Malaysia. They are already one of our largest trading partners in Southeast Asia, supplying primarily components of U.S. electronics manufacturers such as Intel and Motorola who have plants in that country.

What It Means:
The U.S. is trying to increase its competitiveness with China, who signed a free trade agreement with the Association of Southeast Asian Nations in July, and whose trade with Malaysia increased 30% last year. The U.S. is trying to also using these trade talks to increase its influence politically in these area. A free trade agreement with Singapore is completed, one is underway with Thailand, and one will begin with South Korea in June. The Bush Administration is trying to complete these bilateral agreements before July 1, 2007, the expiration date of the Trade Promotion Authority which allows an expedited process. It is also trying to make up for the failure of the Doha rounds of the World Trade Talks, and the success of the First East Asian Summit (to which it was not invited), both occurring last December.

Action Steps:
If you've been thinking of increasing the weight of electronics and tech stocks in your portfolio, go ahead - this agreement should help the profitability in those companies. Also, if you haven't done so already, please find some good Southeast Asian mutual funds to add to your portfolio. Don't believe those experts who say these funds are overpriced...over the long haul, these bilateral agreements will continue to support increased growth in this area of the world.

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