KUALA LUMPUR, Feb 5: The United States and Malaysia on Monday kicked off a make-or-break fifth round of trade talks, imperilled by sensitive issues and a row over a Malaysian energy deal with US foe Iran.

The talks, which are a last-ditch attempt to strike a free-trade agreement (FTA) before a March deadline, are being held in the resort town of Kota Kinabalu on Borneo island.

No details of the discussions were made available, but US officials said they would hold a press conference when they conclude at the end of the week.

Malaysia said on Friday it was ready to suspend the talks after senior US lawmaker Tom Lantos called for a halt over a $16 billion deal between the state-owned National Iranian Oil Company and Malaysia's SKS Group.

“Malaysia reiterates that the FTA negotiations cannot be held hostage to any political demand, and cannot be conducted under such threats,” the trade ministry said. However, the US government said later it was forging ahead with the talks despite the controversy.

“The Malaysians are tough negotiators. I think we're tough negotiators,” US Trade Representative Susan Schwab said in Washington.

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

The two sides had already expressed fears they would fail to meet the deadline for a pact to be presented to Congress before President George W. Bush's powers to strike free trade deals expires in June.

The negotiations are bogged down in sensitive areas including the services sector, investment and government procurement.—AFP