"I am ready to advise the government to cancel the FTA discussions immediately because the US doesn't respect the preliminary terms of the discussion," Rafidah, well-known for her feistiness, was quoted as saying by Utusan Malaysia, a Malay-language daily, on Friday.
She said the terms include an understanding to have no political agenda, for the agreement to focus on markets and for both countries not to interfere in each other's domestic policies.
Tom Lantos, chairman of the foreign affairs committee in the US House of Representatives, said in a letter on Wednesday to US trade representative Susan Schwab that its trade partners should respect and share its security concerns.
He said Iran's $16 bn liquefied natural gas (LNG) deal with Malaysia's SKS to help develop gas fields in southern Iran and establish LNG production plants was a "disturbing development" which required "swift action by the administration".
Iran's state-owned oil company and SKS signed a preliminary deal to develop the southern Golshan and Ferdos gas fields and build plants to produce LNG, Iranian state television reported on January 7.
The US is Malaysia's largest trading
partner and foreign investor [AP]
Steve Norton, a US trade representative spokesman, said on Thursday negotiators were reviewing Lantos's letter.
Lantos said the US may be required to penalise SKS under the recently expanded Iran Sanctions Act, which calls for steps against companies involved in Iranian energy development.
"In addition to enforcing this legislation, it behoves all of us charged with implementing US foreign policy to take actions to further press Iran to cease its development of nuclear weapons," Lantos said.
Gholamhossein Nozari, managing director of the National Iranian Oil Company, told the Mehr news agency last month that the project would take 25 years to complete.
He said SKS would have a 50 per cent share of the LNG produced.
US-Malaysia free trade talks, which began last June, have been scheduled for a fifth round next week.
US negotiators are under pressure to reach a deal by the end of March but difficult issues remain.
The US is Malaysia's biggest trading partner and foreign investor, while the South-East Asian country is the 10th-largest trading partner for the US, with bilateral trade recorded at $44 bn in 2005.
US legislators have also raised concerns about a preliminary deal Royal Dutch Shell and Spain's Respol have signed to develop part of Iran's giant South Pars gas field.