Brittan was speaking to businessmen in the Malaysian capital, his first stop on a four-nation tour of Asia that will also take him to Indonesia, India and Pakistan. The European Union's top trade negotiator hailed financial reforms in Malaysia, saying they had prompted a return of foreign investment, but said more was needed.

"The relaxation of capital and exchange controls in recent months has been particularly welcome, but progress in key areas such as corporate debt restructuring and bank reform deserve greater focus," he said. Malaysia, which imposed controls on capital flows in September, recentlyscrapped a rule that had barred the repatriation of foreign portfolio investment for a year.

The EU trade negotiator urged Malaysia to roll back an across-the-board increase in tariffs that it adopted after Asia's Financial crisis erupted in mid-1997. Brittan was scheduled to meet Trade Minister Rafidah Aziz and Second Finance Minister Mustapa Mohamed in Kuala Lumpur.

He told a news conference that a meeting with Prime Minister Mahathir Mohamad was cancelled after doctors advised the Malaysian leader to rest upon returning this week from his Haj pilgrimage to Mecca.

A spokesman said Mahathir was resting at home.

Brittan said Asian countries racked by the regional crisis should not seek relief through protectionist measures. "Don't be put off by what has happened in the last couple years," he said. "Don't throw the baby out with the bath water."

Developing countries dissatisfied with the Uruguay round of trade talks that ended in 1993 should look to the next round, expected to be launched at a WorldTrade Organisation (WTO) ministerial meeting later this year, for concessions. "You have everything to gain from further liberalisation."

Brittan reiterated the EU was prepared to put all of its tariffs on the table at the next round, dubbed the Millennium Round, and was willing to discuss its anti-dumping duties, criticised by many developing nations. "In the new round, everybody should be able to put on the table what they want," he said.

But he said the EU's anti-dumping measures affected only a small share of Europe's trade and had drawn unfair criticism. "Anti-dumping is a red herring," he said.

The EU negotiator said he was hoping for Malaysia's clear endorsement of a new, comprehensive round of trade talks.

"Endorsement by Malaysia of a comprehensive approach will be very important and a timely signal to the international community that you are back in business with the energy and imagination that has characterised this region in the past."

The United States and other members of theAsia-Pacific Economic Cooperation forum want a global accord on removing tariffs in eight product sectors before the end of the year. The EU wants the sectors wrapped into overall negotiations.