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Australia and Malaysia explore FTA

The Age, Melbourne

Australia and Malaysia explore FTA

27 July 2004

Australia and Malaysia have paved the way for a free trade agreement between the two countries.

Australia’s Minister for Trade, Mark Vaile, and his Malaysian counterpart, Rafidah Aziz, yesterday agreed to conduct scoping studies into the possibility of setting up a bilateral FTA.

The agreement was made during the 11th meeting of the Australia-Malaysia Joint Trade Committee (JTC) in Melbourne.

Mr Vaile said at the end of this process, "we will be able to make a decision on whether to proceed to the negotiating stage".

No specific deadline or period of time had been set for the studies, which would identify the advantages of an FTA.

Mr Vaile said there was an opportunity for an improvement in access for services, and mutual recognition of non-tariff barriers.

"The private sector will be part of this process and we will seek their views and ideas about opportunities," he said.

Mr Vaile said the two sides would also look at the opportunities of the two countries working together in third markets.

Ms Rafidah said these studies took on average about six months. Malaysia’s study would look at the cost to government of not collecting duty, and the benefits to the country if it opened trade barriers.

Ms Rafidah said Malaysia almost had free trade already, as tariffs were zero on 60 per cent of imports into Malaysia, and 5 per cent or below for 96 per cent of products.

"The FTA must be specific, for example, looking at areas that still have actual market barriers," she said. These included champagnes, wines, alcohol, tobacco and automotive, although tariffs on automotive products would be dropped by January.

Ms Rafidah said mutual recognition of testing and regulations in areas from construction to agribusiness would be part of the process.

Business councils from both countries would look at expanded business opportunities. "We are concerned there is not enough Australian investment in Malaysia," she said.

Between 1999 and 2004, only 78 Australian manufacturing operations were approved in Malaysia compared with 939 Malaysian investments in Australia. The JTC also agreed to expand Malaysia’s certification of Australian halal food products into other areas.