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Japan, Malaysia to sign FTA next week in Kuala Lumpur

Antara News

Dec 09 2005

Japan, Malaysia to Sign FTA Next Week in Kuala Lumpur

Tokyo (ANTARA News) - Japan and Malaysia are scheduled to sign a bilateral free trade agreement (FTA) during their summit talks in Kuala Lumpur next week on the sidelines of the inaugural East Asian Summit, Japanese officials said Friday.

To pave the way for the signing, the cabinet of Prime Minister Junichiro
Koizumi approved the FTA in its meeting Friday morning.

Koizumi is expected to sign the accord and issue a joint statement when he
meets with Malaysian Prime Minister Abdullah Ahmad Badawi possibly on
Wednesday, a day before the East Asian Summit in the Malaysian capital begins, they said.

``I expect the FTA will further rejuvenate the two countries` economies by
promoting liberalization and facilitation of trade and investment in
wide-ranging areas and by establishing a mutually beneficial partnership,``
Chief Cabinet Secretary Shinzo Abe said at a press conference.

The two countries, which launched official FTA negotiations in January 2004, reached a basic accord in May this year. Malaysia will be the third FTA partner for Japan following Singapore and Mexico.

Under the pact, the two countries will do away with tariffs on essentially all industrial goods and most agricultural, forestry and fishery products within 10 years.

For example, Kuala Lumpur will remove tariffs on finished passenger cars with engine displacement above 2000 cc by 2010 and smaller vehicles by 2015. It will also immediately abolish tariffs for completely knocked down auto parts for Japanese carmakers assembling vehicles in Malaysia.

For farm products, Tokyo will immediately eliminate tariffs on Malaysian
imports of tropical fruits such as mangoes, mangosteens, durians, papayas and rambutans.

The accord will cover not only trade in goods but also services trade,
intellectual property right protection, investment rules, competition policies, business facilitation and cooperation projects for personnel training in Malaysia.

Japanese manufacturers would benefit from the FTA as it will boost their
competitiveness by lowering parts procurement costs in Malaysia, while
Malaysian local industries would also gain from Japan`s cooperation programs stipulated in the accord, the officials said.

Under the partnership, Japan will accept 1,000 trainees over the next 10 years from relevant Malaysian institutions for human resources development in such areas as agriculture, education and information technology. A total of 24 programs will be implemented immediately after the pact enters into force.

The bilateral FTA would create economic effects worth about 400 billion yen, pushing up Japan`s real gross domestic product by 0.08 percent and Malaysia`s GDP by 5.07 percent, according to expert estimates, Kyodo reported.

Malaysia offers an export market to Japan worth about 1.3 billion yen and
Tokyo`s trade volume with Kuala Lumpur is larger than that with either of its other two other FTA partners Singapore and Mexico, they said.

 source: Antara News