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Malaysia signs FTA with Chile, its first with Latin America

Bernama | November 13, 2010

Malaysia signs FTA with Chile, its first with Latin America

From Siti Hawa Othman

YOKOHAMA, Nov 13 (Bernama) — Malaysia and Chile signed the Malaysia-Chile Free Trade Agreement (MCFTA) here today, marking Malaysia’s first bilateral FTA with a Latin American country.

It was also Malaysia’s fourth bilateral FTA after the Malaysia-Japan tie in 2005, Malaysia-Pakistan in 2007 and Malaysia-New Zealand in 2009.

Deputy Minister of Foreign Affairs, Datuk Richard Riot Jaem, signed on behalf of the Malaysian government while Minister of Foreign Affairs of Chile Alfredo Moreno Charme signed for Chile.

The signing was witnessed by Deputy Prime Minister Tan Sri Muhyiddin Yassin and Chilean President Sebastian Pinera.

In his address, Muhyiddin said although the FTA was confined to trade in goods and economic cooperation, both countries were committed to working towards a comprehensive agreement which would include services and investment within two years after the entry into force of this agreement by the first half of 2011.

"With this agreement, trade between both countries is expected to further increase and this would also be a vehicle for Malaysia’s expansion into the Latin American market," said Muhyiddin who is in Japan for the APEC Economic Leaders Meeting (AELM).

The FTA which would eliminate duties for almost all products within five years, would also give plenty of scope for both countries to diversify their range of exports.

Meanwhile, a jubilant Pinera said this was Chile’s first FTA signed with a member of Asean and was indeed a historic day for both countries.

"In 2010, our trade accounted for US$350 million and we hope to double this within next year."

With the agreement, he said Chilean products, in particular its agricultural produce, would have significant access into the Malaysian market.

Meanwhile, a statement released by the Ministry of International Trade and Industry said the agreement followed the conclusion of negotiations between Malaysia and Chile in May 2010 in Santiago after several rounds of negotiations which began in June 2007.

MCFTA encompasses liberalisation in trade in goods as well as enhancement of bilateral economic cooperation.

Bilateral trade between both countries grew from RM898 million in 2007 to RM1.05 billion in 2008, before slowing to RM788.8 million in 2009.

However, it made a remarkable recovery this year, with trade amounting to RM853.7 million for the first nine months of this year, with exports accounting for RM199.8 million and imports RM653.9 million.

Malaysia’s major exports included electrical and electronic products, rubber products, wood products and chemical and chemical products while imports were manufactures of metal, metalliferous ores and metal scrap, chemicals and chemical products, paper and pulp products and fruits.

Meanwhile, areas of cooperation which Malaysia and Chile have agreed to undertake include research and development and innovation, science and technology, trade and investment, mining and mining-related industry, SMEs, intellectual property, tourism, education and human capital development, culture and promotion of tourism.

The FTA will benefit Malaysian exporters as Chile will undertake full elimination of import duties for 6,960 tariff lines (90.2 per cent of total tariff lines) upon entry into force of the agreement while Malaysia will take full elimination of import duties for products comprising 9,311 tariff lines (89.5 per cent).

 source: Bernama