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  jata  Malaysia's Free Trade Agreements

 
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Questions On Malaysia-New Zealand FTA (MNZFTA)

What are the main elements of the MNZFTA?

The MNZFTA is a comprehensive Agreement that covers Trade in Goods, Trade in Services, Investment and Economic Cooperation.

What are the benefits that can be derived from MNZFTA?

The main benefits of the FTA are as follows:

  • It provides better market access for Malaysia's exporters as import duties on all Malaysia's export products including electrical and electronic products, textiles and apparel and auto parts will be eliminated and be duty free by 2016. Malaysian products will be more competitive vis-à-vis exports from other countries that do not have FTA arrangement with New Zealand;
  • It addresses non-tariff measures, in particular technical barriers, including stringent SPS measures and thus will facilitate access for our products into the New Zealand market;
  • It facilitates trade through the establishment of mutual recognition agreements of product standards and tests, particularly for agricultural products and environmental goods;
  • As a developed country, New Zealand's services industry is generally open. Malaysian services providers are urged to explore available market access opportunities in areas that Malaysia has an export advantage such as engineering and architectural services, accounting services and computer and related services. There are also opportunities for Malaysian and New Zealand professionals to establish joint ventures to export services or invest in third countries;
  • In education, there are opportunities for Malaysia and New Zealand to form a strategic partnership that will strengthen Malaysia's efforts in becoming an education hub in the region. New Zealand is known for its long established education institutions and quality education such a partnership will help draw more foreign students to study in Malaysia; and
  • It provides a framework to further facilitate cross-border investments between the two countries through commitments on national treatment, most-favoured nation treatment, as well as protection of investors and investments.

What are Malaysia's and New Zealand's commitments under the MNZFTA?

  1. Trade in Goods

Malaysia and New Zealand will progressively reduce or eliminate tariffs on their respective industrial and agricultural products.

Malaysia's offer :

  • Progressive elimination of import duties on 10,293 tariff lines by 2016 via:

The schedules of tariff elimination is as follows:

Year

Tarif Lines

Percentage

2010

7,022

67.54

2011

7,598

73.08

2012

9,078

87.31

2013

9,704

93.33

2014

9,704

93.33

2015

9,704

93.33

2016

10,293

98.90

 

New Zealand's offer

New Zealand will liberalise tariffs on all of its 7,288 tariff lines (or 100 per cent of its tariff lines) via full elimination of import duties. The schedules of tariff elimination is as follows:

Year

Tariff Lines

Percentage

2010

6,163

84.56

2011

6,163

84.56

2012

6,572

90.18

2013

6,594

90.48

2014

6,600

90.56

2015

7,237

99.30

2016

7,288

100.00

 

  1. Investment

MNZFTA provides a framework to further facilitate cross-border investments between the two countries through commitments on non-discriminatory treatment, as well as protection of investors and investments.

What are the products excluded by Malaysia under the MNZFTA?

Malaysia has excluded 89 tariff lines from the tariff concession under the Exclusion List (EL). These products are excluded for health, safety and moral reasons. Among the products are firearms, bullet, rice, tobacco and liquor.

This FTA complements the ASEAN-Australia-New Zealand FTA (AANZFTA), further facilitating and enhancing two-way trade, services , investment and economic relations in general. What additional benefits can be derived from the MNZFTA as compared with the AAN

'AANZFTA Plus' in MNZFTA

  • The ASEAN-Australia-New Zealand Free Trade AREA (AANZFTA) provides for a general framework to facilitate and ease trade and investment between ASEAN Member States, and Australia and New Zealand.
  • Implementation of the Malaysia-New Zealand Free Trade Agreement (MNZFTA) will complement and add-value to AANZFTA deals . Key areas which are of specific interest to the bilateral trade, investment and economic relations are well covered under this comprehensive FTA .
  • Highlights of the commitments in MNZFTA over and above the AANZFTA which will be of particular benefit to Malaysian businesses:

 

Trade in Goods

  • Faster elimination of import duties . Duties on all of New Zealand's 7,228 tariff lines will be eliminated by 2016 , compared with 2020 under the AANZFTA. In other words, under MNZFTA, within seven years from entry-into-force , all Malaysia's exports to New Zealand will be duty free (under AANZFTA, full tariff elimination is within 12 years - from 2009-2020);
  • Malaysian consumers as well as importers of inputs and intermediate products will gain from the faster elimination of Malaysia's import duties on 10,293 tariff lines (or 98.9% from the total tariff lines) by 2016, compared to 2020 in AANZFTA. [Note: remaining 89 tariff lines under the Exclusion List are not included for the tariff reduction].

 

Economic Cooperation

In addition, the MNZFTA provides for economic cooperation in key areas specifically in areas of critical interest to Malaysia, compared to the AANZFTA . These include:
  • education : cooperation to develop public and/or private ventures and partnerships, promote networking, mutual understanding and close working relationships;
  • forestry : cooperation in training and research and development;
  • health sector : undertake exchange of information, study hours, or in-country training on benchmarking organisational performance in the health sector, including assuring financial accountability and measuring effectiveness of service delivery;
  • biotechnology : promote commercial networking and close working business relationships in the area of biotechnology and related industrial processes;
  • manufacturing industry : cooperation in the development of private ventures and commercial partnerships, on engineering technology; design, repair and maintenance; airport development and ground control systems; infrastructural, commercial and housing construction projects.

What are the conditions exporters need to fulfill to enjoy the preferential tariff?

Compliance to Rules of Origin is important in exporting products under the preferential trading arrangements. In order for Malaysian and New Zealand importers to enjoy preferential treatment, they must ensure that not less than 40% of the value of the product is from the exporting country.

What are the likely challenges and the implications to domestic industrial sectors?

The main challenge resulting from the implementation of the MNZFTA will be increased competition to the domestic industry especially where New Zealand has comparative advantage.

However, this increased competition is expected to spur our industries to increase their competitiveness through increased productivity and efficient utilization of resources by shifting limited resources away from less economic viable activities to areas where Malaysia has comparative advantage. In addition, the FTA will contribute to lower costs of inputs as Malaysian industry will be able to source cheaper inputs from New Zealand, for example paper, plastics, automotive components, veneer, chemical products, paper and steel products .

Malaysia has negotiated progressive liberalization with longer phase-in period for tariff elimination/reduction for sensitive products to allow Malaysian producers time to prepare to face the increased competition.

Where are the areas where strategic partnership can be forged between Malaysian and New Zealand companies?

MNZFTA also provides for economic cooperation. Areas of cooperation which Malaysia and New Zealand have agreed to undertake include:

  • education : cooperation to develop public and/or private ventures and partnerships, promote networking, mutual understanding and close working relationships;
  • forestry : cooperation in training and research and development;
  • health sector : undertake exchange of information, study tours, or in-country training on benchmarking organisational performance in the health sector, including assuring financial accountability and measuring effectiveness of service delivery;
  • biotechnology : promote commercial networking and close working business relationships in the area of biotechnology and related industrial processes;
  • manufacturing industry : cooperation in the development of private ventures and commercial partnerships, on engineering technology; design, repair and maintenance; airport development and ground control systems; infrastructural, commercial and housing construction projects.

 

The Malaysian business community is encouraged to take full advantage of the opportunities offered under this comprehensive FTA. The FTA creates an attractive operating environment for the business community of both countries to further strengthen their bilateral trade and economic linkages on a long term basis.

 

Further information on the MNZFTA as well as t he text of MNZFTA and schedules of goods and services offers is available on MITI's website at (www.miti.gov.my).



Last Updated 2015-06-01 18:10:54 by Administrator

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