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  jata  Malaysia's Free Trade Agreements

 
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ASEAN - Korea

BACKGROUND

  • The ASEAN-Korea Summit on 8 October 2003 tasked Ministers to discuss feasibility of a Framework Agreement on Economic Cooperation between ASEAN and Korea with a view towards establishing a Free Trade Area (FTA).

  • At the 8th ASEAN-Korea Summit held on 29 November 2004, the Leaders signed the ASEAN-ROK Joint Declaration on Comprehensive Cooperation Partnership Agreement. Through the Joint Declaration, the Leaders among others agreed to: 

    • the recommendations of the ASEAN-ROK Experts Group (AKEG) on the measures to expand two-way trade and investment by liberalising and integrating the markets;

    • the establishment of an ASEAN-ROK Free Trade Area (AKFTA); and  

    • launching the AKFTA negotiations in early 2005 with a goal of having at least 80% of products at zero tariff by 2009, and consideration of special and differential treatment and additional flexibility for new ASEAN Member Countries.  

  • The Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea was signed by the Leaders at the ASEAN-Korea Summit on 13 December 2005 in Kuala Lumpur, Malaysia and came into force on 1 July 2006.   

    (Click here to view full text of the agreement)

  • During the ASEAN-Korea Summit on 13 December 2005, the Economic Ministers of Korea and ASEAN signed: 

    (Click here to view full text of the agreement)  

    • the Agreement on Dispute Settlement Mechanism between ASEAN and Korea.

  • On 26 August 2006 in Kuala Lumpur, the Economic Ministers of ASEAN and Korea, with the exception of Thailand, signed: 

    (Click here to view full text of the agreement) 

    • the Agreement on Trade in Goods of the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea. 

SCOPE

  • The main elements of the Framework Agreement include: 

    • establishment of ASEAN-Korea Free Trade Area (AKFTA):  

  • FTA for Trade in Goods to be realised by 2012 for ASEAN-6, 2018 for Vietnam and 2020 for Cambodia, Lao PDR and Myanmar; and  

  • FTA for Trade in Services and Investment to be implemented within the timeframes to be mutually agreed between ASEAN and Korea; and  

    • cooperation in the areas of:  

      • Customs Procedures;  

      • Trade and Investment Promotion;  

      • Small and Medium Enterprises;  

      • Human Resource Management and Development;  

      • Tourism;  

      • Science and Technology;  

      • Financial Services;  

      • Information and Communication Technology;  

      • Agriculture, Fisheries, Livestock, Plantation Commodities and Forestry;  

      • Intellectual Property;  

      • Environmental Industry;  

      • Broadcasting;  

      • Construction Technology;  

      • Standards and Conformity Assessment and Sanitary and Phytosanitary Measures;  

      • Mining;  

      • Energy;  

      • Natural Resources;  

      • Shipbuilding and Maritime Transport; and  

      • Film.

BENEFIT

  • ASEAN's trade with the Republic of Korea (ROK) has increased from to RM153.5 billion in 2004 to RM 396.7 billion in 2011. For 2012, ASEAN and ROK recorded total trade of RM417.9 billion. The ROK, with a GDP per capita of RM103,355 represents an important market for ASEAN's exports.  

  • Malaysia 's trade with the ROK also showed a significant growth in the last ten years. Malaysia‘s trade with Korea expanded from RM23.4 billion in 2002 to RM51.6 billion in 2012.  

  • An FTA between ASEAN and ROK will also strengthen and deepen economic integration and help to build capacity through sharing of available resources and expertise.  

  • An ASEAN-ROK FTA is also expected to facilitate greater flow of ROK investments into ASEAN.

FTA FOR TRADE IN GOODS

  • Main provisions in the Agreement include:  

    • modalities for tariff reduction;  

    • rules of origin;  

    • modification of concessions;  

    • removal of non-tariff barriers; and  

    • safeguard measures, including Balance of Payment.  

    • The first tranche of tariff reduction/elimination began on 1 June 2007.  

    • The modalities for tariff reduction for products agreed by ASEAN and Korea are:

NORMAL TRACK

  • Korea will eliminate tariffs on at least 70% of its products listed in Normal Track upon the entry into force of the Agreement, i.e., 1 June 2007. All tariffs for products listed in Normal Track will be eliminated by 1 January 2010;

  • For ASEAN-6, tariffs will be eliminated in 4 phases beginning July 2006 and concluded by 2012:

  • tariffs for at least 50% of products listed in Normal Track will be reduced to 0- 5% by 1 January 2007;

  • tariffs for at least 90% of products listed in Normal Track to be eliminated by 1 January 2009;

  • all tariffs for products listed in Normal Track to be eliminated by 1 January 2010, with flexibility to eliminate maximum 5% of products listed in Normal Track by 1 January 2012; and

  • all tariffs for products listed in Normal Track will be eliminated by 1 January 2012.

  • Vietnam is given an additional 6 years while Cambodia, Lao PDR and Myanmar are given an additional 8 years.

SENSITIVE TRACK

  • Maximum ceiling for Sensitive Track is 10 per cent of all the tariff lines and 10 per cent of the total value of imports based on 2004 trade statistics;

  • Products in the Sensitive Track are divided into Sensitive List (SL) and Highly Sensitive List (HSL);

  • HSL is limited to 200 tariff lines at the HS 6-digit level or 3 per cent of all the tariff lines and 3 per cent of the total value of imports.

  • Duties for products under the SL will be reduced to 20 per cent by 1 January 2012 and subsequently to 0-5 per cent by 1 January 2016 .

  • Products under HSL is subjected to five methods of tariff reduction:

    • tariffs to be reduced to 50% by 1 January 2016;

    • tariffs to be reduced by 20% by 1 January 2016;

    • tariffs to be reduced by 50% by 1 January 2016;

    • products subjected to Tariff Rate Quotas (TRQs); and

    • products exempted from tariff reduction. A maximum of 40 tariff lines at six digit level can be placed under this category.

TRADE IN SERVICES AGREEMENT

  • Negotiations for Trade in Services Agreement was concluded in October 2007. The ASEAN-Korea Trade in Services Agreement was signed by the Economic Ministers and Korea at the ASEAN-Korea Summit on 21 November 2007.  

  • The scope of offers is based on commitments under:

    1. WTO Doha Round; and

    2. selected sectors under the Fourth Package of ASEAN Framework Agreement on Services (AFAS) such as:

      • business services;

      • computer related services;

      • telecommunication services;

      • construction;

      • distribution services;

      • educational services;

      • environmental services;

      • financial services;

      • tourism and related services; and

      • transport services.

  • Malaysia is expected to gain leverage in penetrating Korea's services market. These are in competitive sectors such as construction, engineering, financial services and Information Communication and Technology (ICT).

(Click here to view the schedule of specific commitments of each ASEAN Member Countries and Korea)

TRADE IN INVESTMENT AGREEMENT

  • The AKFTA Investment Agreement was signed on 2 June 2009.

  • The ratification process of the Investment Agreement is being undertaken by individual ASEAN Member States (AMS). Malaysia issued the instrument of ratification on 26 June 2009.

ECONOMIC COOPERATION

  • As at now, a total of 38 economic cooperation projects were approved under the ASEAN-Korea Free Trade Agreement (AKFTA):

    • Executive Training Programme for ASEAN SMEs;

    • ASEAN - Korea Women SMEs Cooperation Network;

    • Study visit to ROK on four environmental areas:

      • Phase I - Solid Waste Management;

      • Phase II - Environmentally Sound Technology and Clean Production;

      • Phase III - Biodiversity; and

      • Phase IV - Environmental Awareness and Education;

    • Training Program on Material Cycles and Solid Waste Management;

    • Project on Natural Gas Vehicles;

    • Capacity Building on FTA Negotiations for CLMV (Cambodia, Laos, Myanmar and Vietnam):

      • Phase I – Investment

    • ASEAN-Republic of Korea Cooperation Workshop for the Facilitation of Trade of Broadcasting Services in the Digital Economy;

    • Training Program on Information Technology Equipment (ITE) Testing and Certification System;

    • Course on Intellectual Property Rights for ASEAN;

    • Capacity Building in Development of Dyeing and Finishing for Textiles;

    • Business Match Making between Laos, Cambodia and Korea;

    • Training Workshop on the Agricultural Statistical data Collection, Analysis & Dissemination of Information;

    • Information Exchange on Agricultural Extension Delivery Systems;

    • Upgrading Technical Capabilities of SMEs in the Agro-Based Industry in the Post Harvest Management Operations;

    • Educational Program for Strengthening Cooperation in Standards and Technological Regulations between ASEAN and Korea;

    • Training Program on the Diagnosis of Avian Influenza (AI) for ASEAN Member Countries (Prevention Measures Against AI for ASEAN Member Countries);

    • International Merchandise Trade Statistic (IMTS) Capacity Building Project for CLMV Countries to Monitor the Implementation of Free Trade Agreement;

    • Strengthening Technical Collaboration of Korea and ASEAN Countries in Controlling Emerging and Re-emerging Infectious Diseases;

    • Program on Certificate of Origin (CO) System and the Customs Administration System for ASEAN Member States;

    • International Plant Quarantine Training Program for ASEAN Countries Training Program on Plant Quarantine for ASEAN ;

    • ASEAN Training Program for Patent Examiners;

    • Breeding Heat Tolerant Rice;

    • Improvement of competitiveness of enterprises through technical support in production efficiency, safety and sustainable environmental protection;

    • Agricultural Genetic Resource Management Program;

    • Establishment of ASEAN-ROK Network on Climate Change adaptation in Aquaculture and Fisheries;

    • Korean Culture and Tourism Program for ASEAN Journalists;

    • Digital Futures and ICT Certification System Workshop;

    • Trade Impact Study on the AKFTA - Trade in Goods Agreement;

    • AKFTA Website and AKFTA Seminar Kit;

    • Joint Study on the Economic Impact of the AKFTA - Trade in Services;

    • Reclamation and Rehabilitation Technologies for Mine Land;

    • Workshop on Molecular Genetics in Cattle Breeding;

    • Authorized Economic Operator (AEO) Workshop to Secure and Facilitate Regional Trade for Korea-ASEAN Member Countries;

    • Training Program on Response to Climate Change (focusing on renewable energy and environmental health);

    • Science, Technology and Innovation (STI) Cooperative Strategy Development in Green Technology between ASEAN and Korea;

    • ASEAN-Korea Rivers Restoration;

    • Workshop on Shipbuilding Industry to Face Challenges of Globalisation and More Liberal and Facilitative Trade and Investment Regime of ASEAN and Republic of Korea; and

    • Creative Fashion Forum @AFS-to Facilitate Regional Trade and Knowledge Sharing for ASEAN Member States and Korea.

  • ASEAN-Korea Economic Cooperation Fund, with annual contribution of USD500,000 to implement economic cooperation projects approved under the AKFTA.

  • SME Corp Malaysia chairs the Working Group on Economic Cooperation. The Working Group meets twice a year.

  • On 12th to 13th June 2013, Malaysia organised the “ASEAN-Korea SME Conference 2013” comprising of five sessions with eminent speakers from both  Korea and the ASEAN region with the objectives to

    • Provide platform for SMEs from ASEAN Member States (AMS) to understand benefits and opportunities arising from ASEAN Korea FTA, regulatory requirement relating to trade imposed by Korea;

    • Increase awareness among SMEs across Korea and ASEAN on the on-going trade liberalisation under ASEAN Korea FTA;

    • Provide understanding on doing business across regions, despite diverse cultural and language differences;

    • Serve as platform for networking and business exchange opportunities among industry players from Korean and AMS especially through business matching sessions;

    • Provide avenue for sharing of knowledge and experience on best business practices not only from Korea but also from AMS; and

    • Provide opportunities for AMS to learn from Korea on best practices in promoting its creative industry in enhancing the national brand value of Korea.

RELATED DOCUMENTS

  •  
P.U.(A) 286/2015: Customs Duties (Goods under the Framework Agreement on Comprehensive Economic Co-operation among the Government of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea (Asean Harmonised Tariff Nomenclature) Order 2015
  •  
P.U.(A) 381/2013: Customs Duties (Goods under the Framework Agreement on Comprehensive Economic Co-operation among the Government of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea (Amendment) Order 2013
  •  
AKFTA Information Kit
  •  
Protocol to Amend the Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation Among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea
  •  
Letter of Understanding for the Amendment of the Product Specific Rules
  •  
Second Protocol to Amend the Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation Among the Governments of the Member Countries of the Association of Southeast Asian Nations and the Republic of Korea
  •  
Protocol on the Accession of Thailand to the Agreement on Trade in Services under ASEAN-Korea
  •  
Protocol on the Accession of Thailand to the Trade in Goods Agreement under ASEAN-Korea
  •  
ASEAN-Korea Trade in Services Agreement
  •  
Agreement on Trade in Goods under the Framework Agreement on Comprehensive Economic Cooperation between ASEAN and Korea
  •  
Schedule of Specific Commitments of Korea
  •  
List of Products under Sensititve List Offered for Tariff Reduction Beginning 1 January 2012
  •  
List of Products under Normal Track Offered for Tariff Reduction Beginning 1 June 2007

CONTACT US

For Preferential Certificate of Origin / Rules of Origin related matters, please contact:

  1. Datin Mega Marissa Abdul Malek
    DL: 03-62084722
    Email: marissa.malek@miti.gov.my

  2. Mr. Mohd Nazri Abd Ghani
    DL: 03-62084721
    Email: nazri.ghani@miti.gov.my

  3. Mr. Muhammad Faris Sameon
    DL: 03-62084750
    Email: faris@miti.gov.my

 

For other enquiries, please contact the FTA focal point(s) as follows:

  1. Mr. Mohd Firdaus Mohd Ali
    DL: 03-62000386
    Email: firdausali@miti.gov.my

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