BACKGROUND
The First meeting of the Malaysia-Turkey Free Trade Agreement (MTFTA) was held in Ankara on 31 May-1 June 2010.
A total of nine (9) rounds of MTFTA negotiations were held with the final or concluding round held on 13-15 January in Ankara, Turkey. The Agreement later was signed by YB. Dato' Sri Mustapa Mohamed Minister of International Trade and Industry, Malaysia and Hon. Nihat Zeybekci, Minister of Economy of The Republic of Turkey on 17 April 2014 in Ankara, Turkey.
MTFTA came into force on 1 August 2015.
Malaysia was able to lock-in tariff preferences that were either on par with, or better than, those previously granted under Turkey’s Generalised System of Preferences (GSP), which were no longer available for Malaysia, beginning 1 January 2014. As such, with the signing and subsequent entry into force of MTFTA, Malaysian exporters can continue to gain preferential market access into and also remain competitive in the Turkish market.
The main text of the Agreement can be viewed via MTFTA Agreement
TRADE WITH TURKEY
In 2016:
Malaysia’s trade with Turkey expanded by 50.2% to RM8.42 billion (US$2.02 billion) from RM5.61 billion (US$1.43 billion) in 2015.
Total exports of merchandises increased by 89.0% to RM7.17 billion (US$1.72 billion) from RM3.80 billion (US$0.95 billion) in 2015.
Total imports of merchandises decreased by 31.2% to RM1.24 billion (US$300.36 million) from RM1.81 billion (US$473.82 million) in 2015.
Major exports to Turkey in 2016:
Palm Oil and Palm-Based Products
Manufactures of Metal
Textiles, Apparels and Footwear
Chemicals and Chemical Products
Electrical and Electronic Products
Major imports from Turkey in 2016:
Textiles, Clothing & Footwear
Machinery, Equipment & Parts
Chemicals & Chemical Products
Petroleum Products
Fruits and Other Agricultures
SCOPE
Areas covered under MTFTA include:
Initial Provisions
General Definitions
Trade in Goods
Rules of Origin
Customs Procedures and Cooperation
Sanitary and Phytosanitary Measures
Technical Barriers to Trade
Trade Remedies
Economic and Technical Cooperation
Transparency
Institutional Provisions
Dispute Settlement
General Exceptions
Final Provisions
TRADE IN GOODS
The Agreement outlines commitments from both countries on liberalization of trade in goods. Malaysia and Turkey will progressively reduce or eliminate tariffs on substantial number of products traded between both countries.
The FTA will be realised over a period of 8 years. Turkey will grant preferential market access to Malaysian exports. Turkey will eliminate duties on 85.89% of tariff lines.
Malaysia’s Commitment
Modalities |
Description |
Tariff lines |
% |
Fast Track |
Immediate elimination on 1 August 2015 |
7317 |
70.38 |
Normal Track |
Gradually reduced and eliminated on 1 January 2018 |
1040 |
10.00 |
Sensitive Track (ST) |
Gradually reduced and eliminated on 1 January 2020 |
1725 |
16.59 |
Highly Sensitive Track (HST) |
Gradually reduced and eliminated on 1 January 2023 |
196 |
1.89 |
Turkey’s Commitment
Modalities |
Description |
Tariff lines |
% |
Fast Track |
Immediate elimination on 1 August 2015 |
8309 |
68.70 |
Normal Track |
Gradually reduced and eliminated on 1 January 2018 |
302 |
2.50 |
Sensitive Track (ST) |
Gradually reduced and eliminated on 1 January 2020 |
877 |
7.25 |
Highly Sensitive Track (HST) |
Gradually reduced and eliminated on 1 January 2023 |
898 |
7.43 |
Upon entry into force of the FTA, Turkey import duties by 30% for palm oil products such as Crude Palm Oil, Processed Palm Oil, Crude Palm Kernel Oil and Processed Palm Kernel Oil. No further reduction will be given for these products. Including palm oil-based products, one off tariff reduction given to 322 tariff lines (2.67%) agricultural and fisheries products. Tariff for another 970 tariff lines (8.02%) will be at locked in at current rate for Malaysia. In essence, only 3.44% of Turkey’s tariff lines are excluded from the Agreement.
For textiles, Malaysian exporters are given immediate elimination of additional customs duties (ACD) which these safeguard duties are imposed over and above the MFN duties for selected textile products.
In the case of Malaysia, the elimination of duties by Turkey through MTFTA will compensate for the withdrawal of the GSP benefits previously offered by Turkey until 31 December 2013. Therefore, with the MTFTA, Malaysian exporters can continue to gain market access at preferential duties and remain competitive in exporting to Turkey, offering further advantages to Malaysian exporters.
EXPORT-IMPORT PROCEDURES
Exporting to Turkey
If you are exporting to Turkey, please click this link to check on the preferential duties under MTFTA:
Turkey - Schedule of Commitment
Nevertheless, in order for your products to enjoy the preferential duties, the products must first fulfill the Rules of Origin (ROO) criteria under MTFTA.
Products listed under Turkey’s Exclusion List (EL) do not qualify for duty reduction or elimination under MTFTA. The Turkish importers would need to pay the duty based on the effective MFN rate.
Calculation of Preferential Duties Reduction when exporting to Turkey - Turkey’s Schedule of Commitment
Fast Track |
: |
Immediate Elimination upon Entry Force of MTFTA Note |
Normal Track (NT) |
: |
Gradually reduced and eliminated on the 4th year from date of MTFTA is implemented Step 1 Step 2 Step 3 8%/4 = 2% Starting 1 August 2015, the reduction would be: |
Sensitive Track (ST) |
: |
Gradually reduced and eliminated on the 6th year from date of MTFTA is implemented Step 1 Step 2 Step 3 8%/6 = 1.33% Starting 1 August 2015, the reduction would be: |
Highly Sensitive Track (HST) |
: |
Gradually reduced and eliminated on the 9th year from the date of MTFTA enter into force Step 1 Step 2 Step 3 8%/9 = 0.89% Starting 1 August 2015, the reduction would be: |
Importing from Turkey
If you are importing from Turkey, please click this link to check on the preferential duties under MTFTA:
Malaysia - Schedule of Commitment
Nevertheless, in order for the product to enjoy the preferential duties, it must fulfill the Rules of Origin (ROO) criteria under MTFTA.
Products listed under Malaysia’s Exclusion List (EL) do not qualify for duty reduction or elimination under MTFTA. The Malaysian importer would need to pay the duty based on the current MFN rate.
RULES OF ORIGIN
For Rules of Origin (ROO) Chapter in MTFTA, please click Rules of Origin (ROO) Chapter in MTFTA
For list of working or processing required to be carried out on non-originating materials (Annex 4-2), please click List of working or processing required to be carried out on non-originating materials (Annex 4-2)
SERVICES
Services/Investment was not in the Scope of MTFTA that was signed on 17 April 2014 and came into effect on 1 August 2015.
Based on Article 14.3 (Evolutionary Clause), Malaysia and Turkey may consider negotiating the Services/ Investment Chapter, 1 year after the entry into force of the Agreement.
CONTACT US
For Preferential Certificate of Origin / Rules of Origin related matters, please contact:
For other enquiries, please contact the FTA focal point(s) as follows:
Ministry of Investment, Trade and Industry
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Last updated : 11-10-2024
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