Questions On Malaysia - New Zealand FTA

The main benefits of the FTA are as follows:

- eliminates tariffs on all Malaysia's export products including electrical and electronic products, textiles and apparel and auto parts by 2016.

- addresses non-tariff measures, in particular technical barriers, including stringent SPS measures.

- facilitates trade through the establishment of mutual recognition agreements of product standards and tests, particularly for agricultural products and environmental goods.

- provides access for Malaysian services providers to New Zealand market including engineering services, environmental services, services incidental to mining as well as computer and related services.

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, the products need to fulfill the general Rules of Origin Qualifying Value Content (QVC) of not less than 40% or Product Specific Rules

The main challenge resulting from the implementation of the MNZFTA will be increased competition to the domestic industry especially where New Zealand has a 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 a comparative advantage. Furthermore, the FTA will contribute to lower costs of inputs as Malaysian industry will be able to source cheaper inputs from New Zealand.

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

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

a. 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:

- Normal Track 1 (NT1) in which the import duties on 9,070 tariff lines with duties of 20 per cent and below will be fully eliminated by 2012. These cover products such as paper, plastics and automotive components;

- Normal Track 2 (NT2) in which import duty on 1,223 tariff lines with duties of more than 20 per cent will be fully eliminated by 2016.These cover products such as veneer, chemical products, paper and steel products.

Tariff Rate Quota TRQ on 15 tariff lines of agricultural products including liquid milk, hens eggs and live swine will be gradually increased:

- 3 to 5 per cent a year for liquid milk; and

- 3 per cent a year for hens eggs.

New Zealand's offer:

New Zealand will liberalise tariffs on all of its 7,238 tariff lines (or 100 per cent of its tariff lines) via full elimination of import duties on:

- 7,191 tariff lines by 2015 for products such as cocoa products, carpet and tyre; and

- the remaining 47 tariff lines by 2016 for other their sensitive products such as margerine, steel wire, iron products and wood furniture.

b. Trade in Services

Both Malaysia and New Zealand have also committed to liberalization their respective services market. Malaysia's offer covers commitments in sectors such as:

- private education;

- environment services;

- veterinary; and

- tourism services.

New Zealand's offer to Malaysia include:

- services incidental to mining;

- engineering services; and

- mailing list compilation and mailing services.

Both countries has also agreed on sectoral, automatic, and reciprocal Most Favoured Nation (MFN) treatment for private education, engineering services, environmental services, services incidental to mining as well as computer and related services. If New Zealand extends better market access compared with what is offered under this Agreement to a third party, that preferential treatment must also be extended to Malaysia, and vice-versa.

c. Investment

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.

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.