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MALAYSIA'S INVOLVEMENT IN FTAs MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY, MALAYSIA

MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

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Page 1: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

MALAYSIA'S

INVOLVEMENT IN FTAs

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY, MALAYSIA

Page 2: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

PRESENTATION OUTLINE

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

WHAT IS FTA?

MALAYSIA’STRADE POLICY AND APPROACH

RATIONALE FOR PURSUINGTHE FTAs

STRATEGIES IN NEGOTIATINGTHE FTAs

OVERVIEW OF MALAYSIA’S INVOLVEMENT IN FTAs

SCOPE OFTHE FTA NEGOTIATIONS

BENEFITS OFTHE FTAs

IMPACTS AND CHALLENGES ARISING FROMTHE FTAs

MITIGATINGTHE IMPACTS OFTHE FTAs

Page 3: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

WHAT IS FTA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

A Free Trade Agreement (FTA) is a legally binding

and comprehensive agreement between two or more

countries where member countries provide each other

more favourable treatments such as:

Lower or zero tariff for export of goods;

Relaxed or removal of quantitative import

restrictions;

Hassle free customs procedures;

Improved market access for various services;

Easier entry for businessmen; and

Better terms for investment

Page 4: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

TRADE POLICY AND APPROACH

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

OBJECTIVE - Liberal and Fair

Global Trading Environment

APPROACH - Anchored on

the Rules-Based Multilateral

Trading System – WTO

Complemented by regional and

bilateral FTAs – “Building Blocks”

Page 5: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

RATIONALE

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

Building Blocks

First Mover Advantage

Services Trade and Cross-Border Investment

Competitive Production Hub

Economic and Technical Cooperation and Collaboration

Page 6: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

Engaging with our Major Traditional Trading Partners – ASEAN, Japan, Korea, US,

EU

Engaging new and emerging markets – China, India,

Pakistan, Chile, Turkey and the GCC

Consolidating network of FTAs into region-wide FTAs –

ASEAN+1, ASEAN+3, ASEAN+6 and TPP

STRATEGIES

Page 7: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

7

STATUS/TYPE REGIONAL BILATERAL

CONCLUDED ASEAN Free Trade Area (AFTA)ASEAN-China ASEAN-ROKASEAN-Japan Comprehensive Economic Partnership (AJCEP)ASEAN-India (Goods)ASEAN-Australia-New Zealand

Malaysia-Japan Economic Partnership Agreement (MJEPA)Malaysia-PakistanComprehensive Economic Partnership Agreement (MPCEPA) Malaysia-New Zealand Free Trade Agreement (MNZFTA)Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA)Malaysia-Chile Free Trade Agreement (MCFTA)Malaysia-Australia Free Trade Agreement (MAFTA)

UNDER NEGOTIATIONS ASEAN-Japan (Investment and Services)ASEAN-India (Investment and Services)Trans-Pacific Partnership (TPP) Agreement

Malaysia-TurkeyMalaysia-EUGulf Cooperation Council (Framework Agreement)

FOR CONSIDERATION ASEAN+3 (Japan, China and Korea)ASEAN+6 (Japan, China, Korea, Australia, New Zealand and India)

Malaysia-Bangladesh

MALAYSIA’S INVOLVEMENTIN FTAs

Page 8: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

8

CHINAKOREA

JAPAN

INDIA

AUSTRALIA

NEW ZEALAND

ASEAN

MALAYSIA’S CONCLUDED FTAs

60% of Malaysia’s global trade isunder preferential trade

CHILE

MALAYSIA’S INVOLVEMENT IN FTAs

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

Page 9: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

9

PERU

TURKEY

EUUnited States

CHILEAUSTRALIA

NEW ZEALAND

GCC

More than 80% of Malaysia’s global trade will be under preferential trade

TPP

SINGAPORE

VIET NAM

BRUNEI

MALAYSIA’S CONCLUDED FTAs

MALAYSIA’S INVOLVEMENT IN FTAs

Page 10: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

SCOPE OF NEGOTIATIONS

TRADITIONAL

AREAS

• GOODS

• RULES OF ORIGIN

• SPS

•TBT

• SERVICES

• INVESTMENT

• ECOTECH

NEW AREAS

• GP

• COMPETITION

• IPR

• LABOUR

• ENVIRONMENT

21ST CENTURY

• REGIONAL

INTEGRATION

• REGULATORY

COHERENCE

• COMPETITIVENESS

• SUPPLY CHAIN

• SME

Page 11: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSY MALAYSIA

BENEFITS OF THE FTAs

Malaysian products enjoylower or zero tariff vis-à-vistheir competitors that haveyet to establish the FTAs

Better access through removal of NTBs

and establishment of MRAs

FTAs create larger markets:

ASEAN (570 million population); ASEAN+China (1.9 billion); ASEAN+Korea (618.2 million) ASEAN+Japan (697.8 million) ASEAN+India (1.7 billion); ASEAN+Australia+New Zealand

(595.5 million); TPP (500 million, possibly expanding

to 2.7 billion)

Cummulation of ROO

MARKET

ACCESS

A SINGLE, INTEGRATED MARKET

Uniform Rules of

Origin (ROO)

Page 12: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

12

ASEAN- CHINA FTA : EXTRACT OF TARIFF (CHINA)

Page 13: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

13

ASEAN- CHINA FTA : EXTRACT OF TARIFF (CHINA)

Page 14: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

14

MICECA : EXTRACT OF TARIFF (INDIA)

Page 15: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MLAYSIA

BENEFITS OF THE FTAs

Page 16: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MLAYSIA

4 MODES OF SUPPLY

MODE 1 : CROSS BORDER SUPPLY MODE 2 : CONSUMPTION ABROAD

The service crosses the borderindependent of the supplier or consumer

The consumer crosses the border (non-resident) in the country where the serviceis consumed

Services provided through informationand communication technology orpost/mail

Examples:training programmes for foreigners (non-residents), tourism

Examples:market research reports, tele-medicine anddistance learning (e-learning)

Covers also the movement of consumer’s property

Example: sending machinery equipments for repair

Page 17: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MLAYSIA

… 4 MODES OF SUPPLY

MODE 3 : COMMERCIAL PRESENCE MODE 4 : MOVEMENT OF NATURAL PERSONS

The supplier of the services:

• Locally established affiliate, subsidiaryor representative office with foreign equity participation; and

• Could be incorporated under local laws and employing local personnel

The supplier of the services is anindividual, staying in the country on atemporary basis (non-resident)

Examples:

local offices of multinational servicesfirms

Examples:

independent service supplier (individualconsultant, health worker) and employees ofa service supplier (expatriates)

Page 18: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

EXAMPLES OF CONCESSION IN

TRADE IN SERVICESMALAYSIA-

JAPAN

(MJEPA)

Japan will accord to Malaysia the same treatment as that given to

other FTA partners i.e. Japan offers a wide range of sectors

including all modes of supply.

Malaysia will have market access in sectors of interest such as :

• business and professional education

• tourism and travel related services communication

• health related and social services

MALAYSIA-

PAKISTAN

(MPCEPA)

Pakistan’s offer to Malaysia include:

• Maximum foreign equity participation of 60 per cent in all sectors;

• No limitations on the number of Malaysians employed;

• Sectors of interest to Malaysia include professional services,

construction and related engineering, education and

telecommunication services.

ASEAN-

KOREA

(AKFTA)

Korea’s offers include sectors such as:

• business telecommunication

• finance computer-related

• construction transport

• research and development education

• environment distribution

Page 19: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AN INDUSTRY MALAYSIA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

INVESTMENT: THE FRAMEWORK

Liberalisation

2 components

Protection

Page 20: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MLAYSIA

BENEFITS OF THE FTAs

Page 21: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

IMPACTS OF THE FTAs

TRADE PERFORMANCE WITH FTA

PARTNERS ARE ENCOURAGING

•Total Trade through FTAs outperformed Global Trade

• Exports outperformed Imports

• Improved Balance of Trade

• 2009 Economic Slowdown – Trade with

all Partners were affected; FTA Partners less so!

• Increased Investments

• Increased Utilisation of the FTAs

Page 22: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

CHALLENGES ARISING FROM THE FTAs

Increased competition for domestic industry due to

import duties reduction/elimination

Continuous upgrade to new innovation to

to remain competitive

Re-evaluate and rationalisebusiness operations and

production processes

Lack of awareness on the benefits of the FTAs

Rules and procedures on the requirement

of the Certificate of Origin

Page 23: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

MITIGATING THE IMPACTS/CHALLENGES

• Longer Transition Periods

• Safeguard Mechanisms

• Dispute Settlement Mechanism

• Review provisions

• Option to terminate

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

Page 24: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

2010 :

• 99% of products under AFTA are duty free

• 90% of products under ASEAN-China and ASEAN Korea FTAs are duty free

• ASEAN-India, ASEAN-Australia-New Zealand and Malaysia-New Zealand entered into force and commence tariff reduction/elimination

2011 :

MICECA entered into force and commence tariff reduction/elimination

25 Feb 2012 :

MCFTA entered into force and commence tariff reduction/elimination

IMPORTANT MILESTONES

Page 25: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

TRADE PERFORMANCE WITH FTA PARTNERS

2008- 2011 (Value in RM Billion)

*For Japan, New Zealand and India, trade figures include both bilateral and regional FTAs with ASEAN.

Page 26: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

TRADE PERFORMANCE WITH FTA PARTNERS

2008- 2011 (Value in RM Billion)

*For Japan, New Zealand and India, trade figures include both bilateral and regional FTAs with ASEAN.

Page 27: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

COO UTILISATION OF THE FTA PARTNERS

2007- 2011 (Value in RM Million)

Page 28: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

• MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY MALAYSIA

MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY. MALAYSIA

FTA – WHAT SHOULD YOU DO TO BENEFIT FROM FTA

• Check the HS Code of your products

• Check whether the products are included

under the tariff reduction/elimination

schedule of each FTA .You can check using

MITI’s website http://www.miti.gov.my

• Apply for product cost analysis (MITI) in

order to apply for Certificate of Origin. Cost

analysis form can be downloaded from

MITI’s website

• Apply for Certificate of Origin

• Enjoy the reduction/elimination of duty

Page 29: MITI - Perjanjian Perdagangan Bebas, FTA (Awana Genting, 19 Mei 2012)

THANK YOU

The FTA Agreements and

the Schedules of Tariff Concessions

are available on the following

website: www.miti.gov.my

Ministry of International Trade and Industry