Japan, Malaysia begin new FTA talks

Japan, Malaysia begin new FTA talks

Sean Yoong, Associated Press/Putrajaya, Malaysia

Japan and Malaysia began a new round of negotiations on Tuesday to narrow differences in a planned free trade agreement which they hope to draft before the Malaysian prime minister's visit to Tokyo this month.

Since launching the FTA talks in January last year, the two countries have reached a basic accord on agricultural and marine products but failed to reach a consensus on industrial products, especially the sensitive auto sector and the steel industry.

Japanese and Malaysian officials did not speak to reporters at the start of the two-day talks.

However, in Tokyo, Economy, Trade and Industry Minister Shoichi Nakagawa told a news conference on Tuesday that the "talks have almost reached a conclusion ... but we face difficulties in the final phase," according to Japan's Kyodo news agency.

"There has been a growing momentum between the two countries to strike an accord by the end of this month. I don't want to lose this chance," he was quoted as saying, adding that he will visit Malaysia if necessary to push the talks to a conclusion.

The two countries hope to prepare a basic agreement by May 25, when Malaysian Prime Minister Abdullah Ahmad Badawi visits Japan. They are aiming to formally sign the FTA in December.

Kyodo said one of the sticking points is Malaysia's tentative pledge to fully eliminate tariffs on imported vehicles by 2015. Japan wants an earlier deadline.

Malaysia imposes high import and excise duties on imported cars to protect its national Proton car from competition. Proton has a 67 percent market share in Malaysia, Southeast Asia's biggest passenger car market. Tariffs have recently been lowered for cars produced in Southeast Asian countries but other countries still face high barriers.

Kyodo said Japan also wants Malaysia to abolish tariffs on steel products used for vehicles and household appliances. It quoted unidentified Japanese government sources as saying that Malaysia is considering an immediate removal of tariffs for some car models that do not compete with Proton and another local company, Perodua.

The two countries are also expected to discuss the liberalization of investment and services trade during the talks, Kyodo said.