Japan, Malaysia reach agreement on FTA to boost trade, investment
Japan, Malaysia reach agreement on FTA to boost trade, investment
Associated Press, Kuala Lumpur
Malaysia and Japan on Sunday agreed to set up a free trade area
as part of a comprehensive economic relationship after resolving
the last remaining differences in emergency, high-level talks.
"We have now finalized everything," International Trade and
Industry Minister Rafidah Aziz said after talks with Japanese
Trade Minister Shoichi Nakagawa who arrived earlier on Sunday for
last-ditch efforts to salvage deadlocked negotiations on a
planned free trade area.
"It will be a comprehensive economic framework agreement
covering all the areas that we feel we would like to cover,"
Rafidah said.
Talks between Japan and Malaysia began in Kuala Lumpur on
Tuesday but had failed to produce a consensus on tariffs for
industrial products, especially in the sensitive auto sector and
steel industries of Malaysia, which Japan says is excessively
protectionist.
"I have been saying that it is the final stretch that is the
most difficult," Nakagawa said. The "trust and confidence"
between the two countries had led to this "win win relationship."
He and Rafidah refused to divulge the details of the
compromises made in the auto and steel tariff structures with
Nakagawa describing it as "a national secret."
Rafidah said the comprehensive economic relationship will
contain elements of the free trade area, which will be formally
launched in December.
"What we have decided today will become the basis for an
agreement in principle" that will be announced when Malaysian
Prime Minister Abdullah Ahmad Badawi visits Tokyo on May 25-26
for a bilateral visit.
"It covers all areas - goods, services, even agriculture and
economic cooperation," she said.
Since launching the FTA talks in January last year, the two
countries have reached a basic accord on agricultural and marine
products. But outstanding issues remain, including 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 and Perodua cars from
competition.
The two carmakers jointly control 74 percent of the auto
market 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.
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 Perodua.
Rafidah said the FTA will contain some "early harvest
programs," meaning a list of goods on which the tariff abolition
and reduction will come into force immediately after the deal is
signed in December. Other items will see the benefits of the FTA
gradually.
"The mechanism for tariff cutting, tariff abolishment in terms
of FTA will start as and when it is scheduled to start."