KL, Thailand to begin talks over auto offset

KL, Thailand to begin talks over auto offset

KUALA LUMPUR (Reuters): Malaysia said on Wednesday it would open talks this month with Thailand to discuss compensation following Kuala Lumpur's move to delay tariff cuts on auto imports.

But International Trade and Industry Minister Rafidah Aziz said any compensation might be in the form of trade concession rather than outright payments.

"We have to discuss first. There is no such thing as paying up money," Rafidah told reporters. "It is in terms of trade. It is a trade negotiation."

"If they can prove to us they hope to sell so many cars here but cannot because our markets are not yet opened, then we have to discuss with them what it is they would like us to do," she said.

Under the ASEAN Free Trade Area (AFTA), members Brunei, Indonesia, Malaysia, the Philippines, Thailand and Singapore have to bring down their tariffs to between five and zero percent by end 2002.

But Malaysia has won a two-year reprieve before it has to cut tariffs, which can reach 300 percent on imported cars.

The move has angered Thailand, where multinational car makers have invested heavily and are banking on increased exports to countries such as Malaysia, ASEAN's largest car market.

Malaysia's move was widely seen as the country's attempt to allow national carmaker Proton time to rationalize its operations and be on a firmer footing to compete.

Asked if Malaysia would consider accelerating the 2005 deadline, Rafidah said that depended on the local players.

"We continue to talk with our automotive industry players whether at any point in time between now and 2005 if there are any products in the industry that can be accelerated in terms of tariff reduction," she added.