Malaysia stands firm on delaying auto tariff cuts

Malaysia stands firm on delaying auto tariff cuts

KUALA LUMPUR (AP): Malaysia on Thursday reaffirmed its promise
to lift tariffs on automotive products to Southeast Asian
countries by 2005, two years later than agreed to under a
regional free-trade pact.

The stand has triggered demands for compensation by Thailand
and Indonesia for dragging its heels on implementation of the
agreement.

International Trade and Industry Minister Rafidah Aziz said
Malaysia would include two types of auto products - completely-
built-up and completely-knocked- down - in the agreement, the
Bernama national news agency reported.

But Malaysia said the tariff reduction target of 2003 on those
products wouldn't be met, she was cited as saying.

The Association of Southeast Asian Nations, which comprises
Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the
Philippines, Singapore, Thailand and Vietnam, is working toward a
free trade area by 2003.

Malaysia has sought to defer lifting tariffs on its auto
products until 2005, arguing that its industry needs more time to
restructure and become more competitive.

Thailand - a big automaker - and Indonesia want compensation
for lost market opportunities cause by Malaysia's deferment

Rafidah said that Malaysia would only compensate other nations
if they could quantify the injury to their exports, Bernama
reported.

She said that Malaysia and Indonesia had recently reached an
agreement on compensation, which would take the form of
unspecified collaboration between the countries' auto sectors.

No agreement had been reached with Thailand after four
meetings between officials, and fundamental differences remain
between them, Rafidah was cited as saying.

She said 96.6 percent of Malaysia's products were covered by
the free-trade agreement. Of those, 91.7 percent had tariffs of
between 0 and 5 percent.

Rafidah said the average tariff rate for Malaysian goods
covered by the agreement was 2.8 percent in 2000, and this would
be reduced to 2.59 percent in 2001, 2.45 percent in 2002 and 2.07
percent in 2003.

This was below the average combined tariff rate for Asean's
six original members, Brunei, Indonesia, Malaysia, the
Philippines, Singapore and Thailand. The average tariff rate for
those countries was 3.52 percent in 2000 and was expected to be
reduced to 3.18 percent in 2001, 2.9 percent in 2002 and 2.4
percent in 2003.