Malaysia, Thailand still at odds on car tariffs

Malaysia, Thailand still at odds on car tariffs

KUALA LUMPUR (Reuters): Malaysia said on Tuesday it was still negotiating how to compensate Thailand for delaying reductions on import tariffs for automobiles.

"Nothing yet. We are still negotiating," International Trade and Industries Minister Rafidah Aziz told reporters ahead of the July 19 deadline for finding a solution to the question of non- monetary compensation.

She declined to give further details.

Under an Association of South East Asian Nations (ASEAN) Free Trade Area (AFTA) agreement, Malaysia, Thailand, Brunei, Indonesia, the Philippines and Singapore committed to slashing tariffs on cars and car parts to a maximum five percent by the end of 2002.

But in November Malaysia persuaded its neighbors to grant it a two-year reprieve on cutting tariffs, which are as high as 300 percent on imported cars, to protect its national car Proton.

Thailand's auto industry stands to be hardest hit by the Malaysian delay.

AFTA's conflict resolution procedures give disputing countries 180 days to agree on compensation from the day the talks started. If they fail to reach an agreement within that time, the affected party can take retaliatory steps.

Talks between the two countries started on January 19.

With the deadline less than two weeks away, there have been doubts that the issue would be resolved.

Rafidah said Malaysia was prepared for AFTA with 96 percent of its goods having tariffs of zero to five percent.

"Twenty-five percent of our exports are through the ASEAN countries. That shows the level of preparedness.

"For those products with five percent tariffs for imports, if they cannot compete, they shouldn't be there. So we are quite prepared for AFTA," she said.

ASEAN groups Brunei, Thailand, Singapore, the Philippines, Malaysia, Indonesia, Myanmar, Vietnam, Cambodia and Laos.