According to media reports, the Australian Trade Minister is to sign a free trade agreement with Malaysia later today.
As many would be aware, Australia and New Zealand already have a free trade agreement with the ASEAN group of nations (“ASEAN FTA”) which includes Malaysia. Accordingly, the separate FTA with Malaysia (“MAFTA”) will constitute an enhancement to the existing ASEAN FTA.
According to the media report, the MAFTA intends to guarantee tariff-free entry of 97.6% for all Australian goods, rising to 99% by 2017. The MAFTA will only be Australia’s 6th bilateral FTA and its completion will represent the welcome completion of a deal at the same time of slow progress on negotiations on other FTA with China, South Korea and Japan. The hope is that it may expedite those deals.
According to media reports, the MAFTA will have the following additional benefits:
- The services sector (including universities, schools, banks, telecommunications companies and professional services firms) have won increased access to the market including the ability to become majority owners in Malaysian businesses.
- Most companies will be able to own up to 70% of Malaysian firms and Australian managers will find it easier to work in Malaysia as their spouses and dependants are able to obtain automatic visas.
- Australia has agreed to accelerate the removal of tariffs. This was due to happen in 2020 under the ASEAN FTA but will now happen immediately for goods from Malaysia.
- Australia has promised enhanced economic and technical co-operation in sectors such as the automotive industry, agriculture, tourism and clean-coal technology.
- MAFTA also provides a framework for the mutual recognition of qualifications.
Those in industry will look forward to additional details of the MAFTA including relevant rules of origin for goods to qualify for preferential treatment under the MAFTA, what manner of certificates of origin (or other documentation) will be required to claim preferential tariff treatment on goods and the provisions governing the ability to “tranship” and “further manage” the goods before entry into Australia.