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In order to maximise the benefits from closer economic interaction, bilateral FTAs go beyond the liberalisation of goods, services and investment. Cooperation in other areas of economic policy can help facilitate trade by improving the conditions for doing business in each other’s economy. A bilateral FTA is the perfect vehicle for developing mutually beneficial cooperation between countries that, in turn, can contribute to improved economic performance. This chapter looks at other trade-related issues that New Zealand would like to see addressed in an FTA between Malaysia and New Zealand.
Exporters often face red tape and bureaucratic difficulties when introducing their goods and services into a new market. Different countries have different regulations governing the technical requirements for products, and it can be difficult and expensive for overseas providers to understand and comply with foreign parameters.
An FTA would provide the opportunity to look at ways of minimising technical barriers affecting trade between New Zealand and Malaysia, specifically with the aim of reducing the transaction costs to business associated with different standards and regulatory requirements. A TBT chapter should seek to make provisions for the objectives, disciplines and mechanisms, including consultations, that can be used to resolve issues with regulations, standards and conformity assessment requirements that impede trade. This would be an important means of promoting better interaction between regulators to help reduce some of the transaction and compliance costs associated with, among other things, duplication of conformity assessment. Under such a framework it should be possible to begin joint work programmes to address specific problems relating to technical regulations, conformity assessment or product surveillance regimes. For example, issues such as food labelling might be identified as areas where joint work programmes could be put in place with a view to negotiating sector arrangements.
With respect to harmonisation of technical regulations, an FTA could address:
New Zealand and Malaysia have institutions that set standards for the effective conduct of business and trade, and to minimise risks to health, safety and the environment.
New Zealand and Malaysia are signatories to the Technical Barriers to Trade Agreement (TBT Agreement) under the WTO. New Zealand57 and Malaysia are also active participants in international and regional organisations and fora concerned with standards development, accreditation and other conformity assessment activities. These include the International Organisation for Standardisation (ISO), International Laboratory Accreditation Co-operation (ILAC), the International Electrotechnical Commission (IEC) and the International Accreditation Forum (IAF).
The Department of Standards Malaysia (DSM) is the national standards body. It is responsible for the policy and strategy of national standards development and has appointed SIRIM Berhad, the Standards and Industrial Research Institute of Malaysia (a statutory body under the Ministry of Science, Technology and Innovation), to manage the national standards development process and participate in international and regional standardisation activities. Approximately 50 percent of Malaysian standards are aligned with international standards. SIRIM Berhad is also the WTO/TBT notification and enquiry point.
DSM is also the national accreditation body that has, among other things, overall responsibility for the accreditation of organisations involved in conformity assessment. These include testing and calibration laboratories, and organisations training personnel in conformity assessment. DSM also maintains a register of accredited bodies. Malaysia's accreditation systems aim to fulfil the requirements of ISO/IEC Guides 58 and 61. However, accreditation criteria and procedures must be approved by the Minister of Science, Technology and Innovation. The Minister is advised by the Malaysian Standards and Accreditation Council, which has established four national technical committees to assist with discharging its duties.
The four technical committees are:
In terms of metrology, the National Metrology Laboratory of SIRIM Berhad is responsible for legal and physical metrology, and participates in the relevant international fora to ensure comparability of the Malaysian national metrology services.
In New Zealand the Ministry of Economic Development has responsibility for overseeing the standards and conformance infrastructure and for monitoring the effects of regulation, standards and conformance on industry. It strives to maintain the most appropriate and cost-efficient approach to standards and conformance, thereby reducing the effect of TBTs.
New Zealand operates a regulatory system with vertical and horizontal elements. A number of government organisations have responsibility for regulating particular products or covering particular risks (eg. electrical equipment, hazardous substances, therapeutics). Generally, these regulators are responsible for developing regulations and adopting standards as mandatory requirements or recognising mandatory standards as one of several means of complying with regulations. Regulators’ competence extends to deciding the standards, establishing the methodologies for making conformity assessments, and setting out the criteria for accrediting that will be recognised. Frequently these regulators contract Standards New Zealand, an independent Crown Entity, to develop standards, often jointly with Australia. These regulators are also responsible for surveillance to ensure that products on the market comply with mandatory requirements.
The New Zealand standards and conformance infrastructure is designed to provide services for all types of products and risks. It supports regulators in carrying out their functions and also enables industries to develop and assess conformity to voluntary standards. The infrastructure comprises:
Regulators generally accept conformity assessments carried out by laboratories and other conformity assessment bodies (CABs) that have been accredited by IANZ and/or JAS-ANZ as evidence of compliance with their mandatory requirements. They also accept conformity assessment documentation from CABs accredited by foreign bodies that have mutual recognition arrangements with IANZ or JAS-ANZ.
The WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) establishes the international rules-based framework for developing and adopting SPS measures. The SPS Agreement acknowledges the right of members to undertake measures to protect human, animal or plant life or health. It requires that such measures are not used to restrict trade unnecessarily, are based on scientific principles and are not maintained without sufficient scientific evidence. It recognises the international standards, guidelines and recommendations of the Office International des Epizooties (OIE) for animal health; the International Plant Protection Convention (IPPC) for plants; and the Codex Alimentarius Commission for human health.
As members of and active participants in various international organisations, including Codex, OIE and the IPPC, New Zealand and Malaysia have maintained SPS measures in compliance with those international standards.
In accordance with the requirements of the WTO SPS Agreement, Malaysia has established three SPS enquiry points. The Macro and Strategic Planning Division of the Ministry of Agriculture is responsible for matters relating to plants, livestock and fisheries.58 The Food Quality Control Division of the Ministry of Health is responsible for matters relating to food safety.And, for matters relating to animal and animal products, the Department of Veterinary Services is the enquiry point.59
The Macro and Strategic Planning Division of the Ministry of Agriculture is Malaysia’s sole National Notification Authority. It is responsible for:
In New Zealand the Ministry of Agriculture and Forestry is the primary government department responsible for implementing the SPS Agreement. New Zealand manages its SPS systems in accordance with its rights and obligations as a member of the World Trade Organisation (WTO), Office International des Epizooties (OIE) and Joint FAO/WHO Codex Alimentarius Commission (Codex), and a party to both the International Plant Protection Convention (IPPC) and the Plant Protection Agreement for Asia and the Pacific Region.
New Zealand's approach to the development of SPS standards is based on the use of risk analysis consistent with international standards and the WTO SPS Agreement. The Ministry of Agriculture and Forestry works with exporting countries to develop country- and commodity-specific import health standards that mitigate risks associated with imported products.
New Zealand exporters in the Malaysian market have identified few specific SPS issues. However, an FTA could reiterate the commitment of New Zealand and Malaysia to the WTO SPS Agreement. On a bilateral level, an FTA could encourage technical cooperation between the regulatory agencies of the two countries to enhance implementation of the rules-based framework of the SPS Agreement and facilitate bilateral trade.
Malaysia does not have any comprehensive competition law. Nevertheless, it has various laws to regulate activities of enterprises and protect consumer interests. These include the Price Control Act 1946, the Companies Act 1965, the Control of Supplies Act 1961, the Food Act 1983, the Trade Description Act 1972, the Direct Sales Act 1993, and the Consumer Protection Act 1999. With a view to ensuring competition in telecommunications, the Communications and Multimedia Commission was created through the Communications and Multimedia Act 1998. Several guidelines to regulate competition in this sector came into force on 1 February 2000.
Since the 1970s the Malaysian Government has made a concerted effort to deregulate the telecommunications industry. With the privatisation of the government telecommunications department in 1987 and the formation of the National Telecommunications Policy (NTP) in 1994, the market has now been fully liberalised internally. The Malaysian Government's Master Plan for the telecommunications industry provides guidelines for competition, interconnection charges, tariff rates and network development. 60
Price controls are used in Malaysia on a number of domestically produced goods.61 Imports are allowed only when a shortage occurs and are generally subject to the same price controls as domestically produced goods. Import and export licensing applies to most goods subject to price controls.62
New Zealand maintains robust competition laws that promote competition for the long-term benefit of consumers. Prohibitions on actions that restrict competition apply broadly across the economy, with some limited exceptions. The main legislation governing competition in New Zealand is the Commerce Act 1986. It prohibits arrangements (eg. price fixing), mergers and acquisitions that substantially lessen competition, as well as abuses of market power. Although there are a few examples of sector-specific regulations, such as the Telecommunications Act 2001, these are aimed at supplementing certain aspects of the generic competition law in these sectors. The Telecommunications Act 2001 regulates, and provides for the regulation of, the supply of certain telecommunications services where regulation would promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand.
The main legislation governing fair trading in New Zealand is the Fair Trading Act 1986. Together with the Commerce Act and the Consumer Guarantees Act 1993 (which provides consumers with post-sales protection), it forms the essence of New Zealand’s regulatory framework for consumers. The objective of the Fair Trading Act is to provide consumer protection by prohibiting (i) misleading and deceptive conduct and false representations by sellers in trade and, (ii) certain unfair trade practices such as pyramid selling schemes. The Fair Trading Act seeks to provide consumers with accurate and meaningful information when making purchasing decisions so that they can buy with confidence. In effect, the Act protects ethical traders, who would otherwise be detrimentally affected when their competitors engage in deceptive or unfair trading practices. It also provides for the making of product and service safety standards, as well as consumer information standards in respect of goods and services.
The Commerce Commission, an independent statutory body, is responsible for enforcing the Commerce and Fair Trading Acts, although private parties may also take action. The Ministry of Economic Development, which includes the Ministry of Consumer Affairs, is responsible for advising the Government on policy matters.
A competition chapter in an FTA between Malaysia and New Zealand could promote competition in markets and help curtail anti-competitive behaviour. Such an undertaking would reinforce both countries’ commitment to the APEC Principles to Enhance Competition and Regulatory Reform. Cooperation between the two countries under an FTA could include exchange of information, notification and consultation on the development of competition and consumer protection policy, and on law enforcement.
Intellectual property rights protection is a key factor in facilitating economic development and international trade. The establishment and maintenance of effective, legally certain intellectual property rights regimes provides incentives to innovate and to disseminate ideas and information. Such regimes also help to create an attractive environment for investment and technology transfer.
New Zealand and Malaysia are parties to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) and maintain comprehensive legal frameworks for the protection of intellectual property rights.
In following TRIPS principles, the Government of Malaysia has enacted two new laws and amended four existing laws in recent years. The new laws are the Layout-Designs of Integrated Circuits Act and the Geographical Indications Act. The amended laws are the Copyright Act, the Patents Act, the Trade Marks Act and the Industrial Design Act. Malaysia has also enacted the Optical Discs Act with a view to controlling piracy, and the Computer Crimes Act, aimed at offences related to the misuse of computers. These include unauthorised access to computer material, unauthorised access with the intent to commit other offences, and unauthorised modification of computer contents.63
New Zealand legislation involves a series of Acts including patents, trade marks, copyright and design, and plant variety rights, with enforcement carried out at the border and through primarily civil action in the courts.
In support of economic growth, the enforcement of intellectual property rights is important for fostering innovation and product development. Some New Zealand companies operating in the goods and services area have identified protection of intellectual property rights in Malaysia as a problem. Manufacturing and the creative sector (eg. game and business software development, and the film industry) appear to be the areas of greatest concern. Enforcement of rules rather than the rules themselves seems to be the principal concern.
Cooperation in an FTA might include exchanging information and material on programmes pertaining to education in, and awareness of, intellectual property rights, as well as encouraging and facilitating the development of contacts and cooperation between the countries’ respective government agencies. The focus would be on improving intellectual property regimes, including mechanisms for the enforcement of intellectual property rights, and eliminating trade in infringing goods. An appropriate balance between the interests of right holders and users of intellectual property should also be maintained.
Cooperation between Customs agencies is an important means of facilitating international trade. It provides an avenue to secure the flow of trade in a way that meets the expectations of our trading partners.
There is scope in the context of a New Zealand-Malaysia FTA to implement the APEC Principles for Customs Cooperation to facilitate and protect trade, and provide economical, modern border protection. Synergies between the Customs administrations already exist. Both are members of the World Customs Organisation (and are signatories to the 1974 International Convention on the Simplification and Harmonisation of Customs Procedures, the Kyoto Convention). They are active members of the APEC Sub-Committee on Customs Procedures and both administer valuation of goods pursuant to the Agreement on Implementation of Article VII of the GATT 1994 (the Customs Valuation Agreement).
An FTA provides options to enhance mutual assistance between the New Zealand and Malaysian Customs authorities, including information exchange on a range of enforcement matters, technical assistance, promotion of paperless trading, risk management and verification of origin. An FTA could provide the framework for the respective Customs administrations to agree on an arrangement that will implement these and similar initiatives.
The increasing use of electronic communications by business in New Zealand and Malaysia is improving efficiency and reducing the cost of transactions. Information technology and the development of digital networks are bringing markets closer together, facilitating existing trade and introducing new services. Small and medium- sized enterprises in particular profit from the use of e-commerce, as it lowers the cost of entering new markets and helps in reaching a wider range of international suppliers and customers.
E-commerce initiatives are helping to provide Malaysian businesses with more efficient access to markets, both locally and globally. For example, MyBiz, an e-commerce platform designed for small and medium enterprises, encourages collaborative marketing by linking businesses and their employees in a business community network. The same platform can also be used to make procurement processes more efficient and effective.
In 2000, the New Zealand Government launched its e-commerce strategy. It detailed a commitment to provide leadership and work in partnership with business and the broader community to build the e-commerce capability of New Zealanders. The Government has implemented a significant number of initiatives in all these areas, including:
At present, 75 percent of New Zealanders regularly access the internet from home, work or public access points. Business use is high, with 95 percent of large firms and 75 percent of small firms using the internet.
Cooperation between New Zealand and Malaysia on e-commerce could encourage the coordination of legislation and regulations to facilitate trade in digital products and ensure that the development of electronic commerce is not impeded by unnecessary or burdensome national regulations. Such cooperation could tap into work on e-commerce that is also being undertaken in multilateral fora such as APEC, the UN and the WTO.
Government expenditure is an important component of total economic activity in both New Zealand and Malaysia. Both countries participate in the WTO Working Group on Transparency in Government Procurement, but neither is a member of the Government Procurement Agreement.
Malaysia has a semi-decentralised approach to procurement and Ministries conduct their own procurement according to government-wide legislation and procedures. Procurement procedures vary depending on the size of the contract. For contracts above RM200,000, a tender is let by the Tenders Board within a Ministry. For goods and services over RM 30 million and works contracts over RM 50 million, the tender is let by the Finance Ministry.
The Government Procurement Management Division of the Finance Ministry undertakes open local tenders for goods in common use throughout the Government, eg. office supplies. Government agencies (federal and state) are then required to purchase those goods from the winner of these contracts.
Tenders are only invited internationally if the goods or services are not available locally.
Malaysia’s government procurement policy also requires that a minimum percentage of government procurement contracts, depending on their value, are awarded to Bumiputera businesses.
New Zealand’s government procurement policy is to provide an open and transparent market based on the principles of: best value for money; open and effective competition; full and fair opportunity for domestic suppliers and improving business capabilities.64 The global non-discriminatory approach is undertaken as a matter of national policy but is reinforced by bilateral commitments with New Zealand’s CEP partners Australia and Singapore.
An FTA could help improve access by New Zealand and Malaysian goods and services providers to the government procurement markets in both countries through closer cooperation. A framework consistent with the APEC Non-binding Principles on Government Procurement could be developed to improve transparency of market opportunities and information exchange.
While the main purpose of the FTA is to facilitate trade, there may be times when measures might be taken to counter unfair trading practices such as product dumping. The WTO has rules relating to anti-dumping, subsidy and countervailing measures and global safeguards. Handling of trade remedies in the context of an FTA could be discussed in relation to the objectives of maintaining adequate protection from unfair trading practices while ensuring the benefits of trade liberalisation are not undermined.
New Zealand and Malaysia are committed to the early elimination of all forms of export subsidies on all agricultural products in the current Doha Round of WTO negotiations. This position recognises the trade-distorting nature of export subsidies and their harmful effect on agricultural trade and development. The FTA could reinforce the parties’ multilateral commitments in this area.
Movement of business people between New Zealand and Malaysia is a necessary part of our bilateral trade and is essential to building and strengthening business ties. Facilitating the mobility of business people promotes trade and investment and would help New Zealand and Malaysian industry identify new opportunities from an FTA.
New Zealand and Malaysia have always participated actively in APEC’s cooperation programme on business mobility.
Under the New Zealand Immigration Act 1987, business people (including people making sales to New Zealand businesses and people establishing, expanding or winding up any businesses or deals) may enter New Zealand as visitors for up to 90 days in any calendar year. The New Zealand Immigration Service has a branch in Kuala Lumpur and applications may be made in person or by mail.
Business people who need to spend more time in New Zealand to carry out their business-related activities have two choices. One is to apply for a work visa. For many categories of business person, there are no caps, quotas or labour market tests under this policy. The applicant is simply required to show bona fide intentions, ie. that he or she has genuine business reasons for travel to New Zealand for the period required. Or, the business person may use an APEC Business Travel Card. The APEC card effectively functions as a three-year multi-entry work visa.
Cooperation between New Zealand and Malaysia in an FTA could provide for a wide range of specific steps to strengthen bilateral cooperation on business mobility, including:
carrying out closer cooperation and coordination on the APEC Business Travel Card scheme and other mechanisms to assist the easier movement of business people.
Sustainable development is a core national objective for both New Zealand and Malaysia. The linkages between social, economic, environmental and cultural aspects of sustainable development require an integrated approach to policy development and implementation.
New Zealand and Malaysia have worked together both bilaterally and multilaterally on sustainable development matters. In 2003 New Zealand hosted a delegation of labour officials, led by the Malaysian Minister of Human Resources, which provided a good opportunity to exchange information on labour systems. In the multilateral arena, New Zealand and Malaysia work together in many organisations including the International Labour Organisation (ILO) and the Environmental and Sustainable Development Division of the United Nations Economic and Social Commission for Asia and the Pacific. Both New Zealand and Malaysia participated in the World Summit on Sustainable Development and were party to resolutions it adopted, including the Johannesburg Plan of Implementation.
As members of the ILO, both New Zealand and Malaysia are party to the ILO’s overarching objectives of promoting decent work in a global economy, as well as to the principles of the core labour standards reflected in the ILO Declaration on the Fundamental Principles and Rights at Work.
Malaysia’s sustainable development policy is coordinated through the Economic Planning Unit (EPU) of the Prime Minister’s Department. The EPU has developed a Quality of Life Index, which includes sustainable development indicators for social and economic development, and environmental sustainability. In the forestry area, the Malaysian Government introduced a new certification scheme – the Malaysian Timber Certification Council (MTCC) scheme – in October 2001 to provide assurance that timber has been legally harvested. Since the early 1990s, Malaysia has introduced a number of laws and regulations relating to environmental conservation and pollution prevention. The landmark Enhancement and Conservation of the National Environmental Quality Act of 1992 provides a comprehensive framework for environmental conservation and pollution prevention measures that is still in force today.
The New Zealand Government has produced a sustainable development Programme of Action to ensure the well-being of current and future generations. In line with this approach, it has also developed specific frameworks to integrate labour and environment considerations more effectively into trade agreements. The frameworks recognise that trade liberalisation should be accompanied by strong advocacy for the consistency of the rules of free and fair trade with internationally recognised labour and environment standards. They recognise that developed countries should not use labour or environmental issues as a pretext to keep out exports from countries with legitimate comparative advantages, but also note that these advantages should not be secured by deliberately neglecting fundamental labour and environment principles or domestic law. The frameworks can be viewed on the Ministry of Foreign Affairs and Trade website.65 In New Zealand the Ministry for the Environment 66 and the Department of Labour 67 are responsible for policy advice and implementation relating to environmental and labour issues.
FTAs provide an opportunity to demonstrate a country’s commitment to developing and applying sound sustainable development policy, which, in turn, will create a stable and attractive climate for foreign investment. Labour and environment provisions can also be used to formalise and enhance existing relationships, and explore areas for future cooperation and dialogue both together and in concert with other countries in multilateral fora.
Such FTA provisions would recognise the diversity of social, environmental, legal, cultural and economic circumstances in individual countries, and should not deny legitimate comparative advantage arising from different circumstances. New Zealand would wish to include in an FTA with Malaysia appropriate provisions relating to these issues. The form and content of any labour or environment component would reflect the mutual interests of Malaysia and New Zealand, and objectives both countries want to promote.
Possible areas of cooperation for New Zealand and Malaysia to explore include: the role of relevant international organisations and instruments (eg. the ILO Declaration on Fundamental Principles and Rights at Work and Multilateral Environment Agreements); implementation of domestic laws; mechanisms for cooperation and dialogue; and scope for cooperation in capacity building.
The 1840 Treaty of Waitangi is the founding document of New Zealand's partnership in governance between the Crown and Maori, New Zealand's indigenous people. Because of the importance of the Treaty of Waitangi, New Zealand has included exceptions relating to Maori both in its GATS commitments and in its FTA with Singapore. The relevant clause in the New Zealand-Singapore CEP allows the New Zealand Government to implement policies related to Maori without being constrained by FTA commitments, provided these policies are not used as a means of arbitrary or unjustified discrimination against persons of the other party or as a disguised restriction on trade in goods and services or investments 68 New Zealand would seek to include a similar provision in an FTA with Malaysia.
Because of the importance of the Treaty of Waitangi, New Zealand has included exceptions relating to Maori both in its GATS commitments and in its FTA with Singapore. The relevant clause in the New Zealand-Singapore CEP allows the New Zealand Government to implement policies related to Maori without being constrained by FTA commitments, provided these policies are not used as a means of arbitrary or unjustified discrimination against persons of the other party or as a disguised restriction on trade in goods and services or investments. New Zealand would seek to include a similar provision in an FTA with Malaysia.
Taxation regimes are an important element in influencing international business transactions. New Zealand and Malaysia signed a bilateral agreement on the avoidance of double tax (DTA) in 1976. Comments and ideas relating to taxation that may arise in the context of an FTA could be fed through to any future review of the DTA.
[57] In addition to the organisations listed above, New Zealand is a member of: Organisation International de Metrology Legale (OIML), Pacific Area Standards Congress (PASC), Asia Pacific Legal Metrology Forum (APLMF), Asia Pacific Metrology Programme (APMP), Asia Pacific Laboratory Accreditation (APLAC), Pacific Accreditation Co-operation (PAC).
[58] See the Ministry of Agriculture [external link] for a list of standing instructions on the SPS requirements for all imported agriculture, livestock and fisheries products.
[59] See the Ministry of Agriculture [external link] for import regulations regarding livestock and quarantine requirements.
[60] Malaysia’s regulatory framework comprises the following: Digital Signature Act 1997; Communications and Multimedia Act 1998; Copyright (amendment) Act 1997; Computer Crimes Act 1997; and Telemedicine Act 1997.
[61] These items include sugar, milk including sweetened condensed milk, Portland cement, wheat flour, cooking oil, mild steel round bar, kerosene, diesel, petrol of all grades, liquefied petroleum gas and chicken. Prices for these items are administered by the Ministry of Domestic Trade and Consumer Affairs, while their supply is administered under the Control of Supplies Act 1961. The price of rice (standard and premium grade) is controlled by law and administered by the Ministry of Agriculture under the Rice (Grade and Price Control) Order 1992.
[62] World Trade Organisation, Trade Policy Review: Malaysia (Report by the Secretariat), 5 November 2001, WT/TPR/S/92.
[63] World Trade Organisation, Trade Policy Review: Malaysia (Report by the Secretariat), 5 November 2001, WT/TPR/S/92.
[64] For a full description of New Zealand’s government procurement policy regime see “Government Procurement in New Zealand: Policy Guide for Purchasers [external link]” (July 2002).
[65] Ministry of Foreign Affairs and Trade website: Trade and Labour and Trade and the Environment
[66] Ministry for the Environment [external link] website
[67] Department of Labour [external link] website.
[68] The full text of the Singapore–New Zealand FTA is available online. Article 74 refers to the Treaty of Waitangi.
