Market accessAPECExport controlsNZ and the WTOOECDTrade AgreementsTrade RelationshipsTrade and economic analysisTrade law
Start writing the country or territory name in the box. Typing more letters narrows the search. Click "go" or hit "Enter" to go to the information paper on the country or territory.
(We don't have information papers on all countries and territories.)
Although we have tried to use plain English content on the site, you may come across specialist terms and acronyms. Find out what they mean in our glossary of terms.
If you come across a term that isn't included in the Glossary please send us an email.
Malaysia and New Zealand are open and dynamic market economies that depend on international trade for stimulating economic growth. Strong global connections and improved access to markets are fundamental to the economic strategies of both countries. With this in mind, the governments of Malaysia and New Zealand pursue active trade policy agendas and are leaders in regional and global trade liberalisation and economic reform.
On 5 September 2004 Malaysian Minister for International Trade and Industry Dato Seri Rafidah Aziz and New Zealand Minister for Trade Negotiations Hon Jim Sutton agreed that Malaysia and New Zealand would conduct parallel studies on a possible bilateral FTA. The studies would form the basis of a decision on whether to proceed to FTA negotiations.
This study has been prepared by the Ministry of Foreign Affairs and Trade in consultation with other departments and agencies. It:
Malaysia and New Zealand have a longstanding and healthy bilateral relationship. New Zealand has been an active partner in Malaysia’s development. An FTA would signal a significant step forward in the development of the bilateral relationship by advancing trade liberalisation under an open and sustainable economic development framework. It would also identify a framework, processes and disciplines for pursuing bilateral concerns, and increase the scope for productive long-term partnerships between New Zealand and Malaysian business.
An FTA between New Zealand and Malaysia would also underpin the two countries’ leading role in multilateral and regional trade initiatives, and enhance their longstanding cooperation in the WTO, APEC and AFTA/CER contexts. Both countries recognise the priority of the multilateral process through the WTO. Bilateral FTAs can, however, bring forward the benefits from multilateral trade liberalisation, help add momentum to the global process, and offer wider economic cooperation benefits. New Zealand and Malaysia will need to take into account the compatibility of their bilateral FTA architecture and provisions with other agreements in the region, while also exploring innovative approaches that can serve as examples of good practice. An FTA will also need to be compatible with and support both parties’ engagement in the broader ASEAN-Australia-New Zealand FTA process.
Comprehensive and reciprocal elimination of trade barriers under bilateral FTAs allows people in both countries to benefit from increased competition, lower prices, and a greater variety of goods and services. Given the complementary nature of the two economies, an FTA between New Zealand and Malaysia is expected to lead to an increase in bilateral trade. However, as the volume of current trade is relatively small compared with each country’s total trade, the initial impact of the FTA on each country’s overall economy is expected to be modest. Removal of high tariff barriers in certain areas that may be acting to restrict or stifle potential trading opportunities (the “trade chilling” effect) could also benefit New Zealand exporters.
The dynamic gains over time should be larger. Benefits from removing tariffs and other barriers should stimulate greater economic activity in both countries, providing for more jobs and increased production. Technology and investment exchanges that accompany the flow of goods would also lead to productivity gains. It would also be expected that, following the reduction of trade barriers and the publicity surrounding an FTA, exporters in both countries would have access to new and profitable opportunities.
Given existing trade patterns, the impact on both New Zealand and Malaysian domestic producers of removing bilateral trade barriers in protected sectors should be limited to a few sectors and manageable under appropriate transitional measures. In most areas, imported goods do not compete directly with domestic production. Expansion in bilateral trade is expected to result from increased demand for New Zealand and Malaysian products rather than from displacing domestic production.
It is important that tariff preference under an FTA accrues to New Zealand and Malaysian trade only through appropriate rules of origin that are easily administered and enforced. The rules of origin should facilitate trade and not seek to protect domestic producer interest as compensation for effects of increased bilateral trade under the tariff preference.
An FTA would facilitate trade in services between the two countries by reducing regulatory barriers, improving market access, and encouraging mutual recognition of qualifications. New Zealand should, however, retain the right to regulate in the public interest and provide, regulate and fund public services.
A bilateral FTA would highlight investment possibilities in both markets and improve awareness of the opportunities for joint ventures and strategic alliances. In addition to supporting improved two-way investment flows, an FTA between New Zealand and Malaysia would signal greater certainty and economic stability to investors from other countries.
Bilateral trade agreements also provide the opportunity to deal with a broader range of trade-related issues. This helps to promote cooperation between the two governments and reduce the economic, compliance and administrative transaction costs of operating across different regulatory regimes. In some industry sectors, the costs of meeting different technical standards and regulations and other non-tariff measures, such as sanitary and phytosanitary measures and customs procedures, now exceed the cost of the tariff. Modern trade agreements therefore recognise the central importance of identifying avenues to reduce these costs and ensure the bilateral rules that govern trade and broader regulatory approaches in each country seek to facilitate trade directly. In addition, a bilateral FTA provides an opportunity to demonstrate both countries’ commitment to sound sustainable development policies, including in respect of labour and the environment.
This study demonstrates that there are strong reasons for New Zealand to negotiate a Free Trade Agreement with Malaysia. It has identified areas where a comprehensive FTA would be of direct benefit to New Zealand and bilateral cooperation under an FTA framework could contribute to wider trade and economic objectives. Importantly, it would underpin and enhance the bilateral relationship at a time when developments in regional political and economic architecture are providing new challenges and opportunities. This study recommends that negotiations on an FTA between New Zealand and Malaysia covering goods, services and investment begin as soon as possible.
