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New Zealand and Malaysia agreed negotiate a Free Trade Agreement (FTA) on 31 March 2005. This followed parallel studies by New Zealand and Malaysia on a possible bilateral FTA. Input from New Zealand stakeholders was sought via a public submissions process last year. The public consultation process is an ongoing one.
March 2005 – Release of study on the benefits of an FTA
31 March 2005 – Prime Ministers of NZ and Malaysia launch FTA negotiations
May 2005 – First round of negotiationsJuly 2005 – Second round of negotiations
September 2005 – Third round of negotiations
October 2005 – Fourth round of negotiations
November 2005 -– Fifth round of negotiations
April 2006 – Sixth round of negotiations.
Malaysia is New Zealand’s largest trading partner in the ASEAN region and our 8th largest trading partner globally (treating the EU as a single market). In the year to December 2004, Malaysia was New Zealand’s 10th largest export market taking $523m of exports, and our 10th largest import source supplying $843m of imports. Malaysia is also a significant market for New Zealand services exports. Tourists and students from Malaysia contributed more than $70m to the New Zealand economy in 2003, with exports of other commercial services (e.g. engineering, professional services) for the same year worth around $8m. In the investment area, two-way direct investment is relatively low. As at 31 March 2004, Malaysian direct foreign investment in New Zealand totaled $17m while overseas direct investment by New Zealanders in Malaysia totaled $38m.
Negotiations are also underway on an FTA between ASEAN, Australia and New Zealand after a decision by the leaders of the 12 countries in November 2004.
Negotiations for the bilateral FTA between Malaysia and New Zealand support our joint engagement in the broader ASEAN process.
The New Zealand study, released on 10 March, found that there were strong reasons for us to negotiate a free trade agreement with Malaysia. It identified areas where a comprehensive FTA would be of direct benefit to New Zealand and where bilateral cooperation under an FTA framework could contribute to wider trade and economic objectives, including to ASEAN/Australia/New Zealand FTA negotiations, which have already commenced. The study recommended that negotiations on an FTA between New Zealand and Malaysia covering goods, services and investment begin as soon as possible.
An FTA between New Zealand and Malaysia would be expected to strengthen economic growth and development in the two countries and to facilitate the development of a closer economic relationship between New Zealand and Malaysia by:
Previous bilateral trade agreements entered into or under negotiation by New Zealand have addressed or are addressing:
Preliminary analysis suggests that any FTA between Malaysia and New Zealand would have a positive impact on the New Zealand economy. While in practice the bulk of New Zealand’s merchandise exports to Malaysia enter at low duty rates, Malaysia’s WTO bound tariffs are generally higher than its applied rates. Binding liberalization under an FTA would therefore provide greater certainty to exporters. There are also a number of sectors of interest to New Zealand where Malaysian tariffs are in the 20 to 40 percent range and where products face tariffs that escalate with the degree of processing. Such sectors include forestry, some dairy products, aluminum and steel products, motor vehicle parts, plastics and whiteware.
A key objective of any FTA for New Zealand would be to reduce such restrictions across the range of goods and services to achieve gains for New Zealand exporters. The Government is therefore interested in information from New Zealand businesses on the tariff, non-tariff and regulatory barriers that affect their ability to export to Malaysia.
Although negotiations are at an advanced stage, the Government is still interested to hear your views on the following questions:
Note: Where relevant, it would be helpful to learn from you the products or services your business is already exporting to Malaysia, in the case of goods their tariff classification and the tariffs you are paying, any other specific barriers you face, and the products or services you would consider exporting to Malaysia if tariff or non-tariff barriers were addressed.
If you have any questions or comments about this process, contact Peter Martin, +64 4 439 8084.
Consultation will continue throughout the negotiations.
