March 2006 update on the Australia-Malaysia Free Trade Agreement negotiations

Malaysia brought a full team to the 13 to 17 March 2006 MAFTA round held in Canberra, demonstrating their commitment to the negotiations. This enabled wide-ranging discussion on most issues. Both Parties aim to complete negotiations by the end of 2006.

Negotiations on Goods issues continue to make good progress, supported by a constructive inter-sessional meeting on rules of origin (ROO) held in Kuala Lumpur on 9 and 10 March. Both Parties discussed tariff modalities with Malaysia indicating the possible nature of its tariff commitments, and Australia explaining what it had delivered in other FTAs. Australia continued to underscore its level of ambition for tariff elimination. There was a good discussion on Malaysia’s import licensing regime, with Australia clearly indicating that this was an important issue. Discussion on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) issues advanced our understanding in these areas. On these and most other areas of the goods negotiations, the Parties have begun drafting Chapter text for the FTA. The issue of safeguards will be further discussed at the next session and will depend to a large extent on progress in the tariff negotiations.

Negotiations on Services were advanced this round. Australian industry representatives were able to deliver strong messages regarding their expectation for the negotiations and outlined their experience with trade liberalisation. Malaysian officials, and industry experts, appreciated the chance to discuss issues directly with Australian service industry representatives. During this round, Malaysia expressed interests in tourism, education and professional services. There remains, however, significant work to bridge the gap between the two Parties.

The Investment Working Group discussed the modalities of an Investment Chapter. Both Parties agreed to proceed on the basis of a negative list approach to the scheduling of non-conforming measures/reservations. There was however disagreement on the appropriate treatment of services in an Investment Chapter.

There were good discussions on Intellectual Property, Competition Policy, and legal and institutional issues. Malaysia highlighted the importance of economic cooperation as forming an integral part of the Agreement. There was a good discussion of the economic cooperation projects Malaysia had previously presented.

Malaysia maintained its reluctance to discuss Government Procurement issues.

Both Parties will advance text in the lead up to the next negotiation session to be held in Malaysia in June. To maintain the momentum in the negotiations, working groups will hold inter-sessional meetings wherever possible.