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

Good progress was made in the fourth round of MAFTA negotiations which were held in Kuala Lumpur on 3 to 7 July 2006.  This followed advances made at inter-sessional meetings on investment, telecommunications, e-commerce, financial services and dispute settlement since the last negotiating session held in Canberra in March 2006.

We are now seriously engaged in the negotiations on goods.  Both Parties exchanged initial tariff offers at this round.  They are a good starting point for detailed market access negotiations.  The focus of discussion was on seeking ways to improve our respective offers rather than re-emphasising difficulties.  We will now assess the initial offer from Malaysia and submit a request list before the next negotiating session.  Australia’s request list will be informed by discussion with industry and responses to requests for public submissions.

There was useful discussion on Malaysia’s import licensing regime which covers about 27 per cent of Malaysian tariff lines, and which Australia regards as an important priority in the negotiations.  Both sides have advanced draft text for the agreement which will form the basis of discussions at the next negotiating session.

Both parties made steady progress towards narrowing differences on investment.  Major outstanding issues include the coverage of portfolio investment and investment in services.

Discussion on services continues to highlight fundamental differences between Australia and Malaysia.  Malaysia reiterated its preference for a positive list approach to market access commitments.  Australia has underscored its commitment to a negative list approach.  Both Parties agreed to schedule an inter-sessional meeting in late August to advance negotiations in this area.

There was pleasing progress on intellectual property and e-commerce where discussion focused on draft text.  Malaysia outlined its difficulties in relation to commitments on competition policy.

Australia underscored its disappointment that government procurement was again not discussed at this session.  We continue to argue for the inclusion of commitments on government procurement in MAFTA.

Australia and Malaysia tabled text covering most areas of the negotiations at this session.  Both Parties will advance text in the lead up to the next negotiating session scheduled for 11 to 15 September 2006 in Canberra. 

Mr Vaile will be meeting with Malaysia’s Trade Minister, Rafidah Aziz, in Adelaide on 3 August for the Australia-Malaysia Joint Trade Committee meeting where they will discuss the bilateral relationship including the progress of MAFTA negotiations.