Next round of EU-Malaysia FTA talks to resume in Q4, says envoy

Bernama | 3 June 2013

Next round of EU-Malaysia FTA talks to resume In Q4, says envoy

By Tengku Noor Shamsiah Tengku Abdullah

SINGAPORE, June 3 (Bernama) — The next round of negotiations on the EU-Malaysia Free Trade Agreement (FTA) is expected to resume in the fourth quarter, says Ambassador & Head of Delegation of the European Union to Malaysia, Luc Vandebon.

He said both sides are working to resume the process as soon as possible.

"Recently an informal video conference was held between my colleagues in Brussels and the Ministry of International Trade & Industry where both sides reaffirmed their interest to further discuss and negotiate on the proposed FTA.

"After such a long break, the EU and Malaysia need to compare notes and take stock on the various issues, to verify if we are in sight of each other. If this "stock taking" process goes well, as I think and hope, then we will be in a position to resume the negotiations, maybe in autumn," he said in response to Bernama in an email interview.

The Technical Working Groups of the negotiating teams met in Kuala Lumpur last September.

"We are currently looking at all issues, to see where we left them off before we paused the process," Vandebon said, adding so much has happened in the meantime (the elections, new Cabinet, the TPP process, new legislative developments) that "we need to take a fresh look at where we are and what can be done."

Asked when the negotiations could be concluded, the envoy said: "In the event of a round in Q4 2013, it should be possible to conclude negotiations in late 2014/early 2015.

"But remember, substance primes over timing," he said.

Touching on the impact for both the EU and Malaysia upon successful conclusion of the FTA negotiations, Vandebon said: "Firstly, a long-term, stable "contractual" trade relation with the EU would signal to European investors that Malaysia really means business."

He said both the EU and Malaysia will have duty-free access to each other’s markets, which is a huge benefit for exporting companies.

"This is especially true considering that, as from January next year, Malaysia will no longer enjoy preferential access to the EU market under the General Scheme of Preferences (GSP). "Secondly, the gains of an ambitious arrangement liberalising our bilateral trade can be huge," he said.

Vandebon noted a study conducted in 2006 indicated that Malaysia would be a clear "winner": Malaysia’s GDP would be boosted by eight per cent by 2020 if a deep and comprehensive FTA was to be concluded.

He said the wider the scope of the FTA and the deeper the liberalisation, the more gains there would be, especially in services.

"This means that there must be trade creating, not trade diverting. To make sure that this is the case, FTAs must cover "substantially all trade" and bring about a real integration of the economies of the negotiating parties.

"Which means that they must cover also sensitive areas where liberalisation and opening to competition are more difficult, for political and economic reasons," he said.

On the current economic ties between the EU and Malaysia, Vandebon said: "In 2012, with a share of about 10 per cent, the EU was Malaysia’s fourth largest trading partner."

With total trade of 35 billion Euro, EU exports to Malaysia in 2012 amounted to about 15 billion Euro while Malaysian exports to the EU reached about 20 billion Euro.

In 2012, Malaysia recorded a trade surplus of nearly 6 billion Euro with the EU.

Vandebon said Malaysia is the EU’s second largest trading partner in Asea after Singapore, largely by virtue of its gateway position to the Southeast Asian region and due to the growing domestic demand, spurred by Malaysia’s significant economic development and growth.

Globally, Malaysia is the EU’s 23rd largest trading partner.

In 2012 the EU was the largest source of Foreign Direct Investment (FDI) into Malaysia, as it invested about 953 million Euro in approved manufacturing projects, topping the list and way ahead of Japan (702 million Euro) and Saudi Arabia (652 million Euro).

Vandebon said trade ties will be further enhanced and strengthened with the signing of an FTA between the EU and Malaysia.

He said trade volume, which is already constantly increasing over the years, would be boosted upon the signing of a bilateral FTA.

"Similar results have been observed with Australia, India, China and other FTA partners," he added.

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source: Bernama