free trade agreement between Australia and malaysia
goods and services
Note on the Meeting of 23
september 2014
Chairman: Ambassador Francisco Pirez Gordillo (Uruguay)
1.1. The 74th Session of the Committee on Regional Trade
Agreements (hereinafter 'CRTA' or the 'Committee') was convened in Airgram
WTO/AIR/4338 dated 11 August 2014.
1.2. Under Agenda Item B.II of the session, the CRTA considered the Free
Trade Agreement between Australia
and Malaysia,
(hereinafter "the Agreement").
1.3. The Chairman said that the Agreement had entered into force on
1 January 2013.
It had been notified to the WTO by the Parties on 13 May 2013
under Article XXIV:7(a) of the GATT 1994
and the Understanding on the Interpretation of Article XXIV of
GATT 1994 as an Agreement establishing a free trade area
(document WT/REG340/N/1) and under GATS Article V:7(a) as an Agreement providing for
the liberalization of trade in services within the meaning of Article V of
the GATS (document S/C/N/695).
The text of the Agreement was available, together with its Annexes, on the
Parties' official websites. The Factual Presentation on the goods
and services aspects (document WT/REG340/1 dated 14 April 2014)
and written questions and replies (document WT/REG340/2 dated 26 June
2014) had been issued. In addition, a room document containing questions
submitted after the deadline had been issued.
1.4. He proposed to organize the consideration of the
Agreement by first
asking the Parties and then other Members to give any general comments. Members
would then turn to the specifics of the Agreement, using the Factual
Presentation to guide the debate and would then go through the questions and
replies document.
1.5. The representative of Australia
said he was pleased that the ASEAN-Australia-New Zealand (AANZFTA)
agreement had been considered before the Agreement with Malaysia. This
was because Australia viewed the AANZFTA as a significant achievement and a
platform for ongoing engagement with countries in the region in at least three
different ways: supporting ASEAN in its own economic integration efforts
because a stronger ASEAN was good for Australia; AANZFTA would enhance
Australia's engagement with ASEAN-centred agreements such as the Regional
Comprehensive Economic Partnership (RCEP) negotiations; and provided a platform
for bilateral agreements with ASEAN members to realize AANZFTA-plus outcomes by
focusing more intensively on particular market access and other priorities than
had been possible under the AANZFTA. There was, however, a sequencing issue
because Australia had concluded
bilateral FTAs with Singapore
and Thailand
well before the AANZFTA and those bilateral agreements therefore had a
different architecture to the AANZFTA. However the architecture in the Agreement
with Malaysia
reflected that of AANZFTA.
1.6. In a joint statement by the parties on the Agreement, he welcomed
consideration by the Committee on Regional Trade Agreements of the
Malaysia-Australia Free Trade Agreement (MAFTA). The parties valued the work of
the CRTA to ensure transparency of RTAs and evaluate the Agreement's
consistency with WTO rules. The Agreement had been notified to the WTO on 13 May 2013.
Ministers from Australia and
Malaysia had signed the
Agreement on 22 May 2012 in Kuala
Lumpur, Malaysia
and the Agreement had entered into force on 1 January 2013.
1.7. The Agreement was comprehensive and high-quality and built on the
commitments made by both countries in the AANZFTA. Malaysia
was Australia's
ninth largest trading partner, with two‑way trade valued at A$17.9 billion in
2013.
1.8. The Agreement met all the criteria of a high quality agreement that
promoted growth in goods and services trade. It was fully consistent with WTO
principles and rules, delivered WTO‑plus outcomes and was comprehensive and
provided substantial liberalization across all sectors. It met the robust
interpretation of the WTO threshold requirement that an agreement cover
"substantially all trade" between the parties. The Agreement
accelerated AANZFTA tariff elimination commitments for both countries and
achieved a higher level of tariff elimination by Malaysia. Upon entry into force of
the Agreement, Australia
eliminated all tariffs on goods imported from Malaysia, that is, 100% tariff
elimination from 1 January 2013, compared with 1 January 2020 under AANZFTA. Malaysia had bound tariff-free access on 97.6%
of recent Malaysian goods imports from Australia from the date of entry
into force of the Agreement, which was expected to increase to 98.9% in 2016
and 99% in 2017.
1.9. The Agreement contained an AANZFTA-plus outcome on services, including
through "AANZFTA-Plus" services commitments. Australia's commitments
included increasing the bound Foreign Investment Review Board (FIRB) horizontal
threshold applying to Australia's specific services commitments, as well as
additional sector-specific commitments in areas such as private hospital
services and hospital support services, research and development services, and
some construction services. Malaysia's
commitments included giving Australian entities the right to acquire majority
ownership in selected areas across a range of sectors such as education,
insurance and investment banking, telecommunications and professional services.
1.10. The Agreement also included measures which assisted companies doing
business in Australia and Malaysia,
including business friendly rules of origin provisions. For example, Australian
exporters did not need to supply a certificate of origin, but rather a simpler
declaration of origin. The Agreement had useful commitments in other
trade-related areas, such as intellectual property, electronic commerce and the
temporary entry and stay of skilled personnel.
1.11. Australia and Malaysia
thanked the WTO Secretariat for the Factual Presentation and Members for their
questions, both in writing and those the Parties anticipated receiving during
the meeting. The Parties looked forward to a fruitful discussion of the
Agreement and would endeavour to answer additional questions as they arose.
1.12. The representative of the European Union thanked the Parties and
the Secretariat for the material presented. Both Parties were important trading
partners for the European Union. He noted that despite the very long
implementation period envisaged by the Agreement, end of 2026, the bulk of
tariff liberalization occurred at the beginning of implementation. With regard
to services the EU noted that both Parties had made some improvements compared
to their commitments in the GATS including commitments in sub-sectors for which
the Parties did not have GATS commitments. However, he also noted that a number
of sectors for which there were no GATS commitments, also had no commitments in
the Agreement. The EU looked forward to the results of the in-built five year
review and other review mechanisms such as the first review of services
commitments to be completed by the end of 2015 and the first review of the
Rules of Origin Chapter for which the final report was to be delivered by the
end of 2016. In particular the EU asked what steps had been taken by Malaysia to
review the tariff and other charges applied to alcoholic beverages by the end
of 2015 and to include labour and environmental provisions.
1.13. The representative of Malaysia said that there was
engagement on the review which would depend on the implementation process under
the Agreement. On the question raised by the EU, responses had just been
received from the capital and would be circulated immediately after the
meeting.
1.14. The representative of Australia responded to the
broader point raised by the EU in its questions related to the reviews. He
noted that negotiations had been concluded between the Parties on 13 March 2012
but in November 2012 leaders had taken the decision to launch RCEP negotiations
in which both Malaysia and Australia have
been very deeply involved since. In addition, both Parties were also involved
in the Trans-Pacific Partnership (TPP) negotiations. So at present, two
agreements involving the Parties had already entered into force, the AANZFTA
and the Agreement, but in addition they were negotiating these plurilateral
agreements. An issue that was emerging in these negotiations was that of the
most appropriate architecture for a modern trade agreement and the Parties were
grappling with this issue in some of the mega-regional negotiations. Under the
Agreement and its institutional provisions, there was a requirement that the
FTA Joint Commission meet within 12 months of entry into force of the
Agreement. In fact it had not yet met not only because the Parties were busy
with their negotiations, but there had also not been any implementation difficulties
in the Agreement. Ministers had met in August and instructed the Parties to
have a Joint Committee Meeting soon so it would occur soon.
1.15. The representative of Canada thanked the Parties for
their responses and would ask further questions if any arose.
1.16. The Chairman said that consideration of the Goods and
Services Aspects of the Free Trade Agreement between Australia and Malaysia has allowed the Committee to clarify a number of questions and oral
discussion of this RTA could be concluded in accordance with paragraph 11
of the Transparency Mechanism.
If any delegations wished to ask follow‑up questions they were invited to
forward submissions in writing to the Secretariat by 30 September 2014 and the Parties were asked to submit
replies in writing by no later than 14 October 2014. In accordance with paragraph 13
of the Transparency Mechanism all written submissions, as well as minutes of
this meeting would be circulated promptly, in all WTO official languages,
and would be made available on the WTO website.
1.17. The Committee took note of the comments made.
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