A free trade agreement (FTA), covering goods, services and investment, has been signed in Kuala Lumpur between New Zealand and Malaysia which, it is hoped, will boost trade between the two countries.
New Zealand’s Prime Minister, John Key, who witnessed the signing of the agreement, announced that:
"Comprehensive free trade agreements such as this are vital for an exporting nation like New Zealand, which is far from markets and reliant on overseas export earnings. The NZ-Malaysia FTA is a significant step forward in relations with Malaysia and further evidence of our economic integration with Asia.”
"Malaysia is New Zealand's eighth largest export market, with New Zealand exports to that country worth almost NZD1bn (USD750m) last year,” he continued.
"Between 2004 and 2008, New Zealand's goods exports to Malaysia grew by more than 80% - double the rate for New Zealand's export growth to the world over the same period."
New Zealand’s Trade Minister, Tim Groser, who signed the agreement, added that: "Malaysia's large and growing population of more than 28m people presents considerable opportunity for new and enhanced market access for New Zealand's exporters, including in education, environmental, management consulting and veterinary services."
Within the FTA, he said that "tariffs on 99.5% of New Zealand's current exports will be eliminated within seven years (by 2016) of entry-into-force. On full implementation the Malaysia FTA will provide duty-savings of over NZD10m per year for New Zealand exporters.”
Nazib Rajak, Malaysia’s Prime Minister, who also witnessed the agreement, expressed the hope that the FTA would motivate investors from New Zealand to consider Malaysia as an investment centre and as a gateway, not only for Malaysia, but for the Association of South East Asian Nations (ASEAN) region as a whole.
The FTA augments the ASEAN-Australia-New Zealand FTA signed this year, by fast-tracking many of the tariff reductions found in the latter agreement.
99.5% of New Zealand’s exports will be free of tariffs by 2016 under the bilateral FTA, while 99.4% will only be tariff-free in 2020. Key exports from New Zealand to be liberalized in 2010 include butter, cheese, milk powder, wool and kiwifruit, while electrical parts and fibreboard will be free of tariffs by 2012 and paper products, plastics, paints, whiteware and certain iron and steel products by 2016.
The FTA is scheduled to enter into force in 2010, once both countries have completed the required domestic approval processes.
New Zealand has now entered into FTAs with the following countries and country groupings: Australia; Singapore; Thailand; Chile, Singapore and Brunei (the Trans-Pacific Strategic Economic Partnership); China; and ASEAN.
It is in the process of negotiating with the Gulf Cooperation Council, Hong Kong and South Korea.
A study into the benefits of an FTA with India has been completed and is being discussed by officials. Work on a study which may, in time, help launch FTA negotiations with Japan is also underway, and New Zealand – in conjunction with Brunei, Chile and Singapore – has recently announced its intention to begin negotiations which could see the United States, and potentially other partners, join the Trans-Pacific SEP.
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