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Malaysia Signs FTA With Chile

by Mary Swire, Tax-News.com, Hong Kong

16 November 2010


A free trade agreement (FTA) between Malaysia and Chile was signed in Yokohama, Japan, by Malaysia’s Deputy Foreign Affairs Minister, Richard Riot Anak Jaem, and the Chilean Minister of Foreign Affairs, Alfredo Moreno Charme.

The leaders of the two countries had agreed to launch bilateral FTA negotiations in November 2006. The negotiations concluded in May this year are specifically focused on trade in goods and economic cooperation.

Negotiations on other areas, such as services and investments, are planned to commence within two years after the implementation of the trade in goods FTA, to produce a more comprehensive agreement. Furthermore, Malaysia has just joined the group of countries, which already included Chile, presently negotiating the Trans-Pacific Partnership.

While the FTA with Chile is Malaysia’s fourth after similar agreements with Japan, Pakistan and New Zealand, it is Malaysia's first bilateral FTA with a Latin America country. It is also Chile’s first FTA with a member of the Association of Southeast Asian Nations.

While total trade between Malaysia and Chile is not currently substantial, at around MYR850m (USD270m) in the first nine months of 2010, the FTA can be expected to increase bilateral trade between both regions.

Over five years, the two countries are to reduce or eliminate import tariffs on a number of agricultural and industrial goods. For example, after the FTA’s entry into force, expected to be during the first half of next year, Chile will immediately cancel duties on almost 7,000 products (90% of its total tariff lines). It was said that Malaysia’s exports that should benefit from the above-mentioned tariff eliminations include electronic goods, clothing and textiles, and iron and steel products.

On its part, Malaysia will eliminate import duties immediately on over 9,300 items (almost 90% of its tariff lines), including copper products, kitchenware and plastic products, and pneumatic rubber tires. However, the reduction of tariffs on some products, such as wine, rice and tobacco has been excluded under the FTA.

In economic cooperation, the two countries will collaborate in areas such as research and development, mining, intellectual property, tourism and education. It is planned to develop joint research programmes, exchanges of information and private sector cooperation.

TAGS: tax | free trade agreement (FTA) | Chile | law | tariffs | agreements | Malaysia | import duty | trade

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