For the 11th year in a row, China was Malaysia’s top trading partner, accounting for 17.2% of overall trade in 2019. RM315.19 billion in trade with China, up 0.2% from 2018. Other countries Malaysia has trade agreements with include: Australia and the US
Malaysia-Australia Free Trade Agreement
On May 22, 2012, Craig Emerson, Australia’s former Minister for Trade, and Mustapa Mohamed, Malaysia’s Minister for International Trade and Industry, signed the Malaysia-Australia Free Trade Agreement (MAFTA) in Kuala Lumpur. The Agreement becomes effective on January 1, 2013.
MAFTA is a comprehensive, high-quality agreement that strengthens Australia’s economic integration into Asia’s fast-growing area. The agreement adds to the benefits that the ASEAN-Australia-New Zealand Free Trade Agreement, which began in 2010 for Australia and Malaysia, has already brought to the Australian economy.
The agreement allows Australian goods and services to enter the burgeoning Malaysian market.
By opening markets and freeing trade and investment between our two countries, the Malaysia-Australia Free Trade Agreement helps Australian exporters, importers, and consumers. The agreement expands on the pledges made by both countries under the Australia-ASEAN Free Trade Agreement and the New Zealand-ASEAN Free Trade Agreement (AANZFTA).
Malaysia and Australia have agreed to lower tariffs early and on a broader variety of commodities than under the AANZFTA. The Agreement also addresses additional trade barriers and simplifies trade administration for traders.
On the date of the Agreement’s entry into force, 97.6% of Australian goods currently shipped to Malaysia were eligible for tariff-free treatment, rising to 99.6% in 2017*. When the Agreement went into effect, Australia removed all remaining duties on Malaysian imports.
Malaysia and ASEAN
Malaysia is one of the ten members of the Association of Southeast Asian Nations (ASEAN), with the region’s third-largest economy (12%) and the EU’s third-largest commercial partner in the area.
The ASEAN area is a vibrant market with 640 million consumers and is the world’s seventh-largest economy. After the United States and China, the countries make up the EU’s third-largest trading partner outside of Europe.
The EU’s top aim is to improve access for EU exporters to the vibrant ASEAN market.
Negotiations between the EU and ASEAN for a region-to-region trade and investment pact began in 2007 and were suspended by mutual agreement in 2009 to make way for bilateral negotiations.
These bilateral trade and investment agreements were designed to serve as stepping stones toward a future regional agreement.
Malaysia- US Free Trade Agreement
A proposed treaty between Malaysia and the United States of America is the Malaysia-US Free Trade Agreement. The pact intends to liberalize each other’s markets for the agreement’s participants and to promote direct trade between the two countries. The US was Malaysia’s top trading partner at the time of the proposal in 2005, while Malaysia is the US’s tenth largest trading partner. The talks started in June 2005.
Rafidah Abdul Aziz, Malaysia’s then-Minister of International Trade and Industry, led the Malaysian delegation, while United States Trade Representative Rob Portman and his deputy, Ambassador Karan K. Bhatia, led the US delegation.
RCEP
Malaysia is negotiating the Regional Comprehensive Economic Partnership (RCEP), which is a free trade agreement (FTA) between ASEAN’s ten members and six countries with which ASEAN already has an FTA. The RCEP’s purpose is to achieve greater regional economic integration among its members. The RCEP also intends to harmonize and simplify bilateral free trade agreements between member countries.
Australia, Brunei, Cambodia, China, India, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam are among the RCEP’s negotiating members. If approved, the RCEP will be Malaysia’s largest international pact, accounting for nearly 29% of global commerce. The previous government had promised that the RCEP deal will be completed in 2018, but the new government has not repeated that commitment.
In a related issue, Malaysia and the EU signed the Partnership and Cooperation Agreement (PCA) in December 2015.
In January 2019, Malaysia and the EU planned to sign this PCA. A PCA is a multinational and bilateral cooperation agreement that covers politics, economics, trade, investment, justice, culture, education, science and technology, healthcare, agriculture, tourism, energy, traffic, and the environment. To be eligible for the free-trade agreement, ASEAN nations must first sign a PCA with the EU (FTA).
