MAFTA and beyond: opportunities for business

Victorian Government Super Trade Mission Breakfast Briefing

Kuala Lumpur, 17 June 2013

1

JOHN FISHERFirst Assistant Secretary, Free Trade Agreement Division

Department of Foreign Affairs and Trade

2

Overview

• Trade with Malaysia• Need for a free trade agreement• Malaysia-Australia Free Trade Agreement (MAFTA)

– Outcomes: goods, services and business facilitation

• Regional agenda– ASEAN-Australia-New Zealand FTA (AANZFTA)– Regional Comprehensive Economic Partnership (RCEP)– Trans-Pacific Partnership (TPP)

3

Trade with Malaysia (2012)

• Australia’s 9th largest trading partner– two-way trade worth A$17.7 billion annually

Goods$9.6b

Services$1.3b

Imports from

Malaysia$10.9b

Goods$5.1b

Services$1.7b

Exports to

Malaysia$6.8b

4

Trade with Malaysia: Top 5

Crude petroleum

Education-related travel Copper Recreational

travel Nickel

Top 5 exports to Malaysia

Crude petroleum

Refined petroleum

Transport services

AV/TV equipment Computers

Top 5 imports from Malaysia

5

Why an FTA with Malaysia?

• Scoping study identified the need to go further – eliminate remaining impediments to bilateral trade and

investment– complement existing commitments (WTO/AANZFTA)

• An opportunity to build a tailored solution– design measures to improve access for exporters of both

countries– eliminate additional tariff and non-tariff barriers– opportunities to boosts investment, output and employment

6

Malaysia-Australia FTA (MAFTA)

• Entered into force on 1 January 2013

• “AANZFTA-Plus”• Key features– tariffs and quotas

eliminated or reduced– increased market access,

including options for majority ownership in selected services sectors

Australian Minister for Trade and Competitiveness, Craig Emerson, and

Malaysia’s Minister for Trade and Industry, Mustapa Mohamed

7

Outcomes at a Glance: Goods

• Automotives and automotive parts

• Iron and steel• Processed foods, plastics,

chemicals and a range of manufactured products

• Milk, wine and rice

8

Case study: Hella Australia

• Designs and manufactures automotive lighting equipment and accessories for the automotive, mining and marine industries

• Imports some components including from Malaysia

• Exports finished product to Malaysia, other ASEAN countries, China and South America

• Under MAFTA:– eliminated tariffs on:

• all Malaysian tariffs on automotive parts and components

• medium to large engine cars

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Case study: Milk industry

• Harvey Fresh Milk– produces fresh juice, dairy

and wine products– local and foreign markets– exports one million litres of

fresh milk to Malaysia

• F&N Dairies Sdn. Bhd– major manufacturer and

marketer of milk and juice in Malaysia

– imports 100 per cent Australian fresh milk

• Under MAFTA:– Malaysia will increase

the volume of its tariff-free quota of liquid milk from Australia each year• additional capacity to

AANZFTA commitments

10

Case study: BlueScope Steel Malaysia

• Leading supplier of premium metallic coated and painted steel building products– entered Malaysia in 1996– seven manufacturing plants in

Malaysia, Singapore and Brunei

• Supplier for key projects: – Legoland, KL International

Airport 2 Integrated Complex, Pinewood Malaysia Studios

• Under MAFTA:– tariffs on 96.4 percent of

iron and steel imported from Australia will be eliminated by 2016 (100 per cent by 2020)

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Outcomes at a Glance: Services

Doha AANZFTA AFAS 7 ASEAN-China ASEAN-Korea Australia * Japan Pakistan0

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Comparison of services liberalisation commitments in Malaysia's FTAs

Source: ‘Services Commitments in Preferential Trade Agreements: An Expanded Dataset’, Roy, 2011 (WTO Staff Working Paper ERSD-2011-18) *Commitment to Australia calculated by DFAT applying author's methodology

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Outcomes at a Glance: Services

• Right to acquire majority ownership in a range of industries, including – education– financial– telecommunications– professional

13

Case study: University sector

• Monash, Swinburne and Curtin Universities– campuses in Malaysia

• Under MAFTA:– Australian higher education

providers can own up to 70 per cent equity in local campuses • increase to 100 per cent by

2015– Malaysia raised the quota of

Australian lecturers per institution• 20 to 30 per cent

14

Outcomes at a Glance:Business Facilitation

• Business-friendly rules of origin provisions• More Australian executives and senior managers can

work in Malaysia• Easier for spouses and dependants to obtain visas• Mutual recognition of qualifications and licensing for

professionals• Stronger protection of Australian trademarks and

copyright• Economic and technical cooperation projects

15

Case study: Automotive industry

• Malaysia Automotive Institute (MAI) and Australia's Cooperative Research Centre for Advanced Automotive Technology (Auto CRC)

• AutoCRC Vehicle Electrification program: – collaboration between

University of Wollongong, University of Technology Sydney and CSIRO and MAI

• Under MAFTA:– established an Automotive

Industry Dialogue to provide a forum for enhanced cooperation between Malaysian and Australian automotive industries

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Regional Agenda: AANZFTA

• Entered into force 1 January 2010 • Australia’s largest FTA• ASEAN’s most comprehensive FTA• In-built agenda and review to

strengthen outcomes • Benchmark for other bilateral and

regional FTAs

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Regional Agenda: RCEP and TPP

• Regional Comprehensive Economic Partnership– Aims to build on existing ASEAN FTAs– Target completion date of end 2015– Potential for Australia and Malaysia

businesses• 30 per cent of global GDP• regional supply chains

• Trans-Pacific Partnership– High quality, comprehensive 21st century agreement– Australia and Malaysia both negotiating parties

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Conclusion

• Full FTA agenda in South-East Asia• Existing FTAs already helping business access new

markets and expand trade in existing markets in the region– business must harness these opportunities

• Current bilateral and regional FTA negotiations will potentially offer additional opportunities

• More information: www.dfat.gov.au/fta