Japanese prime minister Junichiro Koizumi and visiting Malaysian prime minister Abdullah Ahmad Badawi on Wednesday agreed in principle on major elements of a bilateral free trade pact during their meeting in Tokyo, Japanese government officials told Kyodo News.
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Under the pact, the two countries agreed to do away with tariffs on essentially all industrial goods and most agricultural, forestry and fishery products within 10 years, the report said, noting that Malaysia had stuck to its policy of protecting domestic steelmakers and national car makers, though it conceded in FTA talks in exchange for Japan’s co-operation in personnel training in the country’s auto industry, according to Japanese government officials.
Malaysia has pledged to gradually eliminate tariffs on finished vehicles below 2000 cc by 2015. Such vehicles compete with cars manufactured by Malaysian national carmakers – Proton Holdings and Perusahaan Otomobil Nasional Kedua, better known as Perodua, Kyodo News said.
As for completely knocked down auto parts for Japanese carmakers assembling vehicles in Malaysia, the country reportedly pledged to remove tariffs immediately. Malaysia also vowed to exempt import duties on iron and steel products from Japan which are directly used in the manufacturing activities under agreed conditions.
Kyodo News said the two countries achieved a breakthrough in FTA talks on Sunday in Kuala Lumpur, with Japan’s economy, trade and industry minister Shoichi Nakagawa making a whirlwind trip to the city in a last-ditch effort to settle the negotiations through talks with his counterpart, Malaysian international trade and industry minister Rafidah Aziz.
Rafidah reportedly said on Sunday the two sides will aim to formally sign an FTA in December.
Kyodo News noted that the FTA deal with Malaysia is the fourth for Japan, which already has FTAs with Singapore and Mexico and struck a basic accord with the Philippines last November. For Malaysia, Japan will be the first country with which it has entered into an FTA.
Kyodo News said the deal with Malaysia is expected to give momentum to FTA negotiations between Japan and other Asian countries – South Korea, Thailand and Indonesia.
Japan aims to reach a basic FTA accord with Thailand by July and is expected to launch formal FTA negotiations with Indonesia early next month, the report added, noting that bilateral FTA talks with South Korea have stalled since last November over differences in farm product liberalisation.
Protection removal hits Proton
