Australia Malaysia Free Trade Agreement

Australia Malaysia Free Trade
Agreement(MAFTA)
19th July, 2022

Institute of Business Administration
Jahangirnagar University
Assignment On:
International Trade Agreement
Submitted to:
Shahriar Kabir
Associate Professor, IBA-JU
Course Instructor
MKT 405
International Marketing
Submitted by
Sharmin Akter Priota
ID. 1923
6thSemester
28th Batch, IBA-JU
Date of Submission
July 19, 2022
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Letter of Transmittal
July 19, 2022
Shahriar Kabir
Associate Professor
BBA
IBA-JU
Subject: Report on Trade Agreement
Dear Sir,
I am pleased to submit the report that you asked for & gave me the authorization to work on
“Trade Agreement of Australia-Malaysia Free Trade Agreement”. This report is an essential part
of our course, I tried my best to work on it carefully and sincerely to make the report
informative.
The study I conducted enhanced my knowledge to make an impactfulreport. This report has
given me an exceptional experience that might have immense uses in future endeavors and I
sincerely hope that it would be able to fulfill your expectations.
I have put my sincere effort to give this report a presentable shape and make it as informative
and precise as possible. I thank you for providing me with this unique opportunity.
Sincerely yours,
Sharmin Akter Priota
28th Batch
IBA-JU
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Executive Summary
MAFTA is a comprehensive, high-quality agreement that further integrates the Australian
economy into the fast-growing Asian region. The Agreement builds on benefits already flowing
to the Australian economy from the ASEAN-Australia-New Zealand Free Trade Agreement,
which started for Australia and Malaysia in 2010. This study details the Malaysia-Australia Free
Trade Agreement benefits Australian exporters, importers and consumers by opening markets
and freeing trade and investment between our two countries. The Agreement builds on the
commitments made by both countries in Australia's regional Free Trade Agreement with
ASEAN and New Zealand. Australian industries to benefit include milk; automotives; processed
foods; plastics; chemicals and a range of manufactured products; wine; iron and steel; and rice.
Significant gains have also been achieved for services and investment through access to majority
ownership in companies in a wide range of sectors including education; financial;
telecommunications and professional services. Suppliers in other industries such as tourism,
research and development and mining-related services will also be guaranteed the right to
majority ownership. The Malaysia-Australia Free Trade Agreement is another step forward for
Australia in the Asian Century. The Agreement reduces trade barriers, making it easier for
Australians to do business in Malaysia. The Malaysia-Australia Free Trade Agreement
(MAFTA) builds on the ASEAN-Australia-New Zealand FTA (AANZFTA) to open up new
opportunities for Australian investors and suppliers of goods and services, bringing our
economies closer together. This high-quality free trade agreement improves access to the
Malaysian market for Australian businesses and makes it easier for Australian workers and their
families to live and work in Malaysia. MAFTA makes it easier for Australian goods exporters to
enter the Malaysian market. It does this by lowering or eliminating the tariffs that Malaysia
imposes on imports from Australia. This will help make Australian businesses more competitive
in Malaysia. MAFTA lowers the cost of Malaysian products and inputs for Australian consumers
and businesses, as no tariffs are imposed on Malaysian goods entering Australia. MAFTA gives
Australian service providers better access to the Malaysian market and reduces a number of other
barriers to trade. Skilled Australian workers will find it easier to take up employment
opportunities in Malaysia. Free trade agreements provide a framework for Australia's
commercial relationship with trading partners, increase trade and investment opportunities, bring
money into the Australian economy and help create jobs. Australia pursues high-quality,
comprehensive trade agreements when they offer net benefits to Australia, are World Trade
Organization-consistent, and support the global trade system. MAFTA provides an opportunity
for Australian agricultural producers to capitalize on the increasing Malaysian demand for
Australia's top quality food and fibre. These changes will generate growth and employment in
services industries in which Australia has specialist skills. Australia's expertise in professional
services and financial services can now more easily be exported to Malaysia. Australian
investors will benefit from increases in foreign equity limits for specified services in the
education, financial services, telecommunications and professional services industries. Apart
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from tariff barriers, non-tariff barriers should also be addressed, including issues relating to
conformity to technical and other standards. Mechanisms to provide more equitable treatment of
Intellectual Property issues, access to Government procurement and investment opportunities are
also critical. General issues of the transparent administration of laws and regulations are also key
to addressing the area of non-tariff barriers.
Summary of Recommendations
 Australia’s goal must be to win access for its exporters to the Malaysia market, which, as
a minimum, matches the preferences awarded any of Malaysia’s other trading partners.
 The Agreement should be comprehensive, covering all sectors of trade, services and
investment.
 The FTA should deliver immediate tariff elimination on the largest number of products
possible, while accommodating transitional arrangements for sensitive sub-sectors. For
those items for which phased tariff reduction is necessary, zero tariffs should be achieved
within a maximum of 10 years.
 Rules of Origin should follow the product-specific methodology employed in the
Thailand-Australia FTA.
 Transitional safeguards must be in place and readily accessible to support industry from
import surges that cause or threaten to cause serious injury.
 Both countries’ rights to WTO-consistent anti-dumping and countervailing mechanisms
should be preserved.
 Elimination of non-tariff barriers and close attention to standards and conformity issues,
to ensure equitable treatment.
 Intellectual Property laws should be harmonised to ensure universal protection.
 Equitable access to Government procurement arrangements.
 Barriers hindering bilateral investment flows to be removed and supported by provisions
facilitating the temporary entry of business people.
 Industry to be included in review mechanisms to be incorporated into the Agreement to
ensure that as the Agreement evolves , it continues to facilitate trade and investment to
the fullest extent possible.
 The negotiations must be integrated with Australia’s global trade strategy encompassing
simultaneously multilateral, sub-regional and bilateral activities.
The Agreement should be comprehensive in nature, and provide immediate liberalization across
merchandise trade to all but a minimum of sensitive items, to which transitional tariff reduction
arrangements should be applied. The rules or origin for preferential tariff treatment should follow
the product-specific methodology employed in the Thailand-Australia FTA. Non-tariff barriers,
such as those relating to technical and other standards, should be addressed in addition to tariff
barriers. Mechanisms for more equal treatment of intellectual property issues, as well as access
to opportunities for government procurement and investment are also critical.
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Table of Contents
Executive Summary.......................................................................................................................iii
BACKGROUND.............................................................................................................................1
SCOPE.............................................................................................................................................1
Introduction......................................................................................................................................3
Aims and Outline of the Study........................................................................................................4
Australia-Malaysia Trade and Investment Links.............................................................................4
The Australian and Malaysian Economies......................................................................................4
Investment Links.............................................................................................................................7
Malaysian Investment in Australia..................................................................................................8
The Impact of Preferential Liberalization........................................................................................9
The Implications for Australian Exports.......................................................................................10
The Impact on Investment and Private Sector Linkages...............................................................12
Australia’s Tariffs..........................................................................................................................13
Malaysia’s Tariffs and Non-Tariff Measures................................................................................13
Service Sector Affects...................................................................................................................14
Industrial Technical Barriers to Trade...........................................................................................14
Australia’s Approach.................................................................................................................15
Malaysia’s Approach.................................................................................................................15
Opportunities for Increased Cooperation...................................................................................16
Investment......................................................................................................................................16
Competition Issues.........................................................................................................................17
Macroeconomic Impact of a Free Trade Agreement.....................................................................17
Objectives and Principles of an MAFTA......................................................................................18
Relationship to an ASEAN-Australia and New Zealand Free Trade Area...................................19
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