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September 2006 update on the Australia-Malaysia Free Trade Agreement negotiations

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MAFTA inter-sessional meetings were held in Canberra from 12 to
15 September 2006. Discussions focused on goods, rules of
origin, investment, intellectual property and economic
cooperation. Malaysia provided a senior team of negotiators
comprising 25 officials from various Ministries and
Departments.

Both countries had tabled initial tariff offers at their
last meeting in July. The September inter-sessional meeting
provided an opportunity to comment on the offers and begin the
process of identifying areas where they could be improved. It
was agreed that the two sides will exchange further information on
their priorities for improvements in the offers for consideration
at the next meeting. Australian officials will be seeking
further input from industry to assist this process.

Australia sought further information on Malaysia's import
licensing system noting it could impede the market access brought
about by reducing import tariffs. There were a number of
products of interest to Australia where import licensing could pose
a problem. There were useful discussions on the automotive
sector
where both sides see significant complementarities in
our respective trade interests. This included
Malaysia's current excise duties on automotive products which
will be further addressed at the next meeting.

There was continued progress on drafting the texts of the
various chapters of the FTA related to trade in goods, including
those relating to: Customs Procedures; Standards, Technical
Regulations and Conformity Assessment Procedures; and Sanitary and
Phytosanitary Measures. Both sides agreed on the importance
of these Chapters to the overall benefits of the FTA.

Discussions on rules of origin were fruitful with
movement to a single, square-bracketed text. There are a
number of differences which will need to be resolved.
Concerns on consignment related to avoiding abuse of the system
while allowing current business practices to be recognised.
The meeting also considered Australia's draft proposals for
the product-specific rules based on the Change in Tariff
Classification approach. We intend to arrange meetings with
Australian industry to discuss the proposals.

There was a very productive exchange on intellectual
property
(IP) issues, with areas of difference continuing to
narrow. The meeting also provided the opportunity for the
Malaysian delegation to attend useful side meetings with
counterparts. The meeting hosted by IP Australia focused on
trade mark issues, while the meeting hosted by the
Attorney-General's Department provided an opportunity for
a useful exchange on approaches to IP enforcement.

Malaysia was very engaged in discussions on investment. We are working through a number of issues
affecting the scope of an investment chapter, including coverage of
investment in services (mode 3) and portfolio investment, and have
settled or are close to settling several standard
post-establishment protection provisions. While we have yet
to agree on a common approach to scheduling commitments, Malaysia
has shown some interest in our preferred "two annex"
negative list approach (used in AUSFTA and SAFTA), which we
consider provides a more predictable, transparent and
"business friendly" approach to scheduling.

Malaysia continued to underscore the importance of a separate
chapter on economic cooperation. Malaysia has tabled a
number of proposals, some of which have merit and we are seeking to
advance, but not necessarily under the auspices of the FTA.
Australia has expressed reservations about the inclusion of a
stand-alone economic cooperation chapter in MAFTA, noting that such
cooperation could best be facilitated by already existing
mechanisms, or included under the relevant chapters in the
Agreement.

Last Updated: 10 December 2010
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