MAFTA and beyond: opportunities for business

Victorian Government Super Trade Mission Breakfast Briefing Kuala Lumpur, 17 June 2013 J OHN F ISHER

First Assistant Secretary, Free Trade Agreement Division Department of Foreign Affairs and Trade 1

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) 2

Trade with Malaysia (2012)

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

Goods

$9.6b

Goods

$5.1b

Imports

from Malaysia

$10.9b

Exports

to Malaysia

$6.8b

Services

$1.3b

Services

$1.7b

3

Trade with Malaysia: Top 5

Crude petroleum Top 5

imports

from Malaysia Refined petroleum Transport services AV/TV equipment Computers Crude petroleum Top 5

exports

to Malaysia Education related travel Copper Recreational travel Nickel 4

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 5

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

6

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 7

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 8

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 9

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) 10

Outcomes at a Glance: Services

Comparison of services liberalisation commitments in Malaysia's FTAs

100 90 80 70 60 50 40 30 20 10 0

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

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 11 11

Outcomes at a Glance: Services

• Right to acquire majority ownership in a range of industries, including – education – – financial telecommunications – professional 12

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 13

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 14

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 15

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 16

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 17

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 18