Can We Really Harvest these FTA Effects?

2010 is a milestone year.

At least two FTA have started its implementation. These are the ASEAN-China FTA and the ASEAN-India FTA.

Malaysia has been a major beneficiary of trade liberalisation through the World Trade Organisation (WTO), Asean Free Trade Area (Afta) and bilateral arrangements.

In 2008, Malaysia’s total trade was 160.4 per cent of gross domestic product (GDP).

While 2009 was expected to record lower exports, there had been however some improvement in export performance in the last few months.

The other regional FTAs in force are Asean-Korea, Asean-Japan, and Asean-Australia New Zealand.

Malaysia has also concluded bilateral FTAs with Japan, Pakistan and New Zealand. He said many Malaysian exporters are already seeing the benefits of the FTAs with Japan and Pakistan.

The agreement with New Zealand will come into force this year while negotiations are actively underway to conclude bilateral agreements with India, Chile and Australia.

These FTAs not only open up new market opportunities for Malaysian products, but also allow the products to be priced competitively due to preferential duty treatment offered by the trading partners.

Together, the concluded FTAs cover more than 60 per cent of Malaysia’s global trade and provide an eventual duty free market of more than 3.2 billion people.

China and the six earlier members of Asean will accord each other duty free treatment on 90 per cent of the products.

The number of certificates of origin (COO) issued by the Ministry of International Trade and Industry (Miti) to exporters under the preferential schemes of the FTAs have increased by 13.0 per cent to 222,476 in 2008 from 196,856 in 2007.

“During the first half of 2009, while total exports to FTA partners’ markets have decreased compared with the corresponding period in 2008, there has been an increase in the share of exports utilising the preferential schemes under the FTAs.

From January to June 2009, exports using preferential rates under Afta amounted to RM10.61 billion compared with RM8.21 billion in the corresponding period of 2008.

But let us not pin our hopes too high. Let us see if these agreements really bring in wealth and prosperity to Malaysians.