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Benefits of FTA to Malaysia and Japan

International trade is an important contributor to Malaysias economic growth and development.


Malaysias trade policy is to pursue efforts towards creating a more liberalizing and fair global
trading environment. While Malaysia continues to accord high priority to the rule-based
multilateral trading system under the World Trade Organization (WTO), Malaysia is also
pursuing regional and bilateral trading arrangements to complement the multilateral approach to
trade liberalization.
Free Trade Agreements (FTAs) are generally aimed at providing the means to achieve quicker
and higher levels of liberalization that would create effective market access between the
participants of the FTA. Traditionally confined to trade in goods, with the establishment of the
WTO, trade in services has been included in many FTAs.
Malaysia has established Free Trade Agreement (FTAs) with the Japanese country. From that
Malaysia and Japan has established the Malaysia-Japan Economic Partnership Agreement
(MJEPA) on 13 December 2005. And the MJEPA came into force on 13 July 2006.
MJEPA is Malaysia's first comprehensive Agreement covering trade in industrial and agricultural
goods, trade in services, investment, rules of origin, customs procedures, standards and
conformance, intellectual property, competition policy, enhancement of business environment,
safeguard measures and dispute settlement.
The main benefits of the FTA to Malaysia and Japan are the elimination of tariffs on all export
products including electrical and electronic products, textiles and apparel and auto parts by 2016.
Other than that is, addresses non-tariff measures, in particular technical barriers, including
stringent SPS measures.

It is also facilitates trade through the establishment of mutual recognition agreements of product
standards and tests, particularly for agricultural products and environmental goods. It provides
access for Malaysian services providers to Japans market including the business and
professional services, education services, communication services, tourism and travel related
services, health related and social services.
Other than that, it provides a framework to further facilitate cross-border investments between
the two countries through commitments on national treatment, most-favored nation treatment, as
well as protection of investors and investments. And also, it provides a framework for economic
and technical cooperation. A major example is the cooperation undertaken under the MalaysiaJapan Automotive Industry Cooperation (MAJAICO)
Compliance to Rules of Origin is important in exporting products under the preferential trading
arrangements. In order for Malaysian and Japanese importers to enjoy preferential treatment, the
products need to fulfill the general Rules of Origin Qualifying Value Content (QVC) of not less
than 40 percent or Change in Tariff Classification.
Malaysia has excluded 42 tariff lines from the tariff concession under the Exclusion List (EL).
These products are excluded for health, safety and moral reasons. Among the products are
firearms, bullet, rice, tobacco and liquor.

References
(n.d.). Retrieved 12 2, 2012, from ministry ofinternational trade and industry:
http://www.miti.gov.my/cms/content.jsp?id=com.tms.cms.article.Article_2dc1fd91c0a81573-7c4c7c4c-394b9352

Ahearn, R. J. (2005). Japan's Free Trade Agreement Program.

FTA Malaysia. (n.d.). Retrieved 12 3, 2012, from


http://www.ftamalaysia.org/article.php?aid=80
Rahman, K. M. (2008). Japan-Malaysia Free Trade Agreement:Expectations and
Achievements.