KUALA LUMPUR: Malaysia will eliminate or reduce tariffs on almost all products traded with Japan within 10 years, including automotive and automotive parts following the signing of a bilateral free trade agreement with Japan, Malaysia's first-ever such deal.
The progressive elimination or reduction of tariffs on 97% of trade is included in the Japan-Malaysia Economic Partnership Agreement (JMEPA) signed by the two countries on the sidelines of the Asean-Japan Summit here yesterday.
The agreement inked by Prime Minister Datuk Seri Abdullah Ahmad Badawi and his Japanese counterpart Junichiro Koizumi encompasses trade in goods, services and investment protection besides a wide range of economic activities including intellectual property protection.
Import duty on textiles and clothing, agriculture and wood products, meanwhile, will be eliminated once the agreement goes into force.
The progressive liberalisation of tariffs in the automotive sector is to be followed by industry collaboration with Malaysia and Japan undertaking cooperation projects to develop the sector locally.
These include technical expertise assistance, training, development of a mould and dies centre as well as the promotion of investment and exports.
The move is expected to result in increased investment in the manufacturing and assembly of vehicles and production of parts, make Malaysia an automotive production hub, enhance the capacity of the existing automotive plants in the country and expand the market for domestic automotive components.
The deal also provides for the progressive elimination or reduction of tariffs on almost all agricultural and industrial products by both countries.
Malaysia will eliminate import duty on rubber products, food products, plastic, paper and downstream iron products within six to eight years.
Japan, meanwhile, will maintain duty-free treatment on 6,613 Malaysian industrial products, tropical fruits and forestry products.
Import duty on products of export interest to Malaysia such as fishery products, rubber and leather footwear and cocoa products will be done away within eight years.
The agreement will come into force after the conclusion of domestic procedures and will be subject to review within five years.
Japan is Malaysia’s third largest trading partner with total trade valued at RM112.3bil with exports accounting for RM48.6bil per year.
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