An Australia-Malaysia Free Trade Agreement: Australian Scoping Study a report coordinated by the Australian Department of Foreign Affairs and Trade February 2005
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- Table 3.2.3. Barriers in Specific Services Sectors
- 3.3 The Implications for Australian Imports
- Chart 3.3.1 Australian Tariff Barriers Applying to Malaysia
Table 3.2.2. Other Malaysian Tariff Barriers on Exports from Australia
DFAT STARS database; Malaysian tariff data. *Rate applies to CBU passenger motor vehicles. There is also an excise of up to 250 per cent on CBU vehicles. There are many areas where tariff liberalization between Australia and Malaysia would lead to new patterns of supply. Table 3.2.2 lists at the 4-digit HS level a few examples of items where Australia’s exports to Malaysia are currently small, but which it would expect to export to Malaysia in greater quantities under an Australia- Malaysia Free Trade Agreement. A free trade agreement would also provide opportunities to address some non-tariff barriers to trade which could have important implications for Australian exports. Industry consultations have suggested that there would be scope to streamline arrangements for the halal certification of food products exported to Malaysia. There may similarly be scope to address sanitary and phytosanitary (SPS) certification requirements of food products such as chicken, liquid milk and eggs through consultations under the framework of a free trade agreement. Various technical barriers to trade (such as safety and environmental regulations) could also be addressed, along with the scope for greater cooperation on government procurement. These issues are addressed in Chapter 5. Services Exports Unlike merchandise trade, Malaysia’s services trade regime remains relatively protected. Cross-country quantitative work by the Productivity Commission shows Malaysia as among the most protected of the countries for legal and accountancy services. Other studies put Malaysia in a highly restricted category for financial services.17 The specific barriers to services trade vary appreciably by sector. Restrictions on commercial presence apply to a number of areas. Malaysia’s GATS Schedule notes that foreign acquisition of a Malaysian corporation requires approval in a number of general circumstances, including where it would involve a single foreign interest acquiring 15 per cent or more, or an aggregate interest of 30 per cent or more of the voting rights of a Malaysian corporation. Requirements to reserve a minimum level of Malaysian (including Bumiputera) equity are also commonplace. There are also restrictions on the movement of services providers into Malaysia. Malaysia has left this mode of delivery unbound in many GATS sectors (although companies are allowed to bring in senior managers and two specialists or experts per organisation, with additional experts subject to a market test and training Malaysians). Table 3.2.3. Barriers in Specific Services Sectors
The barriers to services trade have remained in place despite evidence of significant inefficiencies as a result of industry protection. In the case of banking services, one study found that the effect of non-prudential restrictions applying to foreign banks was to lift the price of banking services by over 60 per cent. Another study found that barriers to foreign suppliers of engineering services raised the price of these services by 12 per cent. In the distribution sector, the cost impact of foreign barriers to establishment has been estimated at over 8 per cent.18 The authorities envisage that the services sector will be gradually opened over time. In the case of financial services, for example, the Financial Sector Master Plan (FSM) and the Capital Market Master Plan (CMM) released in 2001 envisage liberalisation through staged reforms. Malaysia’s ambition to develop its services exports in areas like education, health and construction should encourage it to open its own services sectors, both to improve their efficiency and to secure concessions from other countries in areas of interest to it. Specific barriers of interest to Australia are set out in Table 3.2.3. The extent to which Malaysia would be willing to liberalise these sectors is unclear at this stage. There are some factors which may encourage Malaysia to agree to liberalisation of these sectors in the context of an FTA with Australia. Australian firms, even in a more liberal trading environment, would be small players in the Malaysian market and they would not, therefore, present the threat to Malaysian firms that larger multinationals, for instance, might. Moreover, in some of the professional services sectors (such as accountancy, architecture and legal), many of the Malaysian practitioners have been trained in Australia and are comfortable with its procedures and accreditation arrangements. For example, both countries follow International Accounting Standards while CPA Australia has about 8000 Malaysian members. The impact of a free trade agreement on Australia’s exports of services are explored in more detail in Chapter 4. However, possible benefits could cover each of the four basic “modes of supply” identified in the GATS19 and include: an increase in investment opportunities in Malaysia in a variety of service sectors, flowing from greater transparency in investment regulations, or improved access. Areas where Australian investment could increase include telecommunications, legal services (where at least some Australian legal firms might take advantage of improved access to establish a commercial presence in the market), and banking and insurance services (where Australia already has a small presence). Increased investment is likely to be reflected ultimately in improved flows of income to Australia, and in new opportunities for other Australian firms; an increase in opportunities for Australian services providers, including consultants, academics, medical personnel and others, to seek short term employment in Malaysia; an increase in the number of Malaysian students studying in Australia or studying via distance or online education, flowing from greater recognition of Australian educational qualifications. This could also assist Australian branch campuses in Malaysia as could more streamlined procedures (such as more improved accreditation procedures and more flexible provisions regarding the enrolment of foreign students) ; a modest boost to the number of Malaysian tourists coming to Australia as a result of an improved relationship. 3.3 The Implications for Australian Imports In Australia’s case, applied tariff barriers are low. Most tariff lines are zero or 5 per cent, with the simple average applied tariff only 4.3 per cent. Moreover, because Australia offers Malaysia tariff preferences20 on all tariff lines except PMV and TCF items, the average applied tariff applicable to Malaysia is a little lower at 3.9 per cent. There are two sectors where Malaysia faces tariffs of higher than 5 per cent in the medium term. In the passenger motor vehicle sector, applied tariffs on motor vehicles are 10 per cent (since January 2005). They will remain at this level until 2010, when they will fall to 5 per cent. In the textiles, clothing and footwear industry, a more complex liberalisation of tariffs is occurring, with: tariffs on clothing and certain finished textiles now 17.5 per cent; tariffs for cotton sheeting, woven fabrics, carpet and footwear now 10 per cent; and tariffs on sleeping bags, table linen and some footwear parts now 7.5 per cent. Australia has made preferential concessions in these sectors in the case of other bilateral free trade agreements. Under the Australia-U.S. Free Trade Agreement (AUSFTA), for example, tariffs on finished passenger motor vehicles from the United States are to be phased down to zero by 2010. Under the Thailand-Australia Free Trade Agreement (TAFTA), Australia eliminated tariffs on all passenger motor vehicles, off-road vehicles, goods vehicles and other commercial vehicles of Thai origin on the Agreement’s entry into force. Tariffs on a number of automotive parts and components fell to 5 per cent on TAFTA’s entry into force in January 2005 and will remain at that level until elimination in 2010. In the TCF sector, tariffs have been eliminated for products which meet relevant rules of origin under the Singapore-Australia Free Trade Agreement (SAFTA). AUSFTA will see tariffs on textiles and apparel phased to zero by either 2010 or 2015. TAFTA will similarly provide a significant margin of preference to Thailand. For example, tariffs on clothing and certain finished textiles fell to 12.5 per cent on the Agreement’s entry into force, and will be phased to 5 per cent in 2010 and zero in 2015. Chart 3.3.1 Australian Tariff Barriers Applying to Malaysia (simple average applied tariff, per cent) 
Australia’s 2004 APEC Individual Action Plan. Note: The above table reflects 2004 tariffs. As discussed, duties for motor vehicles and textiles clothing and footwear were reduced in January 2005. In most sectors, where tariffs are zero or 5 per cent, the impact on imports would be limited – and certainly less than those arising from medium term fluctuations in exchange rates. At the same time, the margin of preference which Malaysia might receive under a free trade agreement would be valuable in its efforts to further expand its exports to the Australian market, particularly in a context in which other competitor countries such as Singapore and Thailand have obtained preferential access. Australia’s motor vehicle imports from Malaysia have remained modest in recent years. They were $25 million in 2003. However, Malaysia remains keen to capture a share of Australia’s motor vehicle market with its Proton and distribution agents for its national car manufacturer are putting renewed emphasis into marketing the car in Australia. Australia is also a rapidly growing market for auto parts, with imports from Malaysia now $155 million. In the other major sector where Malaysia faces substantial barriers – textiles, clothing and footwear – Australian imports were valued at $73 million in 2003. There would be useful gains for Malaysia from preferential access in these sectors, but only modest implications for the domestic industry in Australia. Table 3.3.1 shows Australia’s simple average applied tariff rates on selected imports from Malaysia ordered at the 2-digit HS level. It confirms that Australian tariffs on major imports from Malaysia are limited, and that the adjustment issues for Australian industry in most of these areas are likely to be modest. Directory: trade trade -> Trade-off da – gdi 2011 1 Earth Science D/A 2 trade -> Endi 2011 / Daniel/Jason/Kevin/Marc/MiHe/Parth/Simrun trade -> Please note the following trade -> Option 1: Two community residents outside the store trade -> Alliance atlantis communications trade -> U. S. Proposal on negotiating ntbs related to the automobile sector trade -> Cargo arrival deadlines trade -> Economic commission for europe committee for trade, industry and enterprise development trade -> Is the Mark Inherently Distinctive? 4 Download 1.7 Mb. Share with your friends:
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