During the recent visit of the European Trade Commissioner, Karel De Gucht, to Malaysia, it was disclosed that negotiations on the proposed free trade agreement (FTA) between the European Union (EU) and Malaysia should be completed by the middle of 2012.

The announcement that the EU and Malaysia were to hold talks on a bilateral FTA was made only last October. However, with two rounds of talks already having been completed since then and a third round planned to be held in Brussels in May this year, the expectation that the negotiated FTA would be ready in June next year appears to be possible.

The EU had, until they were suspended in 2009, pursued talks on a region-to-region FTA with the Association of Southeast Asian Nations (ASEAN). The EU member states then, instead, decided to pursue negotiations towards FTAs with the individual ten countries within ASEAN. Talks on FTAs are also already at various stages of development with Singapore, Vietnam and Indonesia.

It was reported that the FTA negotiations between the EU and Malaysia are covering goods and services, non-tariff trade barriers and investment. In particular, it is hoped by the EU negotiators that Malaysia will be able to agree the opening-up of government procurement to EU companies.

The EU is Malaysia's biggest source of foreign direct investment, mainly in the manufacturing sector, and its fourth largest trading partner, with two-way trade rising by 11% and totalling over USD40bn in 2009. Malaysia is the EU’s second trading partner in ASEAN, after Singapore.

March 15^th, 2011

Source: tax-news.com

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