Malaysia’s services market opening commitments under RCEP
RCEP is the only FTA in the world that applies both methods of services liberalization scheduling, namely:
- Positive-list scheduling: a country opens its services market to service suppliers of partner countries only under the conditions, to the extent, and in the sectors specifically listed in its “Schedule of Specific Commitments” (in Annex II of the RCEP legal text);
- Negative-list scheduling: a country opens all of its services markets to partner-country service suppliers without restriction, except for specific limitations set out in its “Schedule of Non-Conforming Measures” (in Annex III of the RCEP legal text).
RCEP allows member countries to choose either the “positive-list” or “negative-list” method in the initial stage of RCEP implementation (the transition period):
- Eight of the 15 RCEP members chose the positive-list approach during the transition period: Cambodia, Laos, Myanmar, New Zealand, the Philippines, Thailand, China, and Vietnam.
The transition period for countries using the positive-list approach is 6 years from the date RCEP enters into force (except Cambodia, Laos, and Myanmar, which have a 15-year transition period).
- Seven of the 15 members adopted the negative-list approach from the outset: Australia, Brunei, Korea, Indonesia, Malaysia, Japan, and Singapore.
Accordingly, Malaysia has committed to open its services market under the negative-list approach, with a Schedule of Non-Conforming Measures of Malaysia (covering both services and investment) set out in Annex III of the RCEP Agreement.
This schedule lists all sectors and subsectors in which Malaysia reserves not to open, or not to fully open, in accordance with the core principles of RCEP services liberalization (that is, it remains “non-conforming” with RCEP’s market-opening principles for trade in services).
For each reserved sector or subsector, the detailed contents of the limitation/reservation method (which core RCEP principle is reserved against, to what extent, on what timetable, etc.), also referred to as the “non-conforming” aspect, must be stated clearly.
Each country’s schedule of non-conforming measures includes two lists (List A and List B) with different reservation approaches:
- For reservations set out in List A:
Scope of application: Reservations for the sectors and subsectors listed in this schedule apply only to existing restrictive measures affecting services and foreign service suppliers, or to future amendments to those measures;
Binding requirement: For measures within the scope of this schedule, if a member later unilaterally amends the level of openness, the amendment must comply with the “ratchet” principle (only moving forward, never backward—that is, only broader and more favorable liberalization is allowed).
- For reservations set out in List B:
Reservations listed in this schedule may be maintained without being limited by the conditions applicable to List A.
Source: Center for WTO and International Trade - VCCI
The schedule of reservations and non-conforming measures for services and investment of Malaysia is attached below:
