Free Trade Agreement Between Malaysia And Turkey

“The Prime Minister (Recep Tayyip Erdogan) and I are both very committed to the bilateral partnership and there is no clearer example of this commitment than the Malaysia-Turkey Free Trade Agreement (FTA) that we will see later today,” Prime Minister Razak said in a keynote address at the Turkish-Malaysian business dinner hosted by the Union of Chambers and Commodity Exchanges of Turkey. Razak pointed to the similarities between Turkey and Malaysia and stressed that the agreement outlines the two countries` commitments to liberalize trade in goods. Malaysia and Turkey will gradually reduce or eliminate tariffs on a significant number of products traded between the two countries. According to Bernama, Malaysia`s national news agency, the free trade agreement is expected to increase bilateral trade to $5 billion by 2018. The deal comes after the two countries began examining the feasibility of a free trade agreement between them in late 2009. The first negotiations between the two countries took place in early 2010. Malaysia`s trade with Turkey increased by 50.2% to RM8.42 billion ($2.02 billion) out of RM5.61 billion ($1.43 billion) in 2015. As far as industrial products are concerned, 70% of the customs duties of both parties have been opened since the entry into force of the free trade agreement, while products considered sensitive for Turkey and Malaysia are subject to an operating period of 3, 5 or 8 years. Malaysia and Turkey have signed a free trade agreement that is expected to increase trade to $5 billion by 2018. The following agreements have been replaced by the EU-Turkey Customs Union: the tariff preference applies to Malaysian palm oil through the MTFTA, giving Malaysian palm oil a competitive advantage over other vegetable oils arriving in Turkey. Under the agreement, Malaysian palm oil enjoys a 21.8% lower import duty than other competing oils, with an import duty of 31.2%. However, to benefit from it, Malaysian companies must set up a production site in order to obtain a Turkish rule of origin in accordance with Article 5 of the trade agreement.

Raw materials (refined palm oil) from Malaysia could be processed into industrial food ingredients, cooking fats and margarine in Turkey and redistributed to these markets. Repackaging in branded products is also an alternative to consider, but must comply with the rule of origin. A further assessment of eligibility would require more in-depth studies on the basis of individual countries, each of which may differ in terms of tariff carry-over, regional value and de minimis threshold. The Malaysia-Turkey Free Trade Agreement will allow preferential access for Turkish products to the Malaysian market and vice versa. In addition, it will facilitate trade in another way, including the reduction of customs barriers and bureaucracy. The agreement also allows Malaysia to set tariff preferences “either at the level or better than those previously granted under Turkey`s Generalised System of Preferences (GSP), which were no longer available to Malaysia from 1 January 2014,” Bernama said. . . .

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