1. The Impact Of FTA To Agriculture In
Malaysia
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2. 1. INTRODUCTION 3-3
2. MALAYSIA’S INVOLVEMENT IN FTA 3-4
2.1 Malaysia-Australia FTA
2.2 Malaysia-Chile FTA
2.3 Malaysia-India Comprehensive Economic Cooperation
Agreement ( CECA )
2.4 Japan-Malaysia FTA[JMEPA]
2.5 Malaysia-New Zealand FTA
2.6 Malaysia-Pakistan Closer Economic Partnership Agreement
2.7 Malaysia-US FTA[MUFTA]
3. TRADE BARRIERS
STANDARDS,TESTING,LABELING AND CERTIFICATION 5-5
3.1 Nutritional Labeling
3.2 Meat Import Licenses and Halal Certification
3.3 Biotechnology
4. EXPORT TAXES 5- 5
5. IMPACTS OF FTA 6- 7
6. EFFECTS ON PATENTING OF LIFE,BIODIEVERSITY,GENETIC
RESOURCES , AGRICULTURE AND FARMERS 7- 8
7. SUMMARY ON EFFECTS OF MUFTA 8- 8
8. REFERENCES 9- 9
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3. INTRODUCTION
Free Trade Agreement[FTA] is a form of trade pact between 2 countries.The aims of
FTA are eliminate tariffs,quotas and preferences on most goods between them.
Malaysia’s Involvement in FTA
1)Malaysia-Australia FTA
Prime Ministers of Malaysia and Australia on 7th April 2005 agreed to launch bilateral
FTA negotiations.Three Trade Negotiating Committee[TNC] meetings have been held
since May 2005.There have also been two inter-sessional meetings on September and
November 2006 to further progress the negotiations.Working Groups have been
established to progress work in all the areas under negotiations and disscusions have
since moved into text-based negotiations for most areas.
2)Malaysia-Chile FTA
A bilateral meeting between Malaysia and Chile on 18 November 2005 in Busan,both
sides agreed to initiate a study on the feasibility of a Malaysia-Chile FTA.Thus, a Joint
Study Group[JSG] is established.The first meeting of the JSG agreed on the structure of
the Report and the work plan.The Second Meeting of the JSG is expected to progress
work in drafting of the Report.
3)Malaysia-India Comprehensive Economic Cooperation Agreement[CECA]
The decision to explore the feasibility of comprehensive economic cooperation
Malaysia-India was made during the visit to India by H.E Prime Minister Malaysia on 20
December 2004.The subsequent meeting between the Minister of International Trade
and Industry,Malaysia and the Minister of Commerce,India on 17 January 2005,agreed
that a Joint Study Group to be established to undertake the feasibility study on the
CECA.Now,the Joint Study has been completed.
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4. 4)Japan-Malaysia FTA[JMEPA]
Japan and Malaysia signed the bilateral FTA in December 2005 following nearly two
years of negotiations.Malaysia is the third FTA partner for Japan following Singapore
and Mexico.
5)Malaysia-New Zealand FTA
Negotiations have progressed well and some areas have concluded their
discussions.However there remain a few areas that need further deliberation.
6)Malaysia-Pakistan Closer Economic Partnership Agreement
Prior to the conclusion of negotiations on the FTA,Malaysia and Pakistan have
concluded an Early Harvest Programme (EHP) which was signed on 1 October
2005,implemented on 1 January 2006 .The validity period of EHP has been extended to
31 December 2007.
7)Malaysia-US FTA[MUFTA]
The United States and Malaysia began negotiations on Free Trade Agreement [FTA] in
the March 2006.MUFTA still being negotiatied, There have some issues not concluded
such as US oblige Malaysia should include rice and tobbaco in FTA.But these obligation
has been strongly protested by farmers and NGO likes CAP(Consumer Association of
Penang). Malaysia and the U.S. are expected to conclude their FTA talks by June 2008.
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5. TRADE BARRIERS
STANDARDS,TESTING,LABELING AND CERTIFICATION
1)Nutritional Labeling
Malaysia requires that certain processed, packaged food products are labeled with
nutrition information.This includes cereals,breads,milk,canned foods,soft drinks and
salad dressings.The regulations limit the kinds of nutritional claims,such as “low
cholesterol,” or “high fiber”.To comply with these regulations,U.S. food product
importers must affix separate labels at ports of entry.
2)Meat Import Licenses and Halal Certification
Malaysia requires that all meat,processed meat products,poultry,eggs and egg products
originate from plants inspected and approved by Ministry of Agriculture’s Department of
Veterinary Service(DVS).This products must get halal certification from an approved
Islamic Center.Slaughterhouses,meat processors and egg processors must also be
inspected and approved by Department of Islamic Development(JAKIM).Malaysias halal
requirements are relatively strict compared to other countries.Pork imports are also
controlled by licensing and by restrictions on the types of cuts that can be imported.
3)Biotechnology
Malaysia is currently in the process of drafting a biosafety law.Malaysia require
mandatory labeling for products developed through biotechnology.The U.S. and
Malaysia have been working together to ensure that any approach taken does not
mislead consumers or result in unjustified trade restrictions.
EXPORT TAXES
Malaysia uses export taxes to discourage the export of crude palm oil,taxing it at 10
percent to 30 percent ad valorem,and to encourage development of the local refinery
sector.
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6. IMPACTS OF FTA.
In the agriculture market access part of the FTA,Malaysia is likely to get a negative
deal.Firstly,there will be limited gains to Malaysia in terms of access to the US
agricultural market.Secondly, Malaysia will have to open up its agricultural sectors ,and
the US will probably not agree to having sensitive products such as rice exempted.
Most importantly,the US will not offer to reduce its domestic farm subsidies in the
FTA.The high US subsidies keep the prices of its farm products artificially low.This
prevent Malaysia to penetrate the US market.For example,if soya bean subsidies were
removed,prices would reflect the cost of production more,and increase, making palm oil
more competitive.Malaysia could insist that US subsidies be removed,but this will be
unacceptable to the US.
The high US subsidies enable the US to export its otherwise uncompetitive farm
products,because they lower the price, often to far below the cost of production.To
defend themselves from this unfair practice,countries need higher tafiffs,otherwise the
US products can take over the market wih their artificially cheap prices.
Because of the subsidies,US exports sell at a low prices,thus out-competing more
efficient producers.For example,if subsidies were removed and US soya bean export
prices increased,Malaysia palm oil (which competes with soya oil) would be more
competitive.
The US government wants to export more farm products to Malaysia in particular rice,
soyabeans,chicken and beef.It wants Malaysia’s tariffs on American farm products to be
reduced to zero.This will be advantages to US agricultural exporters and food
producers.
If the rice tariff were reduced to zero then the US rice(which has subsidies from the US
government so that it can be sold at 25% below the cost of growing it) could seriously
undermine local rice production and compromise on the livelihood of local farmers.
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7. In addition,not all imported rice is of quality and safe for consumption.Recently,studies
have shown that genetically engineered (GE) processes in the US can be contaminated
and have negative effects if consumed.
EFFECTS ON PATENTING OF LIFE,BIODIEVERSITY,GENETIC
RESOURCES,AGRICULTURE AND FARMERS
1)Background
The FTA will have serious effects on an inter-related set of issues :patenting of life-
forms(especially micro-organisms),biodiversity and traditional knowledge,agriculture
and the income and interests of farmer(especially the saving,control and use of seeds.
2)UPOV 1991,Plant Varieties protection and Effect on Farmers’ Rights
The US FTA obligation to protect New Plant Varieties(NPV) also raises concerns.
Exercising that right,Malaysia enacted in 2004 a sui generic to protect NPV(Sui Generic
also called the Protection of New Plant Varieties Act 2004) that balances the protection
of commercial plant breeders with the protection of traditional farmers who also breed
NPV.
The US FTAs oblige countries to be member of the International Union for the
Protection of New Varieties of Plants (UPOV 1991 treaty),which provides a lot of rights
to plants breeders and companies,while the rights of farmers to save and re-use seeds
are very limited.
3) Budapest Treaty on the International Recognition of the Deposit of
Microorganisms for the Purposes of Patent Procedure(Budapest Treaty) is about
microorganisms.
If Malaysia signs the Budapest Treaty,it is likely to receive more microorganism patent
applications, if these are granted at the same rate,more microorganisms will be
patented in Malaysia.This is likely to raise the cost of inputs for the food,medical and
agricultural industries in Malaysia,including the biotechnology industry.
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8. 4)Data Exclusivity and Farmers
The “data exclusivity” requirements in USFTAs also apply to agricultural chemicals. This
prevents suppliers of generic versions of these chemicals from being able to make use
of the test data of the companies that first received registration of the chemicals in order
to get the safety approval to market their generic products.
As a conclusion,higher competititon from(often subsidized) imports as tariffs are
reduced or eliminated,and higher costs of seeds due to the strict IP (Intellectual
Property) to be introduced for plant varieties may affecting farmers’ livelihood and
incomes.
SUMMARY ON EFFECTS OF MUFTA
The FTA imposes even stricter standards of IP than even the TRIPS and thus makes
the present imbalance even worse.
Malaysia’s farmers will be affected by making their inputs (such as seeds and
agricultural chemicals) more expensive, and as they lose significant control over the
saving of their seeds. The data exclusivity clause for agricultural chemicals will also
make these more expensive and raise production costs.
Malaysia’s national goal to promote biodiversity and traditional knowledge and the fair
sharing of benefits from their use will be affected by the probable demands of the
MUFTA that the country join the UPOV 1991 treaty, and the Budapest Treaty relating to
microorganisms.
Malaysia’s patent law will most likely have to change in many areas to accommodate
the American FTA demands. They potentially include: having a data exclusivity clause;
extending the term of drug patents; linkage between patents and marketing approval by
the drug regulatory authority; restricting the ground for compulsory licensing; and a
possible restriction on parallel importation.
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9. REFERENCES:
Websites:
www.twnside.org.sg
www.ftamalaysia.org
www.bilaterals.org
www.dfat.gov.au
www.ustr.gov
www.usembassy malaysia.org.my
www.miti.gov.my
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