KUALA LUMPUR, Oct 5 2022 – Malaysia has ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The Ministry and International Trade and Industry (MITI) said the government officially submitted the Instrument of Ratification (IOR) for the CPTPP, to New Zealand, the CPTPP Depositary on Sept 30 2022.
“The CPTPP was signed on 8 March 2018 and the agreement has already been ratified and implemented in stages since December 2018, by Australia, Canada, Japan, Mexico, New Zealand, Singapore, Viet Nam and Peru.
The submission of the IOR marks a momentous occasion for Malaysia as we become the ninth country to ratify the CPTPP,” MITI said.
“The ratification comes after years of detailed deliberation, extensive consultations and careful assessment by the government. Furthermore, in light of the findings of the cost-benefit analysis (CBA), it is clear that the benefits accruing from the ratification of CPTPP far outweigh any potential costs that may arise from the implementation of this agreement,” MITI said in a statement today.
The CPTPP, which presently boasts 11 countries as its members, is currently growing to include more interested economies into the fold and has the potential to become a new rule book for future trade, it said.
According to MITI, the CPTPP also broadens Malaysia’s access to new markets such as Canada, Mexico and Peru, which are not covered by any existing Free Trade Agreement (FTA), providing access to a wider range of high-quality raw materials at competitive prices, and increases the country’s attractiveness as an investment destination.
“At the same time, the CPTPP offers technical assistance and capacity building programmes that are aimed at improving and developing local sectoral capabilities in key industrial areas such as automotive, E&E, chemicals, optical and scientific equipment as well as medical devices,” MITI said.
According to MITI, with the ratification and implementation of the CPTPP, Malaysia’s prominence as a global trading economy is expected to be further elevated.
“The CBA projects that Malaysia’s total trade is expected to increase to USD655.9 billion in 2030, through our participation in the CPTPP. In addition, the findings of the CBA also indicate that Malaysia’s exports are projected to reach USD354.7 billion in 2030, with trade balance remaining in strong surplus at 8.5% of GDP for the same year,” it said.
Under the CPTPP, by 1 January 2033, almost 100 per cent of Malaysian exports to all CPTPP countries will enjoy duty-free treatment.
“As a matter of fact, as soon as the CPTPP enters into force for Malaysia, all our exports to Australia and Singapore will readily enter these markets without being subjected to any duties. Subsequently, in 2024 and 2029, all Malaysian products exported to New Zealand and Canada, respectively, will enter these countries duty-free,” MITI said.
MITI also said that the high duties on key Malaysian exports to Canada and Mexico, which currently range from 15 to 30 per cent, will be eliminated immediately, which means that Malaysian exporters will enjoy duty-free treatment on products such as automotive parts and components, plastics products, surgical gloves, rubber products, textiles and clothing, cocoa products and food items.
In the processed food and beverages sector, Malaysian exporters will be able to expand their businesses into Canada, Mexico, Japan and Peru.
“Since current duties for this sector can go up to 313.5 per cent in Canada, 158 per cent in Mexico, 52.5 per cent in Japan and 17 per cent in Peru, Malaysian exporters will benefit from significant reductions in import duties, under the CPTPP. For these countries, all duties currently imposed on processed food and beverages will be eliminated by the year 2028 (Canada), 2032 (Mexico), 2038 (Japan) and 2033 (Peru),” it said.
The CPTPP contains trade-facilitative Rules of Origin (ROO) that are designed to support modern business practices and further promote deeper integration of Malaysian businesses into regional supply chains.
MITI said the agreement allows Malaysian manufacturers to source raw materials from all CPTPP countries for purposes of fulfilling the ROO requirements and consequently, qualifying for reduction and elimination of import duties.
In facilitating ROO compliance, the agreement also provides exporters with multiple Regional Value Content (RVC) calculation methods, compared with the limited methods that are currently available under the existing FTAs.
The CPTPP Government Procurement (GP) market, excluding Malaysia, is estimated at USD1.5 trillion, with abundant opportunities in countries such as Japan, Canada and Australia, valued at USD838.7 billion, USD233.0 billion and USD227.6 billion, respectively.
Following the implementation of the CPTPP, Malaysian companies will have immediate access to the GP markets of other CPTPP countries at much lower thresholds, as compared to the high thresholds committed by Malaysia,” MITI said.
The CPTPP further promotes exports of services, including through mutual recognition of professional qualifications, licensing or registration, which will facilitate greater regulatory alignment among the CPTPP countries.
“As a result of this, services suppliers from Malaysia will be able to expand their exports to CPTPP countries, either as firms or individuals.
For example, Malaysian accountants, architects, construction managers, engineers, dentists, doctors, nurses, quantity surveyors, and veterinarians are expected to benefit from the facilitation mechanisms offered by the CPTPP, including enhanced mobility through transparent rules governing the movement of professionals across borders,’ MITI added.
— Akses Malaysia
