Questions On AANZFTA

QUESTION

ANSWER

1.

What is AANZFTA?

The ASEAN, Australia and New Zealand Summit on 30 November 2004 in Vientiane, Lao PDR, agreed to establish a comprehensive ASEAN, Australia and New Zealand Free Trade Area. The FTA would build on the existing cooperation initiatives under the AFTA-CER CEP, especially in the areas of:

- trade and investment facilitation measures;
- technical assistance; and
- capacity building activities.

The FTA was signed at the 14th ASEAN Summit on 27 February 2009 in Hua Hin, Thailand. This is the first comprehensive and single undertaking Agreement unsertaken by ASEAN. The Agreement entered into force on 1 January 2010. The Agreement comprises 18 chapters and 9 annexes covering:

- trade in goods;
- investment;
- trade in services;
- financial services;
- telecommunications;
- electronic commerce;
- movement of natural persons;
- intellectual property;
- competition policy; and
- economic cooperation.

2.

The ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) is a comprehensive agreement which results in the creation of a free market encompassing over 600 million people with a combined GDP of US2.3 trillion, the impact will be huge not only in terms of trade and investment, but also in the area of services. In fact, since the start of the FTA negotiations in 2005, intra-regional (ASEAN, Australia and New Zealand) trade has been growing an average of about 16 per cent per annum.

The AANZFTA provides for a general framework to facilitate and ease trade and investment between ASEAN Member States, and Australia and New Zealand.

AANZFTA provides for the progressive elimination of all tariff facing Malaysia's exporters to Australia and New Zealand. By 2020, exports to Australia and New Zealand will be duty free. Upon entry into force in 2010, Australia and New Zealand have eliminated import duties on 96.4% and 83.6% of their tariff lines, respectively. Malaysia will eliminate and reduce import duties on products according to 3 categories:

- Normal Track : duties will be eliminated by 2013;
- Sensitive Track I : duties will be eliminated by 2020; and
- Sensitive Track II : duties will only be reduced and capped at certain rates by 2020.

Products under Sensitive Track 1:

- plastic products;
- machinery and mechanical appliances;
- motor vehicles;
- ceramic products;
- chemical products; and
- others (prepared foodstuffs, dairy products).

Products classified as Sensitive Track II:

- iron and steel;
- automotive products;
- vegetables products;
- glass products;
- tobacco products; and
- agricultural products.

Duties for 98 products under the exclusion list will not be eliminated or reduced. Products in the Exclusion List:

- rice;
- alcohol and liquor beverages;
- used tyres; and
- arms and weapons.

ASEAN's trade with Australia and New Zealand recorded a decrease of 10.8 per cent in 2009 amounting to US$52.6 billion from US$59.0 billion in 2008. Trade is in ASEAN's favour as the total exports in 2008 and 2009 amounted to US$37.8 billion and US$34.3 billion, respectively compared with the total imports in 2008 and 2009 which amounted to US$21.2 billion and US$18.3 billion respectively.

Investments by Australia and New Zealand in ASEAN in 2009 amounted to US$940.8 million, from US$754.6 million in 2008. Australia and New Zealand's investment in ASEAN for the period 2007-2009 amounted to US$3,287.6 million or 2.0 per cent of the total inflow of FDI into ASEAN (US$163.5 billion).

Malaysian companies are increasingly using the preferential market access under AANZFTA to export to Australia and New Zealand. A total number of 38,550 Preferential Certificate of Origin Form AANZ was issued for the year 2010 and this translates into RM2,774 million worth of exports under the AANZFTA. Major products exported using Form AANZ are wooden bed, stretch film, polyethylene bags, tower crane, soybean oil and furniture.

3.

Guidelines to Apply for Preferential Certificates of Origin

Approval For Cost Analysis

Conditions and Procedures for Application:

i. The company must be registered with the Companies Commission of Malaysia (SSM).

ii. Eligible Products
- Products for export as stipulated in the list of products of the importing countries of respective schemes.
- Products for export must fulfill the condition of the rules of origin under the respective schemes.

iii. How to Apply
- Obtain the ASEAN Harmonised Tariff Nomenclature (AHTN) or Harmonised System (HS) code from the Royal Customs of Malaysia for every product and raw material used.
- Application must be submitted with:
•  Form BAK 1(a): Details of Exporter/Manufacturer and Products
•  Form BAK 1(b): Product's Cost Analysis
•  Form BAK 1(c): Letter of Indemnity
•  A Copy of the following documents:
- Certificate of company's registration.
- Invoices of raw material purchasing.
- Sample/photograph/products catalogue.
- Flow chart of production process.

iv. Application Forms of BAK 1(a), BAK 1(b) and BAK 1(c) Forms can be obtained from:
- MITI Portal
- Service Counter (Ground Floor), MITI office Kuala Lumpur.
- MITI's branch offices in respective states.

Completed application forms must be submitted to: 

Ministry of International Trade and Industry (MITI)
Trade Cooperation and Industry Coordination Section
Ground Floor (Service Counter), Block 10
Government Offices Complex, Jalan Duta
50622 Kuala Lumpur

Tel.: 03-6203 3022
Fax: 03-6201 3351
or 

MITI's branch offices in respective states

v. Notification letter will be issued to applicant within 7 working days upon receipt of completed application form.

4.

The AANZFTA website ( aanzfta.asean.org ) was launched during the AANZFTA Business Forum that followed the meeting of the FTA Joint Committee.

This website would be used as a "one-stop shop" for all information relating to the implementation of the AANZFTA. Decisions made by the FTA Joint Committee, particularly those relevant to the business sector, shall be published through this website. A public version of the AANZFTA Economic Co-operation Support Programme ( AECSP) Design Document would also be published on this website.

The legal enactments to implement all Parties tariff commitments under AANZFTA and the contact points for each Party had been posted on the website.

An Economic Cooperation Work Programme has been established that sets out objectives and indicative cooperation activities to support the implementation of the FTA. The Work Programme will provide technical assistance and capacity building to developing ASEAN countries to implement of the AANZFTA. The AANZFTA Support Unit has been set up in the ASEAN Secretariat to meet the needs of servicing AANZFTA effectively.

The Economic Cooperation Work Programme covers cooperation in these areas:

- rules of origin;
- sanitary and phyto-sanitary;
- standards, technical regulations and conformity assessment procedures;
- services;
- investment;
- intellectual property;
- sectoral integration; and customs.

The Work Programme will be implemented over 5 years after entry into force of the AANZFTA at an estimated cost of AUD $20-25 million.