Malaysia, Japan Agree On Economic Pact After Overcoming Deadlocks

Malaysia and Japan agreed on a broad economic framework to pave the way for a free trade pact after overcoming major differences over the auto and steel sectors, their ministers said.

The deal was reached on May 22 after Japanese Economy, Trade and Industry Minister Shoichi Nakagawa held talks with Malaysian International Trade and Industry Minister Rafidah Aziz in a bid to reach a breakthrough in the free trade agreement (FTA) deal ahead of Malaysian Prime Minister Abdullah Ahmad Badawi's visit to Japan.

"What we have decided on today will become the basis for agreement in principle by the two prime ministers when they meet in Japan on May 25, on the entire thing, the Malaysia-Japan Partnership Agreement, including the FTA," Rafidah said.

Malaysia imposes high import and excise duties on imported cars as part of efforts to protect its national Proton and Perodua cars from competition. The two control more than 70% of Malaysia's auto market, but face greater pressure from Japanese and Korean carmakers.

Japan already has a free trade agreement with Singapore, which was the first country in a new push to seek trade pacts. Japan's second free trade deal went into force this month with Mexico, seen as a gateway to the U.S .market. Japan has also reached a draft agreement with the Philippines on a bilateral free trade deal, which would allow Filipino nurses and careworkers to work in Japan. Negotiations are also under way with Thailand.

Copyright Agence France-Presse, 2005

TAGS: Trade
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