TPP: Exporters see up to 95% import duty cut to 4 marts

By Stephanie Jacob

Malaysian textile exporters will see 72.9% tariff lines removed on exports to the US upon the entry into force of the Trans-Pacific Partnership (TPP) Agreement. This means that 36.44% of total exports into the US will see duties eliminated immediately under the TPP, said the International Trade and Industry Ministry (Miti).

Currently, less than 1% of total textile exports into the US are duty free.

Overall, Malaysian exporters will benefit from between 77% and 95% elimination of import duties in four new markets under the TPP deal as it establishes four new free-trade agreements (FTAs) between Malaysia and the US, Canada, Mexico and Peru.

Upon entry into force the agreement, the US will eliminate almost 90%, Canada will remove about 95%, Mexico 77% and Peru will eliminate almost 81% of import duties on a variety of products. This includes electrical and electronics, chemical products, palm oil products, rubber products, wood products, textiles and automotive parts and components.

Japan has also agreed to offer preferential access to Malaysian plywood and plywood product exporters under the TPP Agreement. This area was not originally offered under the Malaysia-Japan Economic Partnership Agreement (FTA) and the Asean-Japan FTA.

In return, Malaysia will eliminate its import duties on sensitive products such as alcohol beverages and tobacco within 15 years of the agreement coming into force. Nonetheless, the government still retains the right to maintain or adjust excise duties for these products.

Import duties of rice will also need to be removed within 10 years of entry into force. However, Malaysia has reserved the right to maintain its current importation and distribution system. Duties for sensitive iron and steel products will be removed within 10 years, while other such products will see import duties removed in between five and seven years.

Malaysia’s 30% import duty on sensitive automotive products such as completely built-up vehicles will be eliminated within 12 years, while import duties for other automotive products will be eliminated in between five and 10 years.

Miti also hopes that the removal of import duties on auto parts manufactured in Malaysia may encourage auto companies from non-TPP nations to establish a presence Malaysia.