The Impact Of Fta To Agriculture In Malaysia


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The Impact Of Fta To Agriculture In Malaysia

  1. 1. The Impact Of FTA To Agriculture In Malaysia 1
  2. 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 2
  3. 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. 3
  4. 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. 4
  5. 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. 5
  6. 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. 6
  7. 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. 7
  8. 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. 8
  9. 9. REFERENCES: Websites: www.usembassy 9