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Malaysia - Turkey Free Trade Agreement (MTFTA)
Background
The First meeting of the Malaysia-Turkey Free Trade Agreement (MTFTA) was held in Ankara on 31 May - 1 June 2010. Both sides agreed negotiating a Free Trade Agreement would be mutually beneficial and will provide added impetus required in increasing bilateral trade flows as well as enhancing the overall bilateral economic and trade relations between the two countries.
A total of nine (9) rounds of MTFTA negotiations were held with the final or concluding round held on 13-15 January in Ankara, Turkey.
The Agreement later was signed by YB. Dato' Sri Mustapa Mohamed Minister of International Trade and Industry, Malaysia and Hon. Nihat Zeybekci, Minister of Economy of The Republic of Turkey on 17 April 2014 in Ankara, Turkey.
The Agreement was later come into effect on 1 August 2015. With the entry into force of this Agreement, exporters from Malaysia and Turkey will be able to enjoy preferential access for their products in each other's countries. Both Malaysia and Turkey will eliminate and bind duties on 70% of the tariff lines, upon entry into force of the Agreement. After a period of eight years, duties will be reduced/eliminated for almost 86% of tariff lines.
The Agreement covers the following chapters:
- Market Access
- Rules of Origin
- Customs Cooperation
- Technical Barrier to Trade
- Sanitary and Phytosanitary
- Economic and Technical Cooperation
- Legal Institution
The Agreement outlines commitments from both countries on liberalization of trade in goods. Malaysia and Turkey will progressively reduce or eliminate tariffs on substantial number of products traded between both countries.
Malaysia's commitment involves tariff reduction/elimination on 98.86 % from the total tariff lines based on modalities as follows:
| Modalities | Description | Tariff lines | % |
|---|---|---|---|
| Fast Track (FT) | Immediate Elimination Upon Entry Force of MTFTA enters into force. | 7317 | 70.38 |
| Normal Track (NT) | Gradually reduced and eliminated on the third year from date of MTFTA enter into force. | 1040 | 10.00 |
| Sensitive Track (ST) | Gradually reduced and eliminated on the fifth year from date of MTFTA enter into force. | 1725 | 16.59 |
| Highly Sensitive Track (HST) | Gradually reduced on the eighth year from the date of MTFTA enter into force. | 196 | 1.89 |
Malaysian importers may enjoy the benefit from immediate elimination of duties for the following products:
- Agriculture and fisheries (except: rice, selected poultries and other meats, selected fisheries, selected vegetables and selected fruits)
- Animal or vegetables fats and oils and its products (except selected palm oil and its products)
- Miscellaneous edible preparations
- Sugar and sugar confectionaries
- Products of meat, fish or crustaceans Leather and its products
- Railway or tramway locomotives, rolling stock and parts
- Apparels, footwear and headgears
- Aircrafts, spacecrafts, ships and boats
- Selected machineries and equipment
- Selected iron and steel and its products
- Selected textiles
- Selected electrical and electronic products
| Modalities | Description | Tariff lines | % |
|---|---|---|---|
| Fast Track (FT) | Immediate Elimination Upon Entry Force of MTFTA. | 8309 | 68.70 |
| Normal Track (NT) | Gradually reduced and eliminated on the 3 rd year from date of MTFTA enter into force. | 302 | 2.50 |
| Sensitive Track (ST) | Gradually reduced and eliminated on the 5th year from date of MTFTA enter into force. | 877 | 7.25 |
| Highly Sensitive Track (HST) | Gradually reduced on the 8th year from the date of MTFTA enter into force. | 898 | 7.43 |
Malaysian exports that will benefit from immediate elimination of duties include:
- E&E
- Chemicals
- Textiles Machinery
- Plastic
- Rubber Products
- Selected Fisheries And Tropical Fruits
- Wood And Wood Products
- Selected Automotive Parts
- Aircrafts, Space Crafts, Ships And Boats
- Mineral And Ores
- Glass, Glassware And Ceramic Products
- Miscellaneous Manufactured Articles
Commitments by the countries in trade in goods are reflected in the following schedule:
- If you are exporting to Turkey, please refer to Turkey - Schedule of Commitment
- If you are importing from Turkey, please refer to Malaysia - Schedule of Commitment
As Turkey is a member to EU Customs Union, both parties therefore agreed to adopt EU 2010 GSP rules, pending the conclusion of the Malaysia-EU FTA. These rules are trade-facilitative, and advantageous for Malaysian exports.
For Rules of Origin (ROO) Chapter in MTFTA, please click this link.
For list of working or processing required to be carried out on non-originating materials (Annex 4-2), please click this link.
Benefits
Turkey is an attractive market for Malaysian products as it has a large population base of 74 million people and GDP per capita of USD 10,782. Malaysia and Turkey can provide advantages to each other as Malaysia has a strategic location within ASEAN while Turkey is a member of the EU Customs Union.
In 2014, Malaysia exports of timber and timber products to Turkey totalled RM 39.5 million, an increase of 7% from RM 36.8 million in 2013. Major products exported to Turkey were:
| HS Code | Description | 2014 (RM Mil) | % Change 14/13 |
|---|---|---|---|
| 4401 | Fuel wood, in logs, in billets, in twigs, in faggots or in similar forms; wood in chips or particles; sawdust and wood waste and scrap, whether or not agglomerated in logs, briquettes, pellets or similar forms. | 23.6 | 26 |
| 9401 | Seats (other than those of heading 94.02), whether or not convertible into beds, and parts thereof. | 6.7 | 17 |
| 4412 | Plywood, veneered panels and similar laminated wood. | 2.6 | 6 |
| 4418 | Builders' joinery and carpentry of wood, including cellular wood panels, assembled flooring panels, shingles and shakes. | 3.6 | 9 |
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