KUALA LUMPUR: Selangor opposition leader Datuk Seri Azmin Ali has called for caution and consultation over the resumption of the Malaysia-Korea Free Trade Agreement (MKFTA).

In a statement, he said that while free trade agreements (FTAs) can offer significant benefits, they require careful consideration to ensure equitable outcomes for all parties involved, and as such, a detailed Cost-Benefit Analysis (CBA) must be undertaken before the resumption of such FTA.

"As a firm believer in the rules-based trading system and the Investment, Trade, and Industry (Miti) Minister who finally ratified the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) for Malaysia, I have always been in favour of the right type of FTAs.

"In the case of the CPTPP, the agreement not only provided new market access to countries such as Canada, Mexico, Peru, and the United Kingdom, but it also offered additional market access to countries with whom Malaysia already had a bilateral or regional FTA arrangement."

Azmin said that the MKFTA, unlike the CPTPP, may not necessarily add further value to the existing ASEAN-Korea FTA (AKFTA), to which Malaysia is already a party.

"As I recall, under the AKFTA, Korea agreed to eliminate duties on 91 per cent of its tariff lines, and in return, Malaysia only had to eliminate duties on 83.5 per cent of our tariff lines.

"This was indeed a good deal for Malaysia, and I commend our negotiators who were involved in the AKFTA negotiations."

Azmin, who was also the former Miti minister, said that in 2019, under the administration of Pakatan Harapan when Darell Leiking was the Miti minister, both Malaysia and Korea agreed to a set of Guiding Principles that stipulated an overall liberalisation threshold of 92 per cent to ensure that the MKFTA builds upon the AKFTA.

"Essentially, this lopsided agreement means that the Korean side will only need to improve about one per cent on their offers (as they have already committed to the elimination of duties on 91 per cent of their tariff lines in AKFTA), while Malaysia will need to significantly improve our liberalisation offers from 83.5 per cent to 92 per cent.

"In other words, Malaysia will have to remove duties on substantially more goods compared with Korea."

He also said that while the MKFTA will also cover other areas such as economic cooperation, the digital and green economy, the supply chain, and the bio-economy, outcomes in these areas are usually collaborative and may not necessarily be commensurate with the sacrifices that Malaysia will need to make by removing duties across 1,600-plus products.

"Given the circumstances above, I would urge Miti to undertake a detailed Cost-Benefit Analysis (CBA) and make the same publicly available (as was the case with the CPTPP), before a decision is made regarding the resumption of MKFTA.

"As part of the CBA, extensive consultations should also be undertaken with industries in the state of Selangor, many of whom operate in the automotive as well as iron and steel sectors," he said.

Earlier today, Miti announced in a statement that Malaysia and South Korea have resumed the MKFTA, which is set to increase bilateral trade and investment between the two countries.

Currently, both countries are parties to the Asean-Korea Free Trade Agreement and the Regional Comprehensive Economic Partnership (RCEP) agreement.The MKFTA is expected to cover the digital economy, green economy, supply chain, and bio-economy.

In 2023, total trade with South Korea amounted to RM111.1 billion (US$24.3 billion), with Malaysia ranking as the as the third largest trading partner in Asean and the 12th largest globally, with total trade amounting to RM118.4 billion (US$25 billion) in the same period.

Malaysia's major exports to Korea were E&E products, liquefied natural gas (LNG), petroleum products, metal products, and optical and scientific equipment.

https://www.nst.com.my/news/nation/2024/03/1030935/caution-and-consultation-needed-malaysia-korea-free-trade-agreement