Paving Way for an FTA: EU Initiates Partnership Deal with Malaysia

Written by | Friday, April 8th, 2016

The European Union has initiated a new Partnership and Cooperation Agreement (PCA) with Malaysia, aiming to reinforce the mutual political dialogue on a range of issues including fight against terrorism, migration issues, energy, sustainable development, education, health, public administration, governance and the promotion of human rights. The PCA will become an overarching legal framework governing the relations between both sides. The deal is a testimony of growing intensity of the EU-Malaysia relations and bilateral cooperation as well as of an increasing importance that the EU attaches to the partnership with ASEAN. In the future, the PCA may be complemented by a Free Trade Agreement (FTA).

Malaysia is one of the ASEAN’s founding countries and is the sixth ASEAN member to finalize PCA talks with the European Union. Negotiations for similar agreements were concluded with Indonesia, Vietnam, the Philippines, Singapore and Thailand. The PCA with Indonesia has already entered into force. The EU-Malaysia relations are currently governed by an European Commission-ASEAN Cooperation Agreement signed in 1980. The new PCA will replace the current agreement and significantly strengthen relations in the areas of a political dialogue, intensification of regional international and cooperation, trade and investment and many specific areas. The agreement will be signed after the completion of all internal procedures.

The EU Delegation in Malaysia was opened in 2003 and since then, the dialogue, trade and policy interaction between both sides have immensely intensified. Malaysia is the EU’s second most important partner in ASEAN after Singapore. Currently, there are no preferential trade deals between both sides but more than 70 percent of Malaysia’s exports to the EU already enter duty-free. Malaysia is a major trading partner in goods such as machinery and appliances while the potential of the EU-Malaysia trade in services is still untapped.

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