THE Ministry of International Trade and Industry (Miti) will seek the cabinet’s mandate to resume talks on the suspended Malaysia-European Union free-trade agreement (FTA) by year-end, said deputy minister Ong Kian Ming.

“Miti is going to seek a mandate from cabinet in order to see whether we can restart trade talks (EU-Malaysia FTA),” he told The Malaysian Insight in a recent exclusive interview.

Restarting the trade talks will be a useful tool for Malaysia to address several issues, including the export of palm oil which has become a source of tension with the European bloc, he said.

Talks on the EU-Malaysia FTA were launched in 2010 and put on hold after seven rounds in 2012 at the request of Malaysia.

A review between 2016 and 2017 was to assess the prospect of resuming negotiations.

However, it hit the brakes again after the new government took over last May. It was reported in April that the talks were suspended following tension over palm oil.

Malaysia is the world’s second largest producer of palm oil, after Indonesia.

“On the Malaysian side, palm oil is an important product but we want to make sure that it is done in a more holistic fashion because palm oil is one of the many export items that we have in terms of the Malaysian economy,” he said.

Palm oil is still being used as an ingredient in consumer goods items, such as food and shampoo.

“Where there is some contention is with regard to whether palm oil will be classified as a high-risk environmental commodity and if so then there may be the possibility that the volume of palm oil that can be used as a biodiesel will decrease over time.

“Nothing has been implemented as of now,” he said while referring to the 2030 deadline by the EU to phase out the use of palm oil in biofuels.

The EU Parliament passed the Delegated Act to restrict and completely phase out the use of palm oil biofuel by 2030.

“We are still negotiating with the EU. We are also taking appropriate action at the WTO (World Trade Organisation) level. I think it is important for us to ensure that we have access to these various channels to protect the interest of our oil palm growers.”

Malaysia will file a complaint with the WTO by November against the EU’s curbs against the commodity.

Meanwhile, on the current status of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Ong said MITI is still weighing in the advantages and disadvantage of ratifying the agreement.

The area that has become a major source of concern is the investor state dispute settlement (ISDS) clause which allows foreign companies to sue the government.

“It is also important to realise that having these protections allow our own companies that are investing overseas to have some protection as well.

“For example, we do have some of our government-linked companies that have invested in the telco industry in places like Nepal, Bangladesh, Sri Lanka. We don’t have FTA with these countries but our GLCs have encountered some breaches of contracts on the part of these governments.

“So whenever we have these kind of protections, it works both ways,” he said.

But the government will only ratify trade agreements when the net benefits outweigh losses, he said.

The Bangi MP added that ratifying the CPTPP will allow market access for Malaysian goods and services, including palm oil, to countries like Canada and Mexico.

It will also pave way to attract foreign direct investment from fellow members, he said.

CPTPP is a renegotiated trade deal borne out of the Trans-Pacific Partnership (TPP) agreement after the US pulled out from the latter.

The revised pact was signed by the remaining 11 TPP member countries, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam on March 8.

Malaysia and three other nations – Brunei, Chile and Peru – have yet to ratify the agreement.

Another FTA, the Regional Comprehensive Economic Partnership (RCEP), which involves Asean and six other countries, including China, Japan, India, South Korea, Australia and New Zealand, is also still under negotiations.

Ong said the RCEP is a much bigger FTA compared with the CPTPP as it will provide access to economic powerhouses, such as India and China.

“It is a much bigger FTA compared to CPTPP, especially since the US is no longer in the CPTPP. RCEP involves China as well as India, two big boys and we are hopeful we can come to a substantive conclusion in terms of negotiations by the end of the year,” he said.

The FTA will give Malaysia greater access to markets like India and also address issues, such as tariffs. India imposes a 40% tariff on Malaysian palm oil. – August 6, 2019.