European Union-Asean Business Council (EU-ABC) executive director Chris Humphrey said stronger ties between the two sides will ensure that Malaysian exporters get easier and cheaper access to the EU single market, thus benefiting the Malaysian economy.
However, economists Geoffrey Williams and Carmelo Ferlito pointed out that previous negotiations had been halted over several issues. They said further discussions were needed on matters such as the EU policy of restricting products that are not certified as sustainable.
In an email interview, Humphrey told FMT that, once concluded and sealed, the Malaysia-EU Free Trade Agreement (Meufta) will improve trade ties between the two sides.
For European investors, he said, Malaysia could be an attractive destination for high-end manufacturing, particularly in electronics and components.
“It will also serve as a key access point to the broader Asean region,” he said.
He also expressed EU-ABC member countries’ delight with the resumption of Meufta negotiations, noting that both sides have pressed for the revival of talks for some time now.
“This will benefit companies and economies, boost trade and investment, and strengthen political ties between EU member states and Malaysia,” he said.
Outstanding issues
Williams, who served as deputy chairman of the European Chambers of Commerce at the last Meufta talks in 2012, said there has been no progress towards resolution of the issues that halted previous negotiations.
“The issues of concern include the EU’s desire to enter major sectors such as the automotive market as well as direct access to government procurement, both of which are restricted in Malaysia,” he told FMT.
“In turn, Malaysia was concerned with non-tariff barriers to trade, especially in palm oil products and sectors affected by the EU sustainability restrictions,” he added.
Williams said sustainability issues surrounding palm oil and its derivatives will be a crucial sticking point, as the implementation of the European Union Deforestation Regulation (EUDR) has only been delayed, but its environmental, social and governance (ESG) certification requirements will remain.
In October last year, the Malaysian Palm Oil Council (MPOC) called for the EU to recognise the Malaysian Sustainable Palm Oil (MSPO) certification as EUDR-aligned.
However, Williams said, the EU was unlikely to agree.
“It threatens their dominance in the certification market and will also pressure them into recognising the Indonesia Sustainable Palm Oil scheme, which they do not support.
“The EU prefers the Roundtable on Sustainable Palm Oil standards, in which they have a strong influence and is certified mostly by EU companies,” Williams added.
Ferlito, who is CEO of the Center for Market Education and faculty member of Universitas Prasetiya Mulya, said the EU should understand that sustainability must be discussed in a way that will not add regulations that hinder innovation and economic growth.
“Green sustainability will not work if it is not economically sustainable, and the right approach to sustainability is an approach that places emphasis on the role of innovation of products, processes and policies,” he said.
Meufta negotiations were launched in 2010 but were put on hold in 2012 after seven rounds at Malaysia’s request.
The resumption of negotiations was announced on Jan 20, following Prime Minister Anwar Ibrahim’s meeting with EU leaders in Brussels.
Malaysia will be represented at the Meufta talks by the investment trade and industry ministry (Miti), while the EU will send its trade representatives. The date for the talks has yet to be fixed.