Malaysia-EU trade talks key to new opportunities amid global shifts
New Straits Times (22/01/2025) - KUALA LUMPUR: Malaysia's free trade agreement talks with the European Union (EU) are timely to help local businesses gain greater access there amid significant changes in the global trade environment, economists said.
They feel that the United Kingdom's (UK) ascension to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may have been the catalyst for the resumption of talks for the Malaysia-European Union Free Trade Agreement (MEUFTA).
Nusantara Academy for Strategic Research senior fellow Dr Azmi Hassan said the involvement of both the UK and Malaysia in the trade agreement nudged the EU to see the significance of MEUFTA, especially with the new administration in the United States under Donald Trump.
"Both Malaysia and the EU need this particular FTA but negotiations were stalled (previously) and there was no push to resume it.
"Our European counterparts did not see any importance but the UK and Malaysia both being in CPTPP might have made the EU see the significance for them to restart the negotiations," he told Business Times.
He added that the EU also has concerns on Trump's tariffs plans although the US president has yet to spell out tariffs for the European nations.
"However, the threat is always there (for the EU), not only on the economy but also geopolitics. The MEUFTA is a win-win situation for both Malaysia and the EU," he added.
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the MEUFTA ensures Malaysian businesses will continue to gain better access into EU markets and diversify Malaysia's supply chain.
"It is definitely a step in the right direction at a time when the deglobalisation trend has become more pervasive. Perhaps, it would translate into a more conducive trade environment especially for palm oil related products.
"So the trade agreement would open more doors for discussion and address any potential gaps that would eventually lead to flows of trade for palm oil."
He added that the international trade environment has greatly differed since the early 2010s especially since Trump's first presidency and UK Brexit in 2016.
"Globalisation would need to be revived but it has to benefit all parties. Perhaps, something good would come out from the trade negotiation between the EU and Malaysia which would result in a win-win outcome," Afzanizam added.
Malaysia and the EU have resumed negotiations for the MEUFTA, which had been stalled since 2012.
Prime Minister Datuk Seri Anwar Ibrahim said this was agreed upon together with European Commission (EC) president Ursula von der Leyen during his working visit to Brussels, Belgium from Jan 19-20.
He, however, said both parties have yet to set any timeframe to conclude their negotiations for the agreement.
Negotiations for the FTA began in 2010 but were put on hold after seven rounds in 2012 at the request of Malaysia, according to the EC website.
It noted that in 2023, both parties began a stocktaking exercise to determine their positions regarding a possible resumption of the negotiations.
The EC highlighted that the EU is the fourth-largest trading partner of Malaysia, accounting for 9.5 per cent of the country's total trade in goods in 2023. In 2023, Malaysia was the EU's third-largest trading partner within the Asean region, after Singapore and Vietnam.