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U.S. Statement on the Trade Policy Review of Malaysia
March 4, 2014

WTO Trade Policy Review of Malaysia
Statement delivered by Ambassador Michael Punke,
U.S. Permanent Representative to the World Trade Organization

March 3, 2014

The United States is pleased to participate in Malaysia’s sixth WTO Trade Policy Review.  We warmly welcome Malaysia’s delegation, led by the Secretary-General of the Ministry of International Trade and Industry, Dr. Rebecca Sta Maria, along with Ambassador Mariam Md Salleh.  We appreciate the reports compiled by the WTO Secretariat and the Government of Malaysia, which provided us with a detailed review of recent developments in Malaysia’s trade and economic policy.  We also appreciate the contributions of the discussant, Ambassador Harald Neple (Norway).

Malaysia is an important and valued trading partner for the United States.  In 2013, it ranked as our 20th largest goods trading partner with $40.3 billion in two way goods trade.  Bilateral trade in services added another $3.9 billion of trade, according to the latest data from 2012.  U.S. services exports to Malaysia were $2.5 billion in 2012, and imports of services from Malaysia to the United States was $1.4 billion, an increase of 177 percent over the previous decade.  Foreign investment has grown steadily, with stock of U.S. foreign investment in Malaysia totaling $15.0 billion in 2012, an increase of 21 percent from 2011.

The United States and Malaysia continue to work together to further advance the multilateral trading system, as well as to deepen and expand our bilateral trade relationship.  In October 2010, Malaysia joined the negotiations for the Trans-Pacific Partnership (TPP), which we welcomed as an important next step to further enhance the trade and investment relationship between our two countries, and to support economic integration across the Asia-Pacific region.

Malaysia’s economic policies over the past several years have focused on ensuring sustainable and inclusive growth to achieve its objective to become a self-reliant and industrialized nation by 2020.  To achieve these objectives, the Malaysian government had planned implementation of an ambitious political, economic, and fiscal reform agenda.

The United States commends Malaysia for the steps it has taken to liberalize its trade and trade-related policies since its previous Trade Policy Review in 2010.  These steps recognized the importance of services to the Malaysian economy and were intended to advance Malaysia’s goal of increasing the share of services as part of Malaysia’s overall GDP from the current level of 50.4 percent to 65 percent by 2020.  These efforts included significant liberalization of its services sector.   In 2012, Malaysia took initial steps to reduce or remove foreign equity restrictions in 17 services subsectors, including in professional services, communication services and distributions services.  We would appreciate an update on any plans for further liberalization in this sector, particularly in light of the important role services plays in Malaysia’s 2020 plan.

Malaysia also took steps to improve its attractiveness as a trade and investment destination, to further integrate its companies into global value chains, and to develop new trade and investment ties.  It strengthened its intellectual property rights protection and enforcement during the period of review, including modernization of its Copyright Act, enforcement actions against online piracy, and joining the WIPO Internet treaties.  Malaysia also reformed its policies on competition and consumer protection and has been active in implementing trade facilitation initiatives. Regarding trade facilitation, we hope that Malaysia will continue its leadership as we approach important milestones in the implementation of the Bali agreements.

Despite these positive developments, there are some areas where Malaysia’s planned economic reforms have slowed or where Malaysia could make further improvements to its trade and investment regime.  We encourage Malaysia to continue efforts to improve its intellectual property regime, including addressing the relatively widespread availability of pirated and counterfeit products, high rates of piracy over the Internet, and continued problems with book piracy.  In addition, we urge it to establish the remaining 12 of the 15 dedicated Intellectual Property courts it had planned.

On import licensing, the Secretariat’s Report states that no major changes have been made to Malaysia’s import licensing regime, which continues to cover about a quarter of its tariff lines.  The United States reiterates its concern with Malaysia’s expansive use of import licenses.  We would appreciate further information on the government’s administrative procedures and its justification for the continued use of import licenses on such a broad range of products in light of  Malaysia’s commitments under the WTO Import Licensing Procedures Agreement.

With respect to automobiles, the United States is disappointed that Malaysia continues to apply high tariffs in the automotive sector and imposes nontariff measures that significantly raise the cost of imported vehicles, including a non-transparent import permit and gazette pricing system.   Malaysia’s new National Auto Policy seeks to transform the country into a regional hub for energy efficient vehicles, but it does little to promote structural reform or address longstanding trade barriers, even appearing to retreat from prior liberalization commitments.  The Secretariat’s report further mentions that Malaysia has not notified a number of support measures and incentives under the National Automotive Program, and we urge it to submit these notifications.

In closing, the United States commends Malaysia for its strong performance overall and the progress it has made in liberalizing and reforming its trade regime.  We encourage Malaysia to continue to pursue reform efforts that will enable it to achieve sustainable growth and further integration into the global trading system.  We would like to thank the delegation of Malaysia for its active participation in this important process, and welcome the opportunity to continue to work cooperatively with Malaysia to further expand our bilateral relationship and to promote the multilateral trading system.