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A free-trade agreement between Japan and Malaysia took effect Thursday, with the two countries ready to scrap tariffs on essentially all industrial goods and most agricultural, forestry and fishery products within 10 years.

To mark the launch of the FTA, the two nations held their first joint committee meeting the same day at the Foreign Ministry’s Iikura guesthouse in Tokyo to discuss implementation details.

Japan’s team at the meeting included Economy, Trade and Industry Minister Toshihiro Nikai, Minister of Agriculture, Forestry and Fisheries Shoichi Nakagawa, Foreign Minister Taro Aso and Finance Minister Sadakazu Tanigaki. Malaysia’s delegation was led by International Trade and Industry Minister Rafidah Aziz.

Japan and Malaysia signed the bilateral FTA in December following nearly two years of negotiations. Malaysia is the third FTA partner for Japan, after Singapore and Mexico.

The Japanese and Malaysian ministers issued a joint statement to mark the FTA’s entry into force, calling it a “solid basis for the strategic partnership between Japan and Malaysia.”

The ministers from both nations “shared the view that the (FTA) will contribute toward enhancing the cross-border flow of goods, services and capital between Japan and Malaysia . . . (and) enable both countries to make the most of their economic complementarity.”

Kuala Lumpur will remove tariffs on finished cars with engine displacements greater than 2,000cc by 2010 and smaller vehicles by 2015. It will immediately abolish tariffs for knocked down parts for Japanese carmakers assembling vehicles in Malaysia.

For farm products, Tokyo will immediately eliminate tariffs on Malaysian imports of tropical fruit, including mangoes, mangosteens, durians, papayas and rambutans.

The accord will cover not only goods, but also services, intellectual property rights protection, investment rules, competition policies, business facilitation and cooperation projects for personnel training in Malaysia.

Japanese officials say the FTA will boost Japanese manufacturers’ competitiveness by lowering parts procurement costs in Malaysia, while Malaysian local industries will gain from Japan’s cooperation programs stipulated in the accord.

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