WORLD TRADE  
ORGANIZATION   
WT/REG306/2 
14 November 2012 
 (12-6277) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN NEW ZEALAND AND MALAYSIA  
(GOODS AND SERVICES) 
 
Questions and Replies 
 
 
 The following communication, dated 14 November 2012, is being circulated at the request of 
the delegations of New Zealand and Malaysia. 
_______________ 
  This document reproduces the questions addressed to the Parties and the responses submitted. 
 
Questions from the delegation of Australia 
 1. Paragraph 62-63, Australia notes that the sc ope of the Chapter on trade in services is 
wider than the GATS as it explicitly includes ground handling services. 
 Could Malaysia please explain how it is able to include ground handling in the scope of 
this Agreement, when it has not done so in previous free trade agreements? 
 
 The provisions of the Agreement reflect the negotiated outcome arrived at between the 
Parties.  Inclusion of ground handling services within  the scope of the Chapter provides an avenue for 
consideration of future commitments in this area. 
 
2. Paragraph 84, Australia notes that the Agree ment provides that if either Malaysia or 
New Zealand concludes a new "negative list" agreem ent, it shall, at the request of the other 
Party, commence re-negotiation of Annex 4 (Sch edules of Specific Services Commitments), with 
a view to progressively liberalizing trade in serv ices between the Parties on a "negative list" 
basis. 
 Could the FTA Parties please clarify whet her their intent is to replace their FTA 
services commitments on modes 1 to 3, should either Party ever conclude services commitments 
on a negative list basis in the future?  Or is the intent this would simply trigger the review 
mechanism of the FTA?  
 Article 8.15, paragraph 3, indicates that in these circumstances the Parties shall, within 
three months from receipt of a request from the ot her Party, commence re-negotiation of the specific 
commitments in Annex 4 of the Agreement, on a "n egative list" basis, with a view to progressive 
liberalization of the trade in services between them. 
 
3. Paragraph 115-118, Australia notes that the provisions on domestic regulation in the 
Chapter on trade in services goes beyond Article VI of the GATS in a number of significant 
respects, and includes a provision to ensure that measures relating to authorisation, licensing or qualification do not constitute unnece ssary barriers to trade in services. WT/REG306/2 
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   Could the FTA Parties please explain whether th is is the first time they have made such 
commitments in an FTA?  If so, did the FTA Party need to make any domestic regulatory 
changes to ensure its compliance with it s commitments on domestic regulation? 
 
 This Article includes some differences in term inology, in particular the use of the term 
"authorisation", but captures very similar concepts  to GATS Article VI.4.  In Malaysia's case, a 
similar commitment has been made under Article 102 (A uthorisation, Licensing and Qualification) of 
Chapter 8 of the Malaysia-Japan Economic Part nership Agreement (MJEPA).  For Malaysia, 
domestic regulatory changes were required to ensure implementation was in line with the 
commitments.  Questions from the delegation of Mexico 
 Services 
Scope and definitions 
 4. Footnote 9 states:  "However, Article 8.17 stipulates that the Parties will review the issue 
of subsidies related to trade in services in the light of any subsidy disciplines agreed under GATS Article XV.  It also provides that the Pa rties give sympathetic consideration to requests 
for consultations regarding the adverse effe ct of a subsidy of the other Party". 
(a) We would like to know whether the Agreement has provisions regarding 
information exchanges related to subsidi es and whether the consultations are to 
be made under these transparency mechanisms.  
 The provisions concerning subsidies related to trade in services under the Agreement are 
those contained in Article 8.17.  These do not  contain a specific provision on exchange of 
information, but they do contain - in paragraph 2 - an opportunity for consultation in cases where a 
Party considers that it is adversely affected by a subsidy of the other Party.   
 
(b) Also, we would like to know what happens  if consultations do not succeed. In 
this case, a Party could recourse to Chapter 16 (Dispute Settlement)? 
 Chapter 16 (including in Articles 16.2 and 16. 3) makes clear that the dispute settlement 
provisions apply to the settlement of disputes  between the Parties on the interpretation, 
implementation or application of the Agreement, ex cept as otherwise provided in this Agreement.  
Article 8.17 does not provide otherwise.  
Liberalization commitments 
Malaysia 
Sector-specific commitments 
 
5. Paragraph 114 mentions that "in telecomm unication services, however, for several 
services an 'unbound' has replaced the corr esponding 'unbound except as indicated in 
horizontal commitments' found in the GATS sche dule.  Additionally, in a few instances, the 
'unbound except as indicated in horizontal commitm ents' has been substituted by an inscription 
seemingly binding access only for a specified number of specialists1 or providing for "no 
                                                      
1 See, for instance, the commit ments in accounting, auditing and bookkeeping services or 
taxation services.   WT/REG306/2 
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  limitation subject to domestic regulation".2  The Parties state that to the extent that more 
specific commitments are listed in the sectoral section, these would prevail.3   
 We would like to know whether these chang es are related to amendments in domestic 
law.   
 Malaysia has indicated these are not related to  amendments in domestic law.  Rather they 
reflect Malaysia's current policy for movement of  natural persons' commitments and are based on the 
negotiated outcome. 
 
Questions from the delegation of the Separate  Customs Territory of Taiwan, Penghu, Kinmen, 
and Matsu 
 
Services 
Commercial presence 
 
6. Paragraph 73, page 21, as indicated in the Report, measures affecting trade in services 
are, in fact, carved out from the scope of Chap ter 10 of the Agreement.  However, Article 10.3.3 
provides for the application of some of the Agreement’s investment rules to services, in 
particular disciplines relating to transfers, ex propriation, compensation for losses, minimum 
standard of treatment, subrogation an d investor-State dispute settlement. 
(a) Since August 2010, when the Agreement fo rmally entered into force, how many 
cases involving investor-State dispute settl ement have been filed by investors of 
the Parties, in service sectors in particular? 
 None. 
 
(b) Which domestic laws or regulations are applied by the Parties to enforce the 
outcomes of cases involving investor-State dispute settlement? 
 Not applicable, as there have been no cases to date. 
 
Liberalization commitments  
Malaysia: (b) Sector-specific commitments 
 
7. Paragraph 107, page 27, with regard to he althcare services, Malaysia has improved the 
commitments on private hospital services by a llowing for a higher limit on foreign equity. 
(a) As Malaysia's Schedule of Specific Services Commitments for private hospital 
services (CPC 93110 ＊) stipulates a mandatory economic needs test in mode 3 of 
limitation on market access, what are the criteria used in determining whether 
or not the economic needs test requirement is met? 
 Malaysia bases this economic needs test on th e density of population, zoning and social 
needs. 
 
(b) How many of New Zealand's service provi ders thus far have complied with the 
economic needs test to set up joint-ven ture private hospitals in Malaysia? 
                                                      
2 For translation and interpretation services. 
3 "Unbound" as opposed to "unbound except as in dicated in the horizontal section", means no 
commitments in the horizontal and sectoral sections. WT/REG306/2 
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   To date, no new hospital has been built that would be subject to an economic needs test. 
 
8. Paragraph 108, page 27, Malaysia has GA TS commitments under hotel and restaurant 
services for sub-sector CPC 87909, yet these do not appear in Malaysia's schedule in the 
Agreement with New Zealand. 
(a) Does Malaysia maintain its GATS commitment of sub-sector CPC 87909 with 
New Zealand, even though this sub-sector does not appear in Malaysia's schedule in the Agreement? 
 Yes, Malaysia maintains its GATS commitments. 
 
(b) Furthermore, if there is any inconsistency between the commitments of the 
Agreement and the GATS, which one will prevail? 
 This is not an issue of inconsistency, but an omission, which will be addressed accordingly. 
 
Sanitary and Phytosanitary Measures 
 9. According to Article 6.6 of the FTA, both  Parties agree to establish a Sanitary and 
Phytosanitary Committee. Article 6.7 provid es that Parties may adopt Implementing 
Arrangements, including equivalence, regionalizatio n, verification, etc., in order to facilitate 
trade between them. In Article 6.10, both Parti es agree that each shall have the right to carry 
out verification and audit of the expo rting Party's regulatory control system. 
(a) Please clarify whether the Committee mentioned in Article 6.6 will accept 
experts from among individuals or gro ups recommended by a non-Party to join 
its discussions?  
 Who is asked to join in any discussions is a subject for agreement between the Parties. 
 
(b) Could New Zealand and Malaysia please explain the necessity for adopting 
Implementing Arrangements for both Parties?  
 Implementing Arrangements allow for various ag reed procedures, equivalence determinations 
or further joint understandings of the principles or obligations under the chapter to be formally 
recorded so as to further facilitate trade and SPS de alings between the Parties.  As sub-treaty level 
instruments they are more readily able to be ch anged subject to the agreement of the competent 
authorities and so allow the chapter and the unde rstandings to both grow and stay current as the 
bilateral relationship further develops over time.    
 
(c) Has New Zealand experienced any difficulty in implementing the FTA with 
Members without Implementing Arrangements? 
 FTAs without either the ability to promulgate Implementing Arrangements or have Decisions 
between the Competent Authorities formally recorded and applied to trade do not tend to support as highly evolved regulatory relationship and associ ated formal understandings.  They are most 
important where there is a potential for different interpretations of the principles and commitments 
contained within the chapter to occur.  New Zeal and negotiates SPS Chapters in FTAs as a means to 
improve the understandings and rela tionship between the competent authorities so as ultimately to 
improve safe trade between the Parties.  Th e SPS Chapter provides the framework and the 
Implementing Arrangements are used to provide th e details which help ensure there are common 
understandings of the principles and commitments.    WT/REG306/2 
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  (d) In practice, how do Implementing Arrangements facilitate trade between 
Parties?  
 The SPS Chapter provides the framework and the Implementing Arrangements are used to 
provide the details which help ensure there are common understandings of the principles, significant 
determinations and commitments.  They may be used to formally record decisions of substance such 
as equivalence determinations which can lead to  a simplification of cer tification requirements, 
reduced port of entry inspections a nd or audits between the Parties. 
 
(e) Do the Contracting Parties intend to adopt "SPS plus" measures through the 
adoption of Implementing Arrangements.  
 The primary role of Implementing Arrangements is  to further facilitate trade while protecting 
public, animal and plant health.    
(f) Do both Parties agree to share the resu lts and conclusions of the audits with 
non-parties to the Agreement, and to u se the results and conclusions of the 
audits conducted by countries that ar e not parties to the Agreement?  
 The Competent Authorities are yet to meet to further consider this point.  In general the 
intention behind the sharing of such information is where it can be used to further facilitate trade or 
save resources being used unnecessarily.  As an example, should a mutually recognized third party have done an assessment of one of the Parties a nd found a satisfactory result (e.g. of a treatment 
facility, canning operation or some other example) then  there is the potential fo r this assessment to be 
used in part or in whole to satisfy the other party that the studied / assessed system is also likely to be 
acceptable.    
Question from the delegation of Thailand 
 
Intellectual Property Rights 
 
10. Paragraph 150, line 12, states that "The Part ies also commit to establishing appropriate 
measures for the protection of traditional knowled ge subject to their international obligations 
and to protect consumers from deceptive practices or the use of false or misleading descriptions 
in trade including false, deceptive or misleadi ng labelling practices which may or is likely to 
create an erroneous impression about the charact er, composition, quality or origin, including 
country of origin, of a product". 
 Could the Parties provide an update or further information on such measures and their 
application?  
 Based on the Malaysia New Zealand FTA, both Parties agree on Article 11.6 where it is 
stated that subject to each Party's internationa l obligations, the Parties may establish appropriate 
measures to protect traditional knowledge.  With rega rds to consumer protection, it is dealt separately 
as agreed by both Parties as in Article 11.7, where it is not tied to the traditional knowledge per se .  
  In 2009, Malaysia developed a Traditional K nowledge Digital Library (TKDL) as one of the 
measures to protect the traditional knowledge in Ma laysia.  The reason for the establishment of the 
TKDL is primarily to assist the patent examiner s in Malaysia to prevent potential bio-piracy, 
exploitation and misappropriation of the traditional knowledge.  
 
 
 WT/REG306/2 
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  Questions from the delegation of the United States 
 
Goods liberalization 
 11. New Zealand eliminates duties on 99.3% of all tariff lines covering 98.3% of imports 
from Malaysia under the agreement.  Of the 636 lines that will remain dutiable after the 
agreement, some 473 of these lines (or approxima tely 74.7%) fall into the textiles industry 
category.  (These 473 lines also represent nearly ha lf of New Zealand's 1,059 textile lines in the 
Agreement.) 
- Malaysia eliminates tariffs on 99.0% of all tariff lines covering 99.3 % of imports from 
New Zealand under the Agreement.   
 
 How do the Parties explain that close to  three-quarters of New Zealand's dutiable lines 
fall within the textiles industry, and that nearly  half of New Zealand's textile lines will remain 
dutiable?  
 New Zealand will eliminate tariffs on 10 0% of all tariff lines under the FTA.   
 
Relationship with other agreements concluded by the Parties 
 
12. Table V.1 indicates that Malaysia has an agreement with Chile.  Could Malaysia please 
clarify if this agreement is in force?  If so, wh en does it expect, in conjunction with Chile, to 
notify this agreement, as required under WTO rules?   
 The Malaysia-Chile FTA entered into force on 25  February 2012.  Malaysia and Chile are in 
the midst of preparing a joint notification of the FTA to the WTO.  
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