WORLD TRADE  
ORGANIZATION  WT/REG216/2  
6 February 2009 
 (09-0601) 
Committee on Regional Trade Agreements  
  
 
  
 
 
FACTUAL PRESENTATION 
 
Economic Partnership Agreement 
between 
Japan and Malaysia 
(Goods and Services) 
 
Report by the Secretariat 
 
 
 
 This report, prepared for the considera tion of the Economic Partnership Agreement 
between the Governments of Japan and Malaysia has been drawn up by the 
WTO Secretariat on its own responsibility and in full consultation with the Parties.  
The report has been drawn up in accordance with the rules and procedures contained 
in the Decision for a Transparency M echanism for Regional Trade Agreements 
(WT/L/671).   Any technical questions arising from this report may be addressed to Mr. Roberto Fiorentino (tel: +41 22 739 5595).  WT/REG216/2 
 Page iii 
 
 
  TABLE OF CONTENTS 
 
 
  Page 
 
I. TRADE ENVIRONMENT 1  
A. M ERCHANDISE TRADE  1 
B. T RADE IN SERVICES AND INVESTMENT  5 
II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 10  
A. B ACKGROUND INFORMATION  10 
III. NATIONAL TREATMENT AND MARKET ACCE SS PROVISIONS ON TRADE IN 
GOODS 11 
A. I MPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  11 
1. General provisions 11  
2. Liberalization of tariff lines and trade 13  
(a) Japan 13 
(b) Malaysia 16 
B. R ULES OF ORIGIN  19 
C. E XPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  21 
D. R EGULATORY PROVISIONS ON TRADE IN GOODS  21 
1. Standards 21  
(a) Technical Barriers to Trade 21 
(b) Sanitary and Phytosanitary Measures 22 
2. Safeguard mechanisms 22  
(a) Global safeguard actions 22 
(b) Bilateral safeguard actions 22 
(c) Provisional bilateral safeguard measures 23 
(d) Restriction to safeguard the balance of payments 24 
3. Anti-dumping and coun tervailing measures 24  
4. Subsidies and State-aid 24  
5. Customs-related procedures 24  
IV. PROVISIONS ON TRADE IN SERVICES AND INVESTMENTS 25  
A. S COPE AND DEFINITIONS  25 
B. D ENIAL OF BENEFITS  26 
C. G ENERAL PROVISIONS ON TRADE IN SERVICES AND INVESTMENTS  26 
1. Market access 26  
2. National treatment and MFN 26  
3. Movement of natural persons 27  
D. L IBERALIZATION COMMITMENTS ON TRADE IN SERVICES  28 
1. Japan 29  
(a) Horizontal commitm ents / exceptions 29 
(b) Sector specific commitments / exceptions 29 
 WT/REG216/2 
Page iv  
 
  2. Malaysia 31  
(a) Horizontal commitm ents / exceptions 31 
(b) Sector specific commitments / exceptions 31 
E. L IBERALIZATION COMMITMENTS ON INVESTMENT  32 
1. Japan 33  
2. Malaysia 34  
F. R EGULATORY PROVISIONS ON TRADE IN SERVICES AND INVESTMENTS  36 
1. Domestic regulation 36  
2. Recognition 36  
3. Safeguard actions on services trade and investment 36  
(a) Emergency Safeguard Measures 36 
(b) Temporary Safeguard Measures 37 
(c) Restrictions to Safeguard the Balance of Payments 37 
4. Payments and transfers 37  
5. Transparency 37  
6. Other 37  
V. GENERAL PROVISIONS OF THE AGREEMENT 38  
1. General and Securi ty Exceptions 38  
2. Accession 38  
3. Institutional framework 38  
4. Dispute settlement 39  
5. Relationship with other agreements concluded by the Parties 40  
6. Other provisions 40  
(a) Intellectual property 40 
(b) Competition 41 (c) Environment 41 
(d) Improvement of business environment 41 
(e) Cooperation 41 
ANNEX I 42 
ANNEX II 46  WT/REG216/2 
 Page 1 
 
 
  I. TRADE ENVIRONMENT 
1. The Economic Partnership Agre ement (EPA) between Japan and Malaysia (hereinafter 
referred to as 'the Agreement' or 'JMEPA') is Japan's second fr ee trade agreement (FTA) with an 
Asian country (following its FTAs with Singapore)1 and Malaysia's first bila teral FTA with an Asian 
country excluding its membership in the ASEAN fre e trade agreement (See Table V.1 for the Parties' 
participation in other RTAs). 
2. Japan's GDP was estimated at US$4,340 billion in 2006, while that of Malaysia reached 
US$149 billion in the same year.2  With total merchandise exports of US$650 billion and imports of 
US$580 billion, Japan ranked in 2006 as the world's fourth and fifth exporter and importer respectively;  with merchandise exports of US$161 billion and imports of US$131 billion, Malaysia 
ranked as the world's 19
th exporter and 23rd importer in that year. 
A. MERCHANDISE TRADE  
3. Recent developments in global and intra-Party trad e are presented in Charts I.1 and I.2.  Japan 
was Malaysia's largest trading partner in terms of imports in 2007, accounting for 13% of its total 
imports, and its 3rd largest tradi ng partner in terms of 2007 exports , accounting for 9.1% of its total 
exports.  Malaysia was Japan's 11th largest tradi ng partner in terms of 2007 imports, accounting for 
2.8% of its total imports and its 11th largest tr ading partner in terms of 2007 exports, accounting for 
2.1% of its total exports.3  Over the period surveyed (1998-2007), Malaysia has run a consistent trade 
deficit with Japan although data fro m Japan shows that it has also run a trade deficit with Malaysia 
over this period.  According to the parties, possibl e reasons for this discrepancy include transhipment, 
third country exports, re-exports and cal culations based on CIF and FOB.   
0100200300400500600700800
1998 1999 2000 2001 2002 2003 2004 2005 2006 20070510152025303540US$billion US$billionChart I.1 - Ja pan: Merchandise im ports from and ex ports to world and 
Malaysia, 1998-2007
Source : UNSD, Comtrade database. Imports from Malaysia
Exports to MalaysiaTotal imports
Total exportsLeft hand scale: Right hand scale:
 
                                                      
1 Following the JMEPA, Japan has concluded similar agreements with Thailand, Indonesia and Brunei 
Darussalam. 
2 WTO, Trade Profiles. 
3 UNSD, Comtrade database (2007). WT/REG216/2 
Page 2  
 
  020406080100120140160180
1998 1999 2000 2001 2002 2003 2004 2005 2006 20070510152025303540US$billion US$billionChart I.2 - Malaysia: Merchandise imports from and exports to 
world and Japan, 1998-2007
  Source : UNSD, Comtrade database.Imports from Japan
Exports to JapanTotal imports
Total exportsLeft hand scale: Right hand scale:
 
 
4. The commodity structure of trade among the Parti es, as well as of their imports and exports to 
the world in the three years preceding entry into force of the Agreement (2003-2005), is shown in 
Chart I.3 on the basis of Harmonized System (HS)  section.  Malaysia's two largest export product 
categories – machinery and minerals – made up 66.4%  of its total exports in 2003-2005 and accounted 
for 69.5% of Japan's imports from Malaysia.  Japan's four largest export product categories – 
machinery, vehicles, base metals and chemicals – made up 79.4% of its total exports in 2003-2005 
and accounted for 82.5% of Malaysia's imports from Japan.   
5. Chart I.4 shows the same commodity structure of  trade post-entry into force of the Agreement 
for the period 2006-2007.  Over this period both Ma laysia and Japan record ed a drop in the overall 
percentage to total export represented by their largest  export categories.  In the case of Malaysia, its 
two largest export product categories – machinery an d minerals – made up 63.8%  of its total exports, 
down 2.6 percentage points from the 2003-2005 pe riod;  however, while machinery dropped 
4.8 percentage points minerals gained 2.2 percenta ge points.  These changes are reflected in Japan's 
imports from Malaysia over the 2006-2007 period, with  machinery and minerals recording an overall 
drop of 4.1 percentage points compared to 2003-2 005 figures; however, while machinery recorded a 
7.7 percentage points drop, minerals actually gain ed 3.6 percentage points compared to 2003-2005 
figures thus replacing machinery as Japan's major im port product category from Malaysia.  With the 
exception of the latter, the overall commodity structure of trade has remained unchanged. 
6. In the case of Japan, machinery was also account able for the overall drop of 0.6 percentage 
points to total exports of its four largest expor t product categories (vehicles and base metals both 
recorded a gain of 1.1 percentage point).  With respect to Malaysia's imports from Japan, machinery 
recorded a drop of 2.6 percentage points while base metals gained 2.7 percen tage points.  Vehicles, 
however, dropped 2.6 percentage points from 2003-2005 figures while plastic became the 4th largest 
import product category, up from 6th in the 2003-2005 period.  With the exception of the latter, the 
overall commodity structure of trade has remained unchanged.  WT/REG216/2 
 Page 3 
 
 
  Chart I.3
Japan and Malaysia: product composition of merchandise trade, annual 
average (2003-2005)
Japan's imports from Malaysia Malaysia's imports from Japan
 Source:  UNSD, Comtrade database.Per cent
Total:  US$13.8 billion Total:  US$15.9 billion
Total:  US$451.5 billion Total: US$100.6 billion
Total:  U S$ 544.2 billion Total:  US $124.3 billionJapan's global exports Malaysia's global exportsJapan's global imports Malaysia's global imports Articles of woo d 8.8
Machinery
54 .7
Optical 4.4
Fats and oils 5.0Chemicals 7.0Optic al 2.4
Ma ch iner y
41.6Ot he r 
10.0Other 
8.7
Base metals 7.1Fats and oils 2.1
Base metals 7.9Base metals 4.8
Pla stics 4.2
Plastic s, Rubb er  4.9 Plastics, Rubber 3.5
Vehicles 23 .7M inerals  12.0Other
9.9Other  
6.0
Te xt iles 2.0Other 
9.6Ma chinery 38.2
Vehicles  1 0.5
M inerals 25.8
Ma ch iner y 2 2.8Chemicals  3.5
Che micals  6.7Vegetables 3.3
Textiles 5.8Vegetables 1.7Other 
11.7
Vehicles  4.2
Machinery 54.4Art icles of wood 2.9Chemicals  5.5
Chemicals 4.3Optica l 2.8
Minerals 31 .3
Animal pro ducts  4.6Articles of wood 2 .5
Minerals 7.3Plastics 3.9Optical 3.2
Optica l 6.4Ve hic les  3.9Prepared foods 3 .7Ma chin er y 53 .8
Base metals 13.4Chemic als 4.8Plastics, Rubb er 4.6P earls 2.2
Prepared foods  2.0Optica l 4.8
Base metals 3.3
 WT/REG216/2 
Page 4  
 
  Chart I.4
Japan and Malaysia: product composition of merchandise trade, annual 
average (2006-2007)
Japan's imports from Malaysia Malaysia's imports from Japan
 Source :  UNSD, Comtrade database.Per cent
Total:  US$16.5 billion Total:  US$18.2 billion
Total:  US$600.7 billion Total: US$139.0 billion
Total:  U S$ 680.5 billion Total:  US $168.4 billionJapan's global exports Malaysia's global exportsJapan's global imports Malaysia's global imports Articles of wood 9.9
Ma chinery
49.8Prepared Foods 3. 2
Fats and oils 5.3Chemicals 7.0Optica l 2.5
Ma ch iner y
38.8Oth er 
7.9Other  
6. 1
Base metals 8.2Base Metals 7.7
Minerals 9.4
Base metals 5.7
Pla stics 4.5
Plastics, Rubber 5 .9 Plastics  4.0
Vehicles 24 .8Minerals 14.2Other 
9.2Ot he r 
6.1
Te xt iles 1.7Pearls 1.6Minerals
 34 .9
Machinery 21.0Minerals 32 .0Base metals 1.8
T e xt iles  4. 9Animal pro ducts  3.2Prepared  Foods 2.2Other  6.9
Vehicles  4.3
Machinery 49.6Art icles of wood 2.8Chemicals  5.5
Chemicals 4.3Miscellaneous 1.5
Ma chinery 30.5
Chemicals 6.3Miscellaneous 2 .2
Base Metals 9.9Plastics 4.5Optic al 3.0
Optica l 5.2Plastics 2.3
Vegetables 2.7Ma chin er y 51 .2
Base metals 16.1Chemicals 4.7Optica l 3.5
Pearls 3.8
Ve ge tables 1.8
Base metals 4.3Fats and Oils 2.4
Pla stics  6.7
Optic al 4.1Ch emic als 3.0Optical 2.7
Ve hicles  7.9
Veh icles 3.5Articles o f wood  2.0Other 7.9
Textiles  1. 2Stone , Cement  1.1 Prepared Food s 1.6
Miscellaneous 1 .8
 
  WT/REG216/2 
 Page 5 
 
 
  B. TRADE IN SERVICES AND INVESTMENT  
7. In 2006, Malaysia ranked 29th in terms of world exports of commercial services and 30th in 
terms of imports.  Its commercial services e xports amounted to US$21.7 billion, representing 0.79% 
of world exports, while imports amounted to US $23.5 billion, representing 0.89% of world imports.  
In the same year Japan ranked fourth in the wo rld both for exports and imports of commercial 
services.  Its commercial services exports amounted to US$122.5 billion, representing 4.43% of world 
exports, while imports amounted to US$144 billion representing 5.48% of world imports.4   
8. Chart I.5 shows the breakdown of commercial services trade for Japan in 2000-2007.  
Transportation services, other business services, a nd royalties and license fees represent the largest 
categories in terms of exports of commercial serv ices, while transportation services, travel services, 
and other business services are the largest in terms of imports. 
0102030405060708090100110120130140150160
2000
2001
2002
2003
2004
2005
2006
20070102030405060708090100110120130140150160
2000
2001
2002
2003
2004
2005
2006
2007Chart I.5 
Japan, total commercial services trade, 2000-2007
Exports Imports
Transportation services
Travel  services
Source :   IMF, BOP CD-Rom.Communications  servicesUS$ billion
Construction servicesFinancial services
Computer and information services
Royalties and license Other business services
Personal and cultural services
Government servicesUS$ billion
 Insurance services
Note:     Exports of insurance services were negative in the following years: 1999 (-US$80 million),
              2001 (-US$100 million), and 2002 (-US$380 million).
 
 
  
                                                     
 
4 WTO, Trade Profiles. WT/REG216/2 
Page 6  
 
  9. Chart I.6 shows the breakdown of Japan's comm ercial services trade with Malaysia in 
2004-2006.  Transportation services, royalties and license fees, travel services and construction 
services are the largest cat egories in terms of exports of comme rcial services, while transportation 
services, travel services, and other business services are the largest in terms of imports. 
02004006008001,0001,200
2004 2005 200602004006008001,0001,200
2004 2005 2006Chart I.6
Japan,bilateral commercial services trade with Malaysia, 2004-2006
Exports Imports
Transportation services
Travel  services
Source : WTO Secretariat, based on data supplied by Japan.Communications  servicesUS$ million
Construction servicesFinancial services
Computer and information services
Royalties and license Other business services
Personal and cultural servicesUS$ million
 Insurance services
Note:     Exports of other business services were negative in the following years: 2004 (-US$ 2,173 millions),     
              2005 (-US$1,522 millions) and 2006 (- US$ 1,077millions) ; Figures for "travel" in 2006 indicate a break-in serie s.
 
 
10. Japan's global investment position is depicted in Chart I.7 which shows inward and outward 
foreign direct investment (FDI) stocks with the world for the period 2000-2007.  Japan's inward FDI 
stock reached US$129 billion in 2007 up from US$54 billion in 2000;  this marks a 13% average 
annual increase compared to a 8.4% average annual increase of its outward FDI stock over the same 
period;  the latter stood at US$ 525 billion in 2007. 
  WT/REG216/2 
 Page 7 
 
 
  050100150200250300350400450500550
2000 2001 2002 2003 2004 2005 2006 2007050100150200250300350400450500550
2000 2001 2002 2003 2004 2005 2006 2007Chart I.7
Japan inward and outward foreign direct investment stock from world, 2000-2007
Inward Outward
Source: WTO Secretariat estimates based on data at http://www.boj.or.jp/en.US$ billion US$ billion
 
 
 
11. Japan's bilateral investment position with Malays ia is depicted in Chart I.8 which shows its 
inward and outward stock of FDI with Malaysia over the period 2003-2 007.  Japan's inward FDI stock 
from Malaysia remained rather constant from 2000 to  2006 except for an isolated increase in 2001;  
however, in 2007 it dropped by 91.1% to US$1.2 million from US$13.8 million in 2006.  Its outward FDI stock in Malaysia, on the other hand, has reco rded over the same period a regular positive trend, 
increasing by 9% on average annually from US$4.3 billion in 2000 to US $7.9 billion in 2007. 
12. Chart I.9 shows the breakdown of commercial services trade for Malaysia in 2000-2007.  
Travel, transportation, and other business services re present the largest categories in terms of exports 
of commercial services, while transportation, travel, and other business services are also the largest in terms of imports. 
 WT/REG216/2 
Page 8  
 
  024681012141618202224
2000 2001 2002 2003 2004 2005 2006 2007012345678
2000 2001 2002 2003 2004 2005 2006 2007Chart I.8
Japan inward and outward foreign direct investment stock with Malaysia, 2000-07
Inward Outward
 Source : WTO Secretariat estimates based on data at http://www.boj.or.jp/en.US$ million US$ billion
 
 
 
13. Malaysia's global investment position is depicted in Chart I.10 which shows inward and 
outward foreign direct investment (FDI) stocks with  the world for the period 2000-2007.  Malaysia's 
inward FDI stock reached US$77 billion in 2007 up  from US$53 billion in 2000;  this marks a 6% 
average annual increase compared to  a 20% average annual increase of its outward FDI stock over the 
same period;  the latter stood at US$ 58 billion in 2007. 
  WT/REG216/2 
 Page 9 
 
 
  051015202530
2000
2001
20022003
2004
2005
2006
2007051015202530
2000
2001
20022003
2004
20052006
2007Chart I.9
Malaysia, total commercial services trade, 2000-2007
Exports Imports
 Source :   IMF, BOP CD-Rom.US$ billion US$ billion
Transportation services
Travel  services
Communications  services
Construction servicesFinancial services
Computer and information services
Royalties and license Other business services
Personal and cultural services
Government services Insurance services
 
 WT/REG216/2 
Page 10  
 
  01020304050607080
2000
20012002
2003
20042005
2006
200701020304050607080
2000
2001
2002
2003
20042005
2006
2007Chart I.10
Malaysia inward and outward foreign direct investment stock from world, 
2000-2007
Inward Outward
Source: UNCTAD, Foreign Direct Investment database.US$ bil lion US$ billion
 
 
 II. CHARACTERISTIC ELEMENTS OF THE AGREEMENT 
A. B
ACKGROUND INFORMATION  
14. The JMEPA was signed by Japan and Malaysia  on 13 December 2005 and entered into force 
on 13 July 2006.  The Parties notified the goods a nd services aspects of the Agreement to the WTO on 
12 July 2006 under Article XXIV:7(a) of the GATT 1994, and Article V:7(a) of the GATS (document 
WT/REG216/N/1 and S/C/N/371).  The text of the Agre ement is available, together with its related 
Annexes, on the following official websites: 
• Japan: http://www.mofa.go.jp/policy/economy/fta/malaysia.html  
• Malaysia: http://www.miti.gov.my/ekpweb/application5 
15. The Agreement aims at liberalizing and fac ilitating trade in goods and services between the 
Parties;  improving investment opportunities and the business environment;  establishing a framework 
to enhance closer cooperation of the socio-economic partnership;  ensuring protection of intellectual 
property;  encouraging effective control of an ti-competitive activities;  and to create effective 
procedures for the resolution of disputes (Article 1). 
 
                                                      
5 The URL address is to Malaysia's  Trade and Industry portal.  The link to the text of the Agreement 
can be found under the directory "Info Centre" and sub-directory "Malaysia an d Free Trade Agreements".  WT/REG216/2 
 Page 11 
 
 
  16. The Agreement is composed of 14 Chapters  and has seven related Annexes, as follows: 
Table II.1:  Chapters, annexes of the Agreement 
Chapters and Annexes Title/description 
Preamble  
Chapter 1 General Provisions 
Chapter 2 Trade in Goods 
Chapter 3 Rules of Origin 
Chapter 4 Customs Procedures 
Chapter 5 Technical Regulations, Standard s and Conformity Assessment Procedures 
Chapter 6 Sanitary and Phytosanitary Measures 
Chapter 7 Investment 
Chapter 8 Trade in Services 
Chapter 9 Intellectual Property 
Chapter 10 Controlling Anti-competitive Activities 
Chapter 11 Improvement of Business Environment 
Chapter 12 Co-operation 
Chapter 13 Dispute Settlement 
Chapter 14 Final Provisions 
Annex 1 Schedule in relation to Article 19 
Annex 2 Product Specific Rules  
Annex 3 Minimum Data Requirement  for Certificate of Origin 
Annex 4 Reservation for Existing and Future Measures 
Annex 5 Financial Services 
Annex 6 Schedules of Specific Comm itments in relation to Article 99 
Annex 7 List of Most-Favoured-Nation Treatme nt Exemptions in relation to Article 101  
Source : The Agreement between the Government of Japa n and Malaysia for an Economic Partnership. 
17. In addition, the Agreement provides for an Implementing Agreement between the Parties 
pursuant to Article 12 of the Agreement.  The Implementing Agreement outlines the details 
concerning the implementation of the cooperation provis ions as set out in the various Chapters of the 
Agreement.  These include co-operation on customs pr ocedures, intellectual property, control of anti-
competitive activities, improvement of the bus iness environment, and co-operation on the 
implementation of projects and programmes as specified in the "Joint Statement at the Signing of the Agreement between the Government of Japan and the Government of Malaysia for an Economic 
Partnership"
6 which are to be implemented within the framework of the JMEPA.  The Implementing 
Agreement entered into force at the same time as the Basic Agreement and will remain in force as 
long as the latter remains in force (Ar ticle 44 of the Implementing Agreement). 
III. NATIONAL TREATMENT AND MARKET ACCESS PROVISIONS ON TRADE IN 
GOODS 
A. IMPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  
1. General provisions 
18. Chapter 2 sets out the general definitions, market access provisions and regulatory regime 
applicable to trade in goods between the Parties. 
                                                      
6 The Parties' respective Prime Minist ers agreed in their Joint Statemen t at the time of  signing of the 
Agreement to promote co-operation in the following fiel ds:  agriculture, forestry, fisheries and plantation, 
education and human resource development, information and communications technology, science and technology, small and medium enterprises, tourism, and environment.  See: http://www.mofa.go.jp/region/asia-
paci/malaysia/ep a/joint0512.html  WT/REG216/2 
Page 12  
 
  19. Each Party accords national treatment to the goods of the other Party in accordance with 
Article III of the GATT 1994 (Article 18).
7 
20. With respect to market access, the Parties ag ree to reduce or eliminate customs duties on 
originating goods in accordance with their resp ective schedules as set out in Annex 1 of the 
Agreement and not to increase such duties except as otherwise provided for under the Agreement 
(Article 19).  No timeframe for the implementation of such commitments is explicitly stated in the 
Agreement, however, the Parties' schedules in Anne x 1 indicate transition periods of up to 15 years 
for certain products with the final tariff cuts taking pl ace in 2021.  By this date, most of the Parties' 
bilateral trade will be duty-free, except for tho se tariff lines which are either excluded from the 
Agreement or subject to partial tariff liberalization. 
21. Part 1 to Annex 1 lists the categories relating to the tariff treatment accorded by the Parties;  
these are common to both Parties except those qua lified by notes specific to each Party's schedule 
(Part 2, Section 1 to Annex 1 for Japan and Part  3, Section 1 to Annex 1 for Malaysia).  The 
categories indicate the following:  timeframes for elim ination of customs duties (categories A to B15);  
timeframes for reductions or elimination of customs duties qualified by notes specific to each Party's 
schedule (category P);  products subject to tariff rate quotas (category Q);  in the case of Japan, 
products not subject to tariff concessions but for which negotiations on issues such as improving 
market access conditions are envisaged in year 4 or  5 following the entry into force of the Agreement 
(category R);8  and products excluded from the Agreement (category X).  In the case of Japan, tariff 
reductions take place on the date of entry into fo rce of the Agreement and on 1 April of following 
years.  For Malaysia, tariff reductions take place on th e date of entry into fo rce of the Agreement and 
on 1 January in subsequent years. 
22. Upon request by either Party, the Parties agree to negotiate on issues such as improved market 
access for goods designated for negotiation in the resp ective schedule in Annex 1, in accordance with 
the terms and conditions set out in the schedule (A rticle 19.3).  They agree to undertake a general 
review of the implementation and operation of the Agreement in the fifth calendar year following its 
entry into force and every five years thereafter, unless otherwise agreed by them (Article 155). 
23. Other general provisions include the undertaking by the Parties not to introduce or maintain 
any non-tariff measures on the bilateral import or e xport of goods which are inconsistent with their 
obligations under the WTO Agreement (Article 22). 
 
 
 
    
 
     
 
                                                     
 
7 For the purposes of this Agreemen t the term "Party" refers to the Governments of Japan or Malaysia 
and the term "Country" refers to either Japan or Malaysia. 
8 Article 19.3 indicates such negotiations will take place at the request of either Party.  WT/REG216/2 
 Page 13 
 
 
  Table III.1  
Market Access:  Basic features at a glance 
 Japan Malaysia Scope and 
coverage  
HS Chapters 1-97 
• Elimination or reduction of duties in accordance with the 
schedule in Annex 1 (Part 2, Section 2) HS Chapters 1-97 
• Elimination or reduction of duties in accordance 
with the schedule in Annex 1 (Part 3, Section 2) 
Tariff elimination or reduction in accordance with each Party's schedule as contained in Annex I (positive list) 
Categories of tariff elimination or reducti on (General notes – Part 1 to Annex 1) 
Date of tariff elimination/reduction Cat. Description of tariff treatment Japan No. of lines9 Malaysia No. of lines 
A entry into force (EiF) 13.07.2006 7,352 13.07.2006 7,918 
B3 four equal annual cuts as from EiF 01.04.2009 0 01.01.2009 21 
B4 five equal annual cuts as from EiF 01.04.2010 0 01.01.2010 63 
B4* equal annual cuts as from EiF w ith final cut in: 01.01.2010 0 01.01.2010  
B5 six equal annual cuts as from EiF 01.04.2011 102 01.01.2011 438 
B6 seven equal annual cuts as from EiF 01.04.2012 5 01.01.2012 48 
B7 eight equal annual cuts as from EiF 01.04.2013 216 01.01.2013 1,361 
B9 ten equal annual cuts as from EiF 01.04.2015 2 01.01.2015 61 
B9* equal annual cuts as from EiF w ith final cut in: 01.01.2015 0 01.01.2015  
B10 11 equal annual cuts as from EiF 01.04.2016 203 01.01.2016 559 
B15 
Elimination in: 
16 equal annual cuts as from EiF 01.04.2021 136 01.01.2021  
P In accordance with the notes  of each Party's schedule Note 3, 6 to 
10 1, (1 x note)   
Q In accordance with the notes of each Party's schedule Note 2 2   
R Negotiations as set out in the notes of Japan's schedule Note 1,4,5 161, 3, 8   Schedule of tariff concessions 
X Excluded from tariff liberalization  913  121 
 
Source : Annex I to the Agreement. 
 
2. Liberalization of tariff lines and trade10 
24. The elimination of tariffs between the Parti es is detailed in their corresponding schedules.  
For both Parties, tariff elimination started at entry into force of the Agreement;  the base rates for 
tariff reductions were in the case of Malays ia the MFN applied duties on 1 January 2004 .  In the case 
of Japan the base rates were the MFN applied duti es on 1 April 2004 or any other lower rates agreed 
upon by the Parties.   Subsequent duty reductions ta ke place on 1 January of each year with respect to 
Malaysia and on 1 April of each year with respect to Japan. 
(a) Japan 
25. Japan's tariff elimination under the Agreement is depicted in Table III.2.11   41.7% of Japan's 
tariff lines were already duty-free on an MFN basis in 200612 which corresponded to 83.2% of 
imports from Malaysia for the period 2003-2005.  The bulk of Japan's scheduled tariff liberalization 
took place on entry into force of the Agreement w ith a further 41% of tariff lines becoming duty-free 
amounting to an additional 10.7% of imports from Ma laysia.  The remaining tariffs lines are to be 
                                                      
9 Japan's total number of tariff lines listed in the Tabl e is slightly higher than the total number of tariff 
lines indicated in the remaining charts and tables of this Factual Presentation due to the exclusion from the 
Secretariat's tariff analysis of Japan's MFN in-quota tariff lines. 
10 Unless otherwise specified, all statistics contained in  the tables and charts have been prepared on the 
basis of data provided by the Parties. 
11 For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related 
calculations. 
12 Japan's tariff is composed of 8,915 tariff lines at the HS 9-digit level;  93.3% of this tariff is ad 
valorem, 2.3% relates to lines with specific duties;  0.6% rela tes to compound tariff lines;  3.7% relates to mixed 
tariff lines, and 0.2% to others.  For compound and mixed lines, only the ad valorem  component is taken into 
account in the calculation of averages. WT/REG216/2 
Page 14  
 
  eliminated in equal annual cuts over a six stage period starting in 2011 and ending in 2021 at which 
point an additional 7.4% of Japan's tariff schedule will have been liberalized.  By the end of the 
transition period 90.1% of Japan's tariff schedule w ill be duty-free, corresponding to 94.4% of imports 
from Malaysia;  9.9% of Japan's ta riff lines will remain subject to duty corresponding to 5.6% of its 
imports from Malaysia after the Ag reement is fully implemented. 
Table III.2 - Japan 
Tariff elimination commitments under the Agreement and corresponding average trade 
Duty phase-out 
period Number 
of lines % of total lines in Japan's 
tariff schedule Value of Japan's imports 
from Malaysia (2003-2005) 
in million US$ % of Japan's total imports 
from Malaysia 2003-2005 
MFN duty free 
(2006) 3,717 41.7 11,166.1 83.2 
2006 3,651 41.0 1,441.7 10.7 
2011 102 1.1 3.1 0.0 
2012 5 0.1 2.1 0.0 
2013 217 2.4 7.2 0.1 
2015 2 0.0 0.0 0.0 
2016 203 2.3 43.1 0.3 
2021 136 1.5 0.8 0.0 
Remain dutiable 882 9.9 749.7 5.6 
Total 8,915 100.0 13,413.7 100.0 
 
Note: Based on the HS 2002 nomenclatur e.  Calculations exclude tariff  lines having an in-quota rate. 
 
Source:  WTO estimates based on data provided by Japan. 
 
26. The base rates used by Japan for implemen ting its tariff liberalization scheme already 
provided for 41.7% of the tariff or 3,717 tariff lin es being duty free on an MFN basis before the entry 
into force of the Agreement.  Of the remaining 5,198 tariff lines, 3,944 held a base rate of up to 10%, 
525 a base rate of between 10% and 20%,  422 a base  rate of between 20% and 30%,  24 a base rate 
of between 30% and 40%, 14 a base rate of betwee n 40% and 50%, 6 a base rate of over 50%, and 
263 lines had non ad valorem  rates.  Table III.3 shows Japan ta riff elimination under the Agreement 
by year and duty range.  Tariff lines with a base rate of up to 10% are mostly liberalized on entry into 
force of the Agreement and progressively thereafter;  those with a base rate of between 10% and 20% 
are to be liberalized in four stages, and most si gnificantly upon entry into force of the Agreement and 
in 2016;  tariff lines with a base rate of between  20% and 30% are mostly liberalized in 2016 and 
2021;  tariff lines with a base rate of between 30% an d 40% are liberalized in 2021;  tariff lines with a 
MFN rate of between 40% and 50% and above are not scheduled for liberalization under the 
Agreement;  tariff lines with non ad valorem  rates are mostly liberalized on entry into force of the 
Agreement and in 2016.  By the end of the trans ition period, 882 tariff lines will retain a duty;  in 
general the percentage of tariff lines excluded fro m liberalization is proportionally higher the higher 
the MFN rate. 
Table III.3 – Japan 
Tariff elimination under the Agreement by year and duty range 
Schedule of Tariff Liberalization Excluded lines MFN duty 
range No. of 
lines 2006 2011 2012 2013 2015 2016 2021 No. of 
lines % of lines 
in range 
Duty Free 3,717          
<=10 3,944 3,393 101 5 183 2 9 15 236 6.0 
<=20 525 206   34  104 45 136 26.0 
<=30 422 2     65 69 286 67.8 
<=40 24       6 18 75.0 
<=50 14        14 100.0 
> 50 6        6 100.0 
Non ad valorem   263 50 1    25 1 186 70.7 
Total 8,915 3,651 102 5 217 2 203 136 882 9.9 
Source:  WTO Secretariat estimates, base d on data provided by Japan.  WT/REG216/2 
 Page 15 
 
 
  27. Table III.4 shows Japan's liberalization comm itments under the Agreement organized by 
HS Section product categories.  Of the 8,915 tariff lines forming Japan's tariff schedule 3,717 were already duty free on an MFN basis in 2006.  Of the 3,651 tariff lines liberalized upon entry into force of the Agreement, more than half fall under HS Sec tion XI (Textiles) while the others are distributed 
across the other HS Sections with a majority fa lling under HS Section VI (Chemicals).  Of the 
882 lines retaining a duty at the end of the transition period, the vast majority fall under HS Sections I 
to IV.  The average tariff that applies to the excluded lines is 18.3% compared to an overall MFN 
applied average of 4.8% which as indicated in Table III.3 would suggest a greater propensity for 
exclusion from liberalization of prod ucts retaining higher MFN rates. 
Table III.4 
Japan: Tariff elimination under the Agreement, by HS section 
Number of duty-free lines  
HS section and 
description  MFN 
average
% Total 
No of 
lines  MFN 
2006  
2006  
2011  
2012  
2013  
2015  
2016  
2021  
No. of excluded 
lines  
Avg. tariff of 
excluded lines  
I Live animals and animal 
products 8.4 508 109 47 42  25   4 281 13.6 
II Vegetable products 6.1 526 165 139 27  38  34 22 101 20.1 
III Animal or vegetable fats 
and oils 3.8 85 20 21 6    1  37 13.7 
IV Prepared food etc. 16.4 761 77 49 18  61  81 110 365 22.4 
V Minerals 0.5 219 166 34     18  1  
VI Chemical and products 2.3 1,034 402 621 1  1  1  8 14.2 
VII Plastics and rubber 2.4 296 103 178  5  2 8    
VIII Hides and skins 10.4 196 66 3   67  32  28 17.7 
IX Wood and articles 3.4 233 83 121 3      26 6.9 
X Pulp, paper etc. 0.0 172 172          
XI Textile and textile 
articles 6.5 2,063 91 1,964   2    6  
XII Footwear, headgear 16.2 109 6 28   18  28  29 26.0 
XIII Articles of stone 1.1 160 100 59   1      
XIV Precious stones, etc. 1.3 80 58 17 5        
XV Base metals and  
products 0.8 842 603 239         
XVI Machinery 0.1 959 945 14         
XVII Transport equipment 0.1 147 146 1         
XVIII Precision equipment 0.2 294 285 6   3      
XIX Arms and ammunition 6.9 24  24         
XX Misc. manufactured 
articles 1.7 200 113 86   1      
XXI Works of art, etc. 0.0 7 7          
Total 4.8 8,915 3,717 3,651 102 5 217 2 203 136 882 18.3 
Note: Based on the HS 2002 nomenclature;  for tariff lines subject  to TRQs only the out-of-quota duty is included in the tariff -related 
calculations. 
Source:   WTO estimates based on data provided by Japan. 
28. Chart III.1 shows the composition of the 882 tari ff lines which remain subject to duties in 
Japan.  Of the 882 tariff lines, 166 fall under category "R" (notes 1, 4 and 5), hence subject to renegotiation in year four or five as the case ma y be;  1 falls under category "P" (note 3) which 
foresees a tariff reduction to 25% by year six and th ereafter renegotiation;  1 line subject to a TRQ;  
1 mixed category line;  and the remaining 713 fall  under category "X", hence completely excluded 
from the scheduled tariff liberalization (see paragraph 21). 
 
  
 WT/REG216/2 
Page 16  
 
  Chart III.1 
Composition of Japan's Remaining Dutiable Lines  
Japan's
Composition of Remaining Dutiable Lines
Category R (1, 4, 5)
(166)Mixed Category (R&B5)
(1)Excluded 
(713)
TRQs
(1)Category P (3)
(1)
 
Source:  WTO estimates based on data provided by Japan. 
 
(b) Malaysia 
29. Malaysia's tariff elimination under the Agreement is depicted in Table III.5.13   58% of 
Malaysia's tariff lines were already duty-free on an MFN basis in 200614 which corresponded to 
71.2% of imports from Japan for the period 2003- 2005.  At entry into force of the Agreement, 
Malaysia liberalized a further 16.7% of its tariff lines amounting to an add itional 10.2% of imports 
from Japan.  The remaining tariff lines are scheduled to be liberalized in equal annual cuts starting 
from 2008 and ending in 2016 except 2014 when no cuts are scheduled.15  Over this period, the most 
significant tariff liberalization stages – in terms of number of tariff lines – are 2011, 2013 and 2016 
with an additional 4.1%, 12.9% and 5.3% respectiv ely of Malaysia's tariff lines becoming duty-free.  
By 2016, 98.9% of Malaysia's tariff lines will be duty-free corresponding to 99.2% of its imports from 
Japan;  1.1% of tariff lines will retain a duty corresponding to 0.8% of imports from Japan. 
 
 
 
  
                                                     
 
13 For tariff lines subject to TRQs only the out-of-quota duty is included in the tariff-related 
calculations. 
14 Malaysia's tariff is composed of 10,508 tariff lines  at the HS 9-digit level;  99.3% of this tariff is 
ad valorem;  0.3% relates to tariff lines with specific duties;  0.3% relates to compound tariff lines;  and 0.1% 
relates to mixed tariff lines.  For compound and mixed lines, only the ad valorem  component is taken into 
account in the calculation of averages. 
15 Malaysia's does not have any tariff lines falling under category B.15 of Part 1 to Annex I for which 
tariff elimination is scheduled in 2021.  WT/REG216/2 
 Page 17 
 
 
  Table III.5 - Malaysia 
Tariff elimination commitments under the Agreement and corresponding average trade 
Duty phase-out 
period Number 
of lines % of total lines in Malaysia's 
tariff schedule Value of Malaysia's imports 
from Japan (2003-2005) 
in million US$ % of Malaysia's total 
imports from Japan 
2003-2005 
MFN duty-free 
(2006) 6,141 58.0 11,053.4 71.2 
2006 1,771 16.7 1,576.7 10.2 
2008 13 0.1 5.1 0.0 
2009 20 0.2 5.7 0.0 
2010 63 0.6 221.4 1.4 
2011 430 4.1 261.8 1.7 
2012 45 0.4 468.3 3.0 
2013 1,361 12.9 932.4 6.0 
2015 61 0.6 96.9 0.6 
2016 559 5.3 765.9 4.9 
Remain dutiable 121 1.1 126.8 0.8 
Total 10,585 100.0 15,514.5 100.0 
 
Note: Based on the HS 2002 nomenclature. 
 
Source:   WTO estimates based on data provided by Malaysia. 
 
30. The base rates used by Malaysia for implemen ting its tariff liberalization scheme already 
provided for 58% of the tariff or 6,141 tariff lines being duty free on an MFN basis before the entry 
into force of the Agreement.  Of the remaining 4,444 tariff lines, 1,700 held a base rate of up to 10%, 
1,302 a base rate of between 10% and 20%, 1,143 a base rate of between 20% and 30%, 30 a base rate 
of between 30% and 40%, 219 a base rate of between  40% and 50%, 14 a base rate of more than 50%, 
and 36 were lines with non ad valorem  rates.  Table III.6 shows Malaysia tariff elimination under the 
Agreement by year and duty range.  Tariff lines with a base rate of up to 10% are mostly liberalized 
on entry into force of the Agreement;  those with  a base rate of between 10% and 20% are mostly 
liberalized in two stages, upon entry into force and in 2013;  tariff lines with a base rate of 20% and 
30% are progressively liberalized from entry into force of the Agreement with significant reductions 
in 2013 and 2016;  tariff lines with a base rate of between 30% and 40% are mostly liberalized in 
2013 except a few lines on entry into force and in 2016;  liberalization of tariff lines with a base rate 
of between 40% and 50% starts in 2012 with the major elimination occurring in 2016;  as for the tariff 
lines with a base rate of above 50%, most of these are eliminated in 2013.  By the end of the transition 
period, 121 tariff lines will retain a duty of which most have non ad valorem  rates;  for lines with 
ad valorem  tariffs, most have MFN rates in the 40% to 50% range. 
Table III.6 – Malaysia 
Tariff elimination under the Agreement by year and duty range 
Schedule of Tariff Liberalization Excluded lines MFN duty 
range No. of 
lines 2006 2008 2009 2010 2011 2012 2013 2015 2016 No. of 
lines % of lines 
in  range 
Duty Free 6,141            
<=10 1,700 1,182   34 380 8 16 1 36 43 2.5 
<=20 1,302 548    1 11 626 21 89 6 0.4 
<=30 1,143 33 13 20 29 48 16 672 39 253 20 1.7 
<=40 30 8      20  2  0.0 
<=50 219      10 15  177 17 7.8 
> 50 14       12  2  0.0 
Non ad valorem  36     1     35 97.2 
Total 10,585 1,771 13 20 63 430 45 1361 61 559 121 1.1 
 
Source:  WTO Secretariat estimates, based on data provided by Malaysia. 
31. Table III.7 shows Malaysia's liberalization co mmitments under the Agreement organized by 
HS Section product categories.  Of the 10,585 ta riff lines forming Malaysia's tariff schedule 6,141 
were already duty free on an MFN basis in 2006.  Of the 1,771 tariff lines liberalized upon entry into 
force of the Agreement, almost half fall under HS Section XI (Textiles) while the others are WT/REG216/2 
Page 18  
 
  distributed across the other HS Sections with a majority falling under HS Section XV (Base metals) 
and XVI (Machinery).  The next major liberalizati on stage occurs in 2013 and most of the tariff lines 
being liberalized at this stage fall under HS Sections VII (Plastics), X (Pulp of wood), 
XIII (Articles of stone) in addition to Sections  XV and XVI.  A large number of the 121 lines 
retaining a duty at the end of the transition peri od fall under HS Section IV (Prepared food), followed 
by Section XIX (Arms and ammunition), XV, VII and a few others.  The average tariff that applies to 
the excluded lines is 12% compared to an overall MF N applied average of 7.7% which as indicated in 
Table III.3 would suggest a greater propensity for exclusion from liberalization of tariff lines with 
higher MFN tariffs. 
Table III.7 
Malaysia: Tariff elimination under the Agreement, by HS section 
Number of duty-free lines  
HS section and 
description  MFN 
avg. 
% Total 
No of 
lines  MFN 
2006  
2006  
2008  
2009  
2010  
2011  
2012  
2013  
2015  
2016  
No. of excluded 
lines 
Avg. tariff of 
excluded lines 
I Live animals and animal 
products 1.6 314 257 16    27  2  8 4  
II Vegetable products 2.7 362 259 74    20  8  1   
III Animal or vegetable 
fats and oils 2.5 168 100 54    11  3     
IV Prepared food etc. 5.3 459 200 40    108  60   51 5.9 
V Minerals 1.6 204 179 15      8  1 1 20.0 
VI Chemical and 
products 2.2 1,231 1,038 55   9 21 2 30 17 50 9 5.0 
VII Plastics and rubber 14.7 658 192 57  20  23 12 101 44 195 14 21.1 
VIII Hides and skins 5.4 103 66 10   3   24     
IX Wood and articles 1.3 1,990 1,860 83      47     
X Pulp, paper etc. 9.8 346 132 16    70  124  3 1 10.0 
XI Textile and textile 
articles 12.1 1,122 247 872      3     
XII Footwear, headgear 15.1 88 26 7    1  47  7   
XIII Articles of stone 20.3 192 48 14    9  100  21   
XIV Precious stones, etc. 2.7 62 42 8    11  1     
XV Base metals and  
products 18.3 1,042 316 146   15 23 28 323  175 16 10.0 
XVI Machinery 7.0 1,214 711 166   7 19 3 300  7 1 20.0 
XVII Transport 
equipment 17.9 476 112 73 13  29 75  83  91   
XVIII Precision 
equipment 0.8 284 260 16    2  6     
XIX Arms and 
ammunition 13.7 27 3          24 15.4 
XX Misc. manufactured 
articles 10.0 233 87 46    10  90     
XXI Works of art, etc. 4.5 10 6 3      1     
Total 7.7 10,585 6,141 1,771 13 20 63 430 45 1,361 61 559 121 12.0 
 
Note: Based on the HS 2002 nomenclature. 
 
Source:   WTO estimates based on data provided by Malaysia. 
 
32. Chart III.2 shows the composition of the 121 tari ff lines which remain subject to duties in 
Malaysia.  Of the 121 tariff lines, 16 fall under cat egory "P" (notes 5, 13) which foresee the two 
following situations: a) tariff reductions to a rate not inferior to 10% by year 16;  and b) duty-free 
provided that the originating go od is imported for use in specific manufacturing sectors or imported 
for users which are designated as Licensed Manufacturi ng Warehouses or in Free Zones.  Nine tariff 
lines fall under category "P" (note 3) which pr ovides for tariff reductions in 11 equal annual 
instalments to a rate of 5%;  two tariff lines fa ll under category "P" (note 2) which is based on the 
same principle as note 3 except that the threshold of the final tariff is to a rate of 20%;  one tariff line  WT/REG216/2 
 Page 19 
 
 
  falls under category "P" (note 4) which provides for th e tariff rate to be set at 10%;  the remaining 
93 tariff lines fall under category "X", hence are completely excluded from the scheduled tariff liberalization (see paragraph 21). 
Chart III.2 
Composition of Malaysia's Remaining Dutiable Lines 
Malaysia's
Breakdown of Remaining Dutiable Lines
Category P (4)
(1)Category P (5, 13)
(16)Excluded 
(93)
Category P (3)
(9)Category P (2) 
(2)
(1 %)
 
Source:  WTO estimates based on data provided by Malaysia. 
 
B. RULES OF ORIGIN  
33. Disciplines regarding rules of origin and custom s procedures are set out in Chapters 3 and 4 
respectively.  Article 27 contains definitions relating to rules of origin while Articles 28 to 38 contain 
the substantive rules;  the product specific rules of origin are contained in Annex 2.  Certificate of 
origin and the procedures designed to administer and enforce the rules of origin are set out in Articles 
39 to 50 of Chapter 3;  these are complemented  by Annex 3 which sets out the minimum data 
requirement for the certificate of origin; and an  Agreement between Japan and Malaysia on the 
operational procedures for the implementation of the rules of origin by thei r respective customs and 
other competent government authorities.  Customs procedures and cooperation on customs matters are 
addressed in Articles 51 to 58 of Chapter 4.   
34. The general requirements for a good to be c onsidered an originating good of a Party 
(Article 28.1) are that it is:  
(a) wholly obtained or produced entirely in the territory of the Party16;   
(b) produced entirely in the Party exclusively fro m originating materials of the Party;  or 
                                                      
16 This concept applies to goods that are born, raised, entirely grown, harvested, picked, or gathered, 
fished or mined in the territory of a Party; goods of sea-fishing and other goods taken by the vessels of the Party 
from the sea outside the other Party or goods produced on board factory ships of the Party outside the other 
Party;  goods lawfully taken from the seabed or subso il beneath the seabed outside the Party;  and recovered 
goods and waste and scrap derived from production in the territory of the Parties.  The detailed requirement are 
contained in Article 28.2. WT/REG216/2 
Page 20  
 
  (c) produced entirely in the Party using non-originating materials which satisfy the 
product specific rules of Annex 2, and all other applicable requirements of Chapter 3. 
35. The Agreement does not provide for a single rule of origin;  rather it lists (Annex 2) product 
specific rules for goods incorporating non-originating materials to be considered as originating (see 
Table AII.1 for a synopsis of the detailed rules). 
36. The specific rules are detailed at the HS Subhead ing (6-digit) level.  The change in tariff 
classification (CTC) criteria can be considered the regi me-wide rule of origin since it is applied either 
as a standalone rule or in combination with other criteria.  The CTC criterion may require a change of 
HS Chapter (CC);  HS Heading (CTH);  or HS Su bheading (CTSH).  The CTC rule is often qualified 
by a requirement that the non-originating material be obtained in the territory of an ASEAN member 
state (the rule is listed as "CTC*" in Table AII. 1).  The Agreement also makes frequent use of the 
regional value content (RVC) test which establishe s the minimum value of originating materials 
needed in the final product for it to be granted or iginating status, expressed as a percentage of the 
overall FOB value of the product.  In most cases, th e RVC test is an alternative rule to the CTC 
criterion;  in a few other cases th e RVC test either supplements the CTC criterion or figures as a 
standalone rule.  The standard RVC is 40%, except for a few headings under HS Chapter 87 (vehicles 
other than railway) where the RVC is set at 50% and 60%, and two subheadings under HS Chapter 22 
(beverages, spirits and vinegar) where the RVC is se t at 50%.  For certain HS Chapters (50 - 55 and 
60) under HS Section XI (Textiles) a technical  condition may be applied together with the 
CTC criterion;  this requires that the dyeing or printing process is accompanied by two or more of the 48 different operations identified in Annex 2 and that certain speci fied working processes are carried 
out entirely in the territory of the Parties or in a non-Party which is a member country of ASEAN. 
37. Article 29 provides for cumulation of materials among the Parties;  it does not includes 
cumulation of production processes undertaken on goods and materials originating in the Parties and 
conducted in any one or more of th e Parties.  Article 30 establishes a de minimis  principle whereby a 
good that does not conform to a CTC, pursuant to th e provisions of Annex 2, will be considered as 
originating provided that the value of all the non-or iginating materials used in its production does not 
exceed specific percentages of value, weight or volume as set out in Annex 2.  For goods in HS 
Chapters 28-49 and 64-97, the applicable percentage  is 10% of the value of the good;  and for goods 
in HS Chapters 50-63, it is 7% of the weight of the good.  Article 31 lists the minimal operations or 
processes that do not confer origin such as pr eservation of products, packing and repacking. 
38. Additional rules in Articles 33-38 clarify how certain materials (unassembled or disassembled 
goods;  fungible goods and materials;  indirect ma terials;  accessories, spare parts and tools;  
packaging materials and containers for retail sale;  packing materials and containers for shipment) are 
to be treated/valued when determining the origin of  goods.  Article 32 sets out the rule applicable to 
the transit of goods through non-parties. 
39. The Parties agree to the establishment of a S ub-Committee on Rules of origin responsible for 
the implementation and operation of the ch apter on rules of origin (Article 49).  WT/REG216/2 
 Page 21 
 
 
  Box III.1  Rules of Origin:  Basic Features at a Glance 
• No single rule of origin methodology 
• Origin criteria: 
− Wholly obtained or produced entirely in the territory of a Country 
− Produced entirely in the territory of a Country exclusively from originating materials 
 Product specific rules: 
− In general, CTC at the chapter, heading, or subheading level 
− For some products the CTC rule and technical rules often allow the involvement of a third State 
which is a member country of ASEAN 
− The RVC test figures as a standalone rule, as an alternative rule to CTC or in addition to CTC; the 
standard RVC is 40% 
• Bilateral cumulation. 
• De Minimis principle:  value of non-originating materials can represent a maximum of 10% of the value 
of the good (HS Chapters 28-49 and 64-97);  7% of the weight of the good (HS Chapters 50 through 63) 
 
C. EXPORT DUTIES AND CHARGES , AND QUANTITATIVE RESTRICTIONS  
40. The Parties agree not to introduce or maintain export subsidies on any agricultural good listed 
in Annex 1 to the WTO Agreemen t on Agriculture (Article 21). 
41. Neither Party may introduce or maintain any non-tariff measures on the export or sale for 
export of any good destined for the other Party whic h are inconsistent with its obligations under the 
WTO Agreement (Article 22).  There are no provisi ons in the Agreement concerning export duties on 
goods.  
D. REGULATORY PROVISION S ON TRADE IN GOODS  
1. Standards 
(a) Technical Barriers to Trade 
42. Chapter 5 sets out the provisions applying to t echnical regulations, standards and conformity 
assessment procedures as defined in the Agreement on Technical Barriers to Trade in Annex IA of the 
WTO Agreement (TBT Agreement).  The aim of the Chapter is to facilitate trade among the Parties 
by ensuring that technical regulations do not create unnecessary obstacles to trade and through the negotiation of possible mutual recognition arrangement s;  to this end the Parties enhance cooperation 
and consult on such matters (Article 59).
17  In particular, the Parties endeavour to work, where 
possible, towards the harmonization of their respec tive technical regulations based on international 
standards, recommendations and guidelines and to  give positive consideration to accepting as 
equivalent technical regulations of  the other Party (Article 61) and accepting the results of each other's 
conformity assessment procedures (Article 62);  a Pa rty, upon request by the other Party and where 
appropriate, gives the reasons for not accepting as equi valent to its own a technical regulation and/or 
the results of a conformity assessment procedure of the other Party (Articles 61.3 and 62.2 respectively).  With respect to mutual recognitio n arrangements, Article 63 provides that upon request 
by either one of the Parties, they will enter into negotiations for possible mutual recognition 
arrangements on the results of their conformity asse ssment procedures in the se ctors they both agree 
upon (Article 63). 
 
                                                     
 
17 The Parties reaffirm their rights and obligations relating to technical regulations, standards and 
conformity assessment procedures under the WTO TBT Agreement (Article 60). WT/REG216/2 
Page 22  
 
  43. For the purposes of this Chapter, the Parti es have established a Sub-Committee on Technical 
Regulations, Standards and Confor mity Assessment Procedures for the effective implementation and 
operation of the Chapter (Article 65).  The Parties also agree to develop cooperation in technical 
regulations, standards and conformity assessment pro cedures in areas such as research and technical 
assistance (Article 64) and to designate enquiry po ints to deal with enquiries from the other Party 
(Article 66).  The dispute settlement procedures provided for in Chapter 13 do not apply to this 
Chapter (Article 67). 
(b) Sanitary and Phytosanitary Measures 
44. Chapter 6 sets out the provisions applying to san itary and phytosanitary (SPS) measures.  The 
Chapter reaffirms the Parties' rights and oblig ations under the WTO Agreement on Sanitary and 
Phytosanitary Measures (Article 69).  For the purposes of this Chapter, the Parties have established a 
Sub-Committee on Sanitary and Phytosanitary M easures for its effective implementation and 
operation (Article 70).  The functions of the Sub- Committee include the exchange of information on 
SPS incidents in the Parties and non-Parties, as well  as the modification or introduction of SPS-related 
regulations and standards by the Parties, shar ing information on potential SPS risks, conducting 
science-based consultations to identify and address sp ecific issues and other functions which may be 
delegated by the Joint Committee, and if necessary,  establishing ad hoc technical working groups as 
subsidiary bodies.  The Sub-Committee also serves as a forum for cooperation between the Parties on 
SPS measures including capacity buildi ng, technical assistance and exchange of experts.  Article 71 
requires each Party to designate an enquiry point to deal with enquiries from the other Party.  The dispute settlement procedures provided for in Chapte r 13 do not apply to this Chapter (Article 72). 
2. Safeguard mechanisms 
45. Article 23 lists the types of safeguard me asures permissible under the Agreement and 
outlines the rules and procedures for administering su ch measures;  it provides for global safeguards, 
bilateral safeguard measures, and provisional measures.
18  Article 24 provides for restrictions to 
safeguard the balance of payments.  
(a) Global safeguard actions 
46. The Parties retain the right to apply a safegua rd measure in accordance with Article XIX of 
GATT 1994 and the WTO Agreement on Safeguards, or Article 5 of the WTO Agreement on 
Agriculture (Article 23.6)  According to the Partie s imports of originating goods from the other Party 
would be included in the application of a safeg uard measure pursuant to Article XXIX of the 
GATT 1994 and the WTO Agreements on Safeguards. 
(b) Bilateral safeguard actions 
47. For trade between the Parties Article 23 provid es for the application of bilateral safeguard 
measures on originating goods;  such measures ma y be applied at any time under the Agreement.   The 
imposition of safeguard measures is allowed if an originating good is imported in such increased 
quantities, either in absolute terms or relative to  domestic production, and unde r such conditions that 
the imports constitute a substantial cau se of serious injury or threat thereof to the domestic industry of 
the importing Party.19  In such cases, the importing Party may (a)  suspend the further reduction of 
                                                      
18 The Parties agree to review the provisions of Artic le 23, if necessary, after ten years of the date of 
entry into force of the Agreement. 
19 Serious injury is defined in Article 16 as "a significant overall impairment in the position of a 
domestic industry" while threat of serious injury is defined as "serious injury that, on the basis of facts and not 
merely on allegation, conjecture or remo te possibility, is clearly imminent".  WT/REG216/2 
 Page 23 
 
 
  customs duty on the originating good;  or (b) increase the duty rate to the applied MFN rate in effect 
when the safeguard action is taken or to the MFN ra te preceding entry into force, whichever is lower 
(Article 23.1).   
48. The measure may only be applied following an  investigation by the Party's competent 
authorities in accordance with the same procedures as in Articles 3, and 4.2 of the WTO Agreement 
on Safeguards and to the minimum extent necessary to  prevent or remedy the serious injury to a 
domestic industry and to facilitate adjustment.  Prior to the application of such a measure, a Party is 
required to inform the other Party in writing of th e initiation of an investigation and the decision to 
apply or extend a bilateral safeguard measure;  that  Party must also provide adequate opportunity for 
prior consultations with the other Party with a vi ew to reviewing the proposed measure and reaching 
an agreement on the level of compensation.  The maximum duration of a measure is four years;  this 
can in exceptional circumstances be extended to a to tal maximum period of five years.  The measure 
must not be applied to goods which have already b een subject to a bilateral safeguard measure, for a 
period of time equal to the duration of the previ ous measure or one year, whichever is longer. 
49. The Party proposing to apply a bilateral safeguard  measure has to provide to the other Party 
mutually agreed adequate means of trade compensation at a level substantially equivalent to the 
safeguard.  If the Parties are unable to agree on  the compensation within 30 days following 
commencement of the consultations the Party against who the measure is taken will be free to suspend 
the application of the duty concessions under the Agre ement to a level substan tially equivalent to the 
bilateral safeguard measure.  The right of suspension  cannot be exercised during the first 18 months of 
effect of the bilateral safeguard measure provided that such measure conforms to the provisions of 
Article 23 and has been taken as a result of an absolu te increase in imports.  The right of suspension is 
limited to what is necessary to ach ieve the substantially equivalent effects of the bilateral safeguard 
measure. 
Table III.8 
Synopsis of JMEPA bilateral safeguard measures  
Description of the bilateral safeguard measure 
Trigger • Rise in imports in absolute term s or relative to domestic production 
Criteria  • Substantial cause of serious injury or threat thereof to a domestic industry 
Measures • Suspension of further duty reduction; 
• Increase in duty rate to MFN rate or MFN rate preceding en try into force, whichever is  lower - (the measure cannot 
be applied to the quota quantities granted under preferential TRQs) 
Timing • The maximum duration of a measure is four  years (five in exceptional circumstances) 
• The maximum duration of a provisional measure is 200 days 
Conditions 
or 
limitations  • Written notice of: a) institution of a proceeding;  and b) decision to apply or extend a measure 
• Provision of adequate opportunity for prior consulta tions (except in the case of provisional measures) 
• A measure may only be applied after an investigation ha s been carried out (except in the case of provisional 
measures) – an investigation must be co mpleted within one year of its initiation 
• No re-imposition of safeguard measures on the same good for a period of time equal to the duration of the previous 
measure or one year, whichever is longer 
• Requirement of progressive liberaliza tion for measures exceeding one year 
• Requirement to provide compensation 
• Retaliation is permitted in the form of  suspension of duty concessions substa ntially equivalent to the safeguard 
measure where the Parties fail to agree on the compensation 
 
(c) Provisional bilateral safeguard measures 
50. Provisional safeguard measures (Article 23.9) may be taken in critical circumstances where 
delay would cause damage which would be difficult  to repair.  The imposition of such a measure 
requires a written notice and a preliminary determina tion that there is clear evidence that increased 
imports of an originating good have caused or are threatening to cause serious injury to a domestic 
industry.  The duration of a provisional measure ca nnot exceed 200 days;  where during this time the 
investigation fails to determine that the increased imports from the other Part y constitute a substantial WT/REG216/2 
Page 24  
 
  cause of serious injury, or threat  thereof, the Party applying the measure will have to refund any 
additional duties collected as a result of the measure. 
(d) Restriction to safeguard the balance of payments 
51. Article 24 authorizes the Parties to take measures to safeguard the balance of payments in 
accordance with the conditions established under Artic le XII and Section B of Article XVIII of the 
GATT 1994, and the Understanding on the Bala nce-of -Payments Provisions of GATT 1994. 
3. Anti-dumping and countervailing measures 
52. The Agreement contains no provision on anti-dumping and countervailing measures.   
4. Subsidies and State-aid 
53. The Parties agree not to introduce or maintain export subsidies on any agricultural good listed 
in Annex 1 to the WTO Agreemen t on Agriculture (Article 21). 
5. Customs-related procedures 
54. Customs procedures related to rules of origin ar e detailed in Articles 39 to 50 of Chapter 3.  
These lay out disciplines for documentation requiremen ts, advance rulings, verification of origin and 
decision on origin.  A claim for preferential treatment must be supported by a certificate of origin 
(Article 39.1) issued by the competent government al authority of the exporting country on written 
request by the exporter (Article 40.1);
20  the certificate will not be required by the importing Party 
where the customs value of the goods does not ex ceed US$1,000 or such higher amount as it may 
establish.  Where in doubt as to the authenticity or  accuracy of a certificate or origin, the importing 
Party may request additional information from the exporting Party on the origin of the good; the 
competent governmental authority of the exporting Part y has three months to reply (Article 43).  If not 
satisfied with the reply, the importing Party may requ est in writing a verification visit at the premises 
of the exporter or producer;  the exporting Party has 30 days to accept or refuse such a visit (Article 44). 
55. The importing Party may deny preferential treatment where:  the goods do not meet the 
requirements of Chapter 3 (Rules of Origin);  th e exporting Party fails to provide the information 
requested or obtained in a verification visit w ithin the timeframes set out in Articles 43 and 44 
respectively;  the exporting Party refuses to conduct a verification visit or fails to reply to such a 
request within the timeframe set out in Article  44; and the information provided pursuant to 
Articles 43 and 44 is not sufficient to prove the or igin of the good (Article 45).  Other provisions 
include the requirement by the Parties to preserve the confidentiality of the information obtained 
pursuant to Chapter 3 (Article 46) and to provide penalties and measures agai nst false declarations 
(Article 47).  A Sub-Committee on Rules of Orig in is established for the implementation and 
operation of Chapter 3 (Article 49). 
56. Chapter 4 of the Agreement deals with customs pr ocedures.  It aims at ensuring that customs 
procedures are applied by the Parties in a predictable,  consistent and transparent manner;  to this end 
the Parties are required to facilitate the customs cl earance of goods through the use of information and 
communications technology;  simplify customs procedures and harmonize them to the extent possible 
with relevant international sta ndards;  and promote cooperation be tween their relevant authorities 
                                                     
 
20 The certificate of origin must contain the minimum data requirement as set out in Annex 3 and 
conform to the specimen contained in Appendix 1-A of the Operational Procedures agreed by the Parties in 
accordance to Article 50.  WT/REG216/2 
 Page 25 
 
 
  (Article 54).  They also agree to continue to f acilitate the procedures for the temporary admission of 
goods in accordance with the ATA Convention (Article 55);21  to cooperate on the exchange of 
information (Article 56);22  and to promote capacity building in customs matters (Article 57).  A 
Sub-Committee on Customs Procedures is established for the effective implementation and operation of Chapter 4 (Article 58). 
IV. PROVISIONS ON TRADE IN SERVICES AND INVESTMENTS 
A. S
COPE AND DEFINITIONS  
57. Chapter 8 sets out the provisions governing trade in services among the Parties while 
Chapter 7 sets out the provisions governing invest ments.  Chapter 8 applies to measures affecting 
trade in services adopted by central or local gove rnments and authorities of the Parties; and non-
governmental bodies in the exercise of powers delegate d by central or local government or authorities.  
It also applies to the supply of financial services in accordance with the provisions listed in Annex 5 
to the Agreement.  The provisions of Chapter 8 do  not apply to: measures affecting air traffic rights;23  
cabotage in maritime transport services;  subsidies provided by a Party or a state enterprise;  measures affecting the movement of natural persons; meas ures affecting natural persons of a Party seeking 
access to the employment market of the other Part y or measures regarding na tionality, residence or 
employment on a permanent basis.  Articles 96-97 and 101 dealing respectively with market access, 
national and MFN treatment, do not apply to any measures by a Party with respect to government 
procurement (Article 94.3).  In addition, the Agr eement contains some general exceptions related to 
trade in services (See paragraph 101).  Chapter 7 applies to measures adopted or maintained by a 
Party relating to investors of the Parties and investments by investors of one Party in the other Party. 
58. General definitions on trade in services and investments are contained in Article 95 and 
Article 74 respectively;  definitions pertaining to  the supply of financial services are contained in 
Section 1 to Annex 5.  Trade in services is defined as the supply of a service through the four modes of delivery provided by the GATS.
24  A service supplier of a Party is defined as any 'natural person of 
the other Country' or 'juridical person of the other Country' that supplies a service.  A natural person 
of a Party is defined as a national of a Party25 while a juridical person of a Party means a legal entity 
constituted or organized under the law of a Party an d engaged in substantive business operations or, in 
the case of the supply of a service through commercia l presence, a legal entity owned or controlled by 
a natural or juridical person of a Party.  Investme nt is defined in Article 74 as every kind of asset 
owned or controlled by an investor of a Party;  the latter is understood to be a natural person or an 
enterprise of a Party, except branch  of an enterprise of a third country located in the Party.  With 
respect to financial services, the definition in A nnex 5 includes all insuranc e and insurance-related 
services, and all banking and other financ ial services (excluding insurance).  
59. The liberalization of trade in services provided in  Chapter 8 follows a "positive-list" approach 
whereby the Parties accord to each  other's services suppliers, national treatment and market access in 
the sectors and sub-sectors listed in their schedules of specific commitments (Annex 6) and subject to 
the conditions and limitations listed therein.  In th e case of investments, the Parties have adopted a 
                                                      
21 Customs Convention on the ATA Carnet for the Temporary Admission of Goods. 
22 The Implementing Agreement sets out in Chapter 2 the details concerning the cooperation and 
exchange of information referred to in Article 56.  Th is includes cooperation between their respective customs 
authorities in areas such a mutual assistance, information and communication technology, risk management, 
enforcement against illicit trafficking, intellectual pr operty rights and exchange of information.   
23 Except for aircraft repair and maintenance services; selling and marketing of air transport services; 
and computer reservation system services. 
24 Article 95.v reproduces the GATS modes of supply. 
25 With respect to Malaysia, the definition also includes a person who has the right of permanent 
residence in Malaysia. WT/REG216/2 
Page 26  
 
  "negative-list approach" whereby national and MF N treatment and the prohibition of performance 
requirements apply to all sectors except for the non- conforming measures existing on the date of entry 
into force of the Agreement and to the sectors,  sub-sectors or activities for which the Parties may 
adopt new or maintain existing me asures subsequent to the Agreement's entry into force (Annex 4). 
B. D
ENIAL OF BENEFITS  
60. Under Articles 91 and 109, a Party may deny the be nefits of Chapters 7 and 8 to an investor 
or service supplier of the other Party if that inv estor/service supplier is an enterprise or juridical 
person "owned" or "controlled" by investors/persons  of a non-party, and the denying Party does not 
maintain diplomatic relations with  the non-party or adopts or maintains measures with respect to the 
non-party that prohibit transactions with the enterpri se or juridical person that would be violated or 
circumvented if the benefits of Ch apters 7 and 8 were accorded to the enterprise or juridical person.  
Further, subject to prior notification and consultation,  a Party may deny the benefits of Chapter 7 to an 
investor of the other Party that is an enterprise owned or controlled by investors of a non-Party which has no substantial business activities in the Party under whose laws it is constituted or organized.
26 
C. GENERAL PROVISIONS ON TRADE IN  SERVICES AND INVESTMENTS  
1. Market access 
61. Article 96 prohibits the Parties from adopting or maintaining in the sectors where they have 
undertaken market-access co mmitments any of the six types of limitations listed in Article XVI of the 
GATS unless otherwise specified in its Schedule of Specific Commitments in Annex 6. 
2. National treatment and MFN 
62. Article 97 provides for the application of nationa l treatment to the sectors listed by the Parties 
in Annex 6.  Accordingly, and subject to the cond itions and qualifications set  out therein, each Party 
accords to services and service supp liers of the other Party treatment no less favourable than that it 
accords to its own services and service suppliers. 
63. Article 101, on the other hand, provides for an  MFN principle whereby each Party accords to 
services and service suppliers of another Party treat ment no less favourable than that it accords to like 
services and service suppliers of a non-Party.27  The MFN principle does not apply to any measure by 
a Party with respect to the sectors, sub-sectors and activities listed by the Parties in Annex 7;28  
nevertheless, should a Party schedule commitments w ith respect to Annex 7 as part of an agreement 
on trade in services with a non-party, it will consider  according to the other Party, upon request by the 
latter, treatment no less favourable than that  accorded to that non-party (Article 101.3). 
 
                                                      
26 An enterprise or juridical person is "owned" if 50% of its equity interest is beneficially owned by the 
person or investor, while an enterprise or juridical person is "controlled" by a person or investor if the person or 
investor has the power to name a majority of its directors or otherwise to legally direct its actions (Articles 74(a) 
and 95(f)). 
27 Unlike Article 96, MFN treatment is not limited to the sectors inscribed in Annex 6. 
28 For Japan such exemptions apply in the following sectors:  maritime freight forwarding services;  
international shipping services;  energy services;  and fisheries related services.  For Malaysia MFN exemptions 
apply in all sectors except certain su b-sectors in rental and leasing services; maintenance and repair of 
equipment;  and maintenance and repair of office equipment.  WT/REG216/2 
 Page 27 
 
 
  64. As regards the Chapter on Investment, Articles 75 and 76 provide for the Parties to accord 
national29and MFN treatment respectively, in like circumst ances to investors of the other Party and to 
their investments, with respect to investment  activities except for national treatment to the 
establishment, acquisition and expansion of portfolio investments.30 
65. Article 79 prohibits performance requirements in relation to investments by means of 
incorporating into the Agreement mutatis mutandis  the Annex to the WTO Agreement on 
Trade-related Investment Measures (TRIMS Agre ement).  The Parties agree to enter into 
consultations at the earliest possible time and no later than five years after the entry into force of the 
Agreement to review issues pertaining to th e prohibition of performance requirements.   
3. Movement of natural persons 
66. Chapters 7 and 8 contain several provisions d ealing with the movement of natural persons, 
particularly, the facilitation of movement of investor s of the Parties (Article 86).  Chapter 8 does not 
apply to measures affecting natural persons seeking access to the employment market of a Party, or 
measures regarding nationality or citizenship, or residence or employment on a permanent basis 
(Article 94.2(d));  furthermore, it does not prev ent a Party from applying measures to regulate the 
entry and temporary stay of natural persons from the other Party, including measures necessary to 
protect the integrity of, and to ensure the orderl y movement of natural persons across its borders 
provided that they are not applied in a manner so as  to nullify or impair the benefits accruing to the 
other Party under the terms of a specific commitment (Article 94.5).31 
67. The Parties grant entry and temporary stay to each others' natural persons in accordance with 
the specific commitments scheduled in Annex 6 and subject to the conditions and limitations listed 
therein.32  The categories of natural persons covered by Annex 6 are, for Japan:   short-term business 
visitors;  intra-corporate transferees;  natura l persons from Malaysia who engage in professional 
services;  and natural persons from Malaysia who engage in supplying services requiring advanced 
technology or knowledge on the basis of a personal c ontract with a public or private organization in 
Japan.  In the case of Malaysia, the categories covere d are intra-corporate transferees and other natural 
persons falling under the following categories:  specialists or experts; professionals; and business 
visitors.  The Parties cannot impose or maintain qua ntitative restrictions on these categories of persons 
unless otherwise specified in Annex 6.  Those seeking entry and temporary stay may be required to obtain a visa and must comply with the immigra tion laws and regulations of the other Party.
33 
68. The period that persons in these categories may stay in the other Party is summarized in 
Table IV.1 while Table IV.2 provides recent data on the movement of natural persons to Japan.  
 
                                                      
29 The provision of national treatment does not apply to the establishment, acquisition and expansion of 
portfolio investments. 
30 'Investment activities' includes the establishment, acquisition, expansion, management, operation, 
maintenance, use, possession, liquidation, sale, or  other disposition of investments (Article 75). 
31 The sole fact of requiring a visa for natural persons of a certain nationality or citizenship and not for 
those of others is not to be regarded as nullifying or impairing benefits under a specific commitment (Note to Article 94.5). 
32 Natural person of a Party means a natural person who resides in the Party and who under the law of 
the Party is a national of the Party or, in the case of Malaysia, has the right of permanent residence in Malaysia (Article 95(k)). 
33  In the case of Japan, for th e requirements and procedures based on the Immigration Control and 
Refugee Recognition Act and relevant regulations, re fer to the following URL address:  http://www.immi-
moj.go.jp/English/inde x.html;  see also http://www. mofa.go.jp/info/visit/visa/inde x.html.  In the case of 
Malaysia, see http://www.imi.gov.my.   WT/REG216/2 
Page 28  
 
  Table IV.1 
Entry and temporary stay of natural person under the JMEPA 
Japan Malaysia 
Category Initial period of 
entry and stay Extension Initial period of 
entry and stay Extension 
Business visitors Not exceeding 
90 days Yes, but no indication of 
the extension criteria  90 days Yes, but no indication of 
the extension criteria  
Intra-corporate transferees Not exceeding 
three years  Yes, but no indication of 
the extension criteria  One year Total period of stay may 
not exceed five years 
Natural persons who engage in 
professional services Not exceeding 
three years  Yes, but no indication of 
the extension criteria  Not applicable Not applicable 
Natural persons engaged in 
supplying services requiring 
advanced technology or knowledge 
on the basis of a personal contract with a public or private 
organization in the other Party
a Not exceeding 
three years  Yes, but no indication of 
the extension criteria  Not applicable Not applicable 
Other professional services Not applicable Not appli cable Total period of stay may not exceed five years 
 
a  Applies to Malaysian natural persons e ngaged in activities which require advanced  technology or knowledge pertinent to 
the physical sciences, engineering or ot her natural sciences;  or activities whic h require knowledge at an advanced level 
pertinent to human science including jurisprudence, economic s, business manageme nt and accounting, or which require 
ideas and sensitivity based on the culture of a country other than Japan. 
Source : Annex 6 of the Agreement. 
Table IV.2 
Movement of Malaysian natural persons to Japan 
Categories 
Year Intra-corporate 
transferees Service sellers/ persons responsible for 
setting up commercial presence Other categories of relevance in the 
context of the agreement Total 
2003 40 23,023 3 23,066 
2004 33 24,764 5 24,802 
2005 47 27,129 4 27,180 
2006 83 28,314 11 28,408 
Source: WTO Secretariat, based on data provided by Japan. 
 
69. With respect to investments, Article 86 seeks to facilitate the movement of investors by 
requiring the Parties to: a) grant entry, temporary st ay and authorisation to work to investors, and 
executives, managers and members of the board of dir ectors of an enterprise from the other Party, for 
the purposes of investments in the former Party whic h commit a substantial amount of capital or other 
resources;34  and b) establish and make publicly availa ble the requirements and application procedures 
for a renewal of the period of temporary stay, a chan ge of status or the issuance of a work permit for a 
natural person from the other Party w ho has been granted entry and temporary stay with respect to an 
investment. 
D. LIBERALIZATION COMMITMENTS ON TRADE IN SERVICES  
70. The schedules of specific commitments are contained in Annex 6, part 1 for Japan and part 2 
for Malaysia.  Each schedule specifies the terms,  limitations and conditions for market access;  
conditions and qualifi cations for national treatment;  undertaki ngs relating to additional commitments;  
                                                      
34 This provision is subject to the Parties' immigra tion laws and regulations relating to entry, stay and 
authorisation to work.  WT/REG216/2 
 Page 29 
 
 
  and where appropriate, the time-frame for implem entation of such commitments (Article 99).35  For 
some of the sectors or sub-sectors in which the Parties have taken specific commitments in Annex 6 and which are indicated with "SS", the Parties'  specified terms, limitations, conditions and 
qualifications with respect to market access or national treatment are limited to those based on existing non-conforming measures, which are in eff ect on the date of entry into force of this 
Agreement.  The majority of sectors and sub-sectors in Japan's schedule are subject to this provision 
while none are in the case of Malaysia. 
71. Under Article 98, the Parties may negotiate commitments in measures affecting trade in 
services not subject to scheduling under market access and national treatment provisions, including those regarding qualifications, standards or licensing matters. 
72. Annex 7 provides supplementary provisions on fi nancial services.  It applies to measures 
affecting the supply of financial ser vices in the four modes of supply of the GATS.  Financial services 
are defined to include all insurance and insurance -related services, and all ba nking and other financial 
services (excluding insurance).  The Annex's pr ovisions on domestic regulation (Section 2) and 
recognition (Section 3) are in line with the rele vant paragraphs in th e GATS Annex on Financial 
Services.  Section 5 requires the Parties to examin e applications by financial services suppliers from 
the other Party to offer any new financial service.
36 The provision of such services is subject to 
approval, on a non-discriminatory basis, by the examining Party.   Section 6 of the Annex provides for 
the establishment of a working group on financ ial services under the Sub-Committee on Trade in 
Services. 
1. Japan 
(a) Horizontal commitments / exceptions 
73. In modes 1-3, Japan does not inscribe any hor izontal exception while in its GATS schedule 
there is a national treatment limitation with regard to  research and development subsidies in mode 3.  
Subsidies, in general, are out of the scope of Chapter 8 (Article 94.2(c)).  Japan's horizontal 
commitments in mode 4 in its GATS schedule are replicated and expanded upon in the Agreement. 
(b) Sector specific commitments / exceptions 
74. For business services, under the Agreement Japan has liberalized mode 2 and the recognition 
criteria for legal advisory services on law of juri sdiction, and added commitments for other legal 
services suppliers including judicial and administra tive scriveners, certified social insurance and 
labour consultants and land and house surveyors.  Japan has added a number of new commitments 
including urban planning and landscape architectural  services, medical and dental services, veterinary 
services, services provided by midwives, nurses and para-medical personnel, services provided by 
physiotherapists, research and development servi ces, rental and leasing services without operators, 
and several other business services.  In addition,  Japan has liberalized mode 4 for a number of 
sub-sectors in business services compared to its GATS schedule. 
75. In communications services, Japan has fully liberalized courier services subject to 
permission/registration requirements for related modes of transport services.  In telecommunications 
services, Japan has increased the limit on foreig n capital participation in Nippon Telegraph and 
                                                      
35 The services sector description is based on the WTO Services Sectoral Classification List 
(see WTO Document MTN.GNS/W/120) as well as the UN's Provisional Central Production Classification 
(CPC). 
36 The term "new financial services" include services related to existing and new products or services, 
or the manner in which such produ cts or services are delivered. WT/REG216/2 
Page 30  
 
  Telephone to one-third (up from a fifth in its GA TS schedule), and incorporates and expands upon the 
reference paper of the GATS by adding on an ti-competitive practices and through additional 
requirements in connection with the reference inte rconnection offer.  It has added commitments in 
telegraph services and under audiovisual services, it has added  radio, television and transmission 
services. 
76. In construction services, Japan has liberalized  services related to mining except that in 
modes 3 and 4, services requiring mining rights or lease must be supplied by a Japanese national or juridical person established under Japanese law;
37  commercial presence is required under mode 4. 
77. In distribution services (involving commission agent, wholesale trade, retailing and 
franchising services), Japan has liberalized services related to rice, tobacco, salt, petroleum and 
petroleum products, alcoholic beverages, services su pplied at public wholesale market, retail sales of 
motor fuel, and wholesale trade and retailing services of steam and hot water.  In education services 
Japan has added commitments in primary education and other education services; and it has liberalized mode 4 in higher education services, and all modes in adult e ducation services and other 
education services.  It has liberalized mode 4 in a number of sub-sectors of environmental services as 
well as mode 3 in refuse disposal services. 
78. In financial services, Japan has incorporated the Understanding on Commitments in Financial 
Services under the GATS into its schedule under the Agreement.  Additionally, under insurance and 
insurance-related services, Japan has removed th e obligation for compulsory coverage by the 
Government in modes 1-3 and opened the sub-sect or to insurance intermediation services albeit 
subject to commercial presence.  For banking and other financial services, it has removed the 
requirement that investment trust management servic es must be juridical persons established in Japan. 
79. In health related services and recreational servi ces, Japan has added new commitments, while 
it has liberalized mode 4 in some sub-sectors of tourism and travel-related services and recreational, cultural and sporting activities.  In other services not included elsewhere, it has added washing, 
cleaning and dyeing services, laundry collection services, hairdressing and other beauty services. 
80. In transport services, Japan has expanded its commitments through the addition of several 
sub-sectors and the liberalization of mode 4 in mo st of its existing transport commitments under the 
GATS.  The following CPCs have been added to the bracketed sub-sectors:  (maritime transport services)
38 rental of vessels with crew - excluding vessels flying the flag of Japan;  (maritime auxiliary 
transport services) maintenance and repair of v essels, maritime cargo handling services, container 
station and depot services, and maritime freight forwarding services;  (internal waterways transport 
services) maintenance and repair of vessels;  (air transport services) space transport; (rail transport 
services) passenger transportation, freight trans portation, pushing and towing services, and supporting 
services for rail transport;  (road transport services) passenger transportation,39 rental of commercial 
vehicles with operator, and support services for ro ad transport services;  (pipeline transport) 
transportation of fuels;40  (services auxiliary to all modes of transport)41 cargo-handling services, 
                                                      
37 With respect to national treatment, prior notification is required for mode 3. 
38 In international maritime transport services, Japan has liberalized modes 1 to 4 albeit subject to a 
nationality requirement in mode 3 with respect to owne rship of liner shipping and a nationality limitation in 
mode 4 with respect to ship's crew. 
39 Limitations may be applied on a temporary and non discriminatory basis with respect to modes 3 and 
4 and commercial presence is required for the latter. 
40 Possible limitations in mode 3 on the number of licenses. 
41 Modes 1, 2 and 4 have been liberalized for customs clearance agent services related to Japanese 
Customs subject to a commercial presence requirement.  WT/REG216/2 
 Page 31 
 
 
  storage and warehouse services relating to petroleu m and petroleum products, and freight transport 
agency services.42 
2. Malaysia 
(a) Horizontal commitments / exceptions  
81. Malaysia's horizontal commitments and excepti ons under the Agreement mirror those found 
in its GATS schedule. 
(b) Sector specific commitments / exceptions 
82. For business services Malaysia has added new commitments in the following sub sectors: 
(computer and related services) data processing services;  (research and development services) 
research and experimental development services in medical sciences and pharmacy, and in economics;  (rental and leasing services without operators) rental and leasing of construction 
machinery and equipment and office machinery and equipment
43 and medical machinery and 
equipment; (other business services) maintenance and repair of equipment on a fee or contract basis 
and of office equipment.44  Further commitments include those in relation to the modes of supply 
which have been either liberalized as is the case fo r mode 3, for some sub-sector under computer and 
related services;  partially liberalized in the case of mode 4 for market access and modes 1 and 2 for national treatment under accounting, auditing and bookkeeping services;
45  or modified or expanded 
in respect of some specific requirements.  The la tter includes raising the threshold for aggregate 
foreign interests in a registered partnership to 35% for mode 3 under accounting, auditing and 
bookkeeping services, and taxation services;  includi ng under architectural services collaboration with 
a Malaysian licensed architect as one of the cond itions applying under mode  4;  expanding mode 3 
under engineering services to include foreign equity  up to a maximum of 10% for joint ventures in 
multi-disciplinary practices;  and, reducing the mini mum number of beds in private hospitals from 
100 to 70 as a condition for provision of medical speciality services under mode 4. 
83. For communication services, Malaysia has not added any new sub-sectors to its existing 
GATS commitments.  However, in basic teleco mmunication, Malaysia has reclassified its 
telecommunication services sector under the prov ision of: network facilitation services (NFP), 
network services (NSP) and applications services (ASP).  Each of these categories is associated with individual licences that specify the services that can be provided therein.
46  Modes 1 and 2 are 
unrestricted while for mode 3 the provision of  NFP and NSP services requires the acquisition of 
shares in an existing licensed NFP(I) and NSP (I) operation/corporation;  the provision of ASP 
services takes place through a locally incorporat ed joint venture corporation with Malaysian 
individuals or Malaysian controlled corporation or acquisition of shares in an  existing licensed ASP(I) 
operator/corporation.  The foreign shareholding threshold is 30% for NFP(I) and NSP(I) and 49% for 
ASP(I).  Nationality requirements apply to the manage ment of such companies;  mode 4 is unbound.  
The mode 3 limitations referred to above also a pply to value added telecommunications services.47 
                                                      
42 Commercial presence is required in modes 1 and 4. 
43 The commitment is limited to machinery and equipment manufactured in Malaysia. 
44 See footnote 39. 
45 Entry under mode 4 is allowed for up to five speci alists or experts for each  institution (referring to 
juridical persons, companies and service providers) s ubject to registration with the Malaysian Institute of 
Accountants (MIA)  and residence requirements;  entry is  limited to two years.  National treatment under modes 
1 and 2 have been liberalized for accounting and bookkeeping services fo r members of the MIA. 
46 The licenses are categorized as  NFP(I), NSP(I), and ASP(I). 
47 In the case of Value Added Services the cl ass licenses are NFP(C), NSP(C), and ASP(C). WT/REG216/2 
Page 32  
 
  84. For construction work, the Agreement relaxes ex isting limitations in mode three by permitting 
foreign construction companies that are not locally  incorporated to carry out certain specified 
construction projects subject to compulsory sub-contracting to local sub-contractors. 
85. With respect to education services, which ar e uncommitted to Malaysia's GATS schedule, 
commitments have been undertaken in higher e ducation services provided by privately funded higher 
education institutions;  modes 1, 2 and 4 are unbound with a few exceptions and mode 3 is limited to 
joint ventures with foreign equity not exceeding 49% a nd subject to an economic needs test.  In health 
related and social services, the aggregate foreign sh areholding in joint venture corporations has been 
increased from 30% to 40% for (mode 3) private ho spital services.  For tourism and travel related 
services, Malaysia has added commitments in hotel lodging services and has raised the foreign equity 
threshold for joint ventures with Malaysian compan ies to 35% for travel agency and tour operator 
services.  Further commitments have been added in maritime transport services with the inclusion of 
cargo vessel with and without crew ch arter for international shipping. 
86. In financial services, Malaysia's commitmen ts mirror its GATS commitments except for 
mode 3 relating to direct insurance companies wh ere the deadline of 30 June 1998 for the local 
incorporation of branches of foreign insurance companies has been removed and replaced by "in 
accordance" with the insurance Act of 1996. 
E. L
IBERALIZATION COMMITMENTS ON INVESTMENT  
87. The investment Chapter adopts a negative-list a pproach to the scheduling of liberalization 
commitments, such that the obligations of  national and MFN treatment, and performance 
requirements48 apply fully, except for sectors, sub-sectors or activities listed in Annex 4 and indicated 
with an asterisk, for which the central or local govern ment of a Party, a prefecture in Japan, or a state 
in Malaysia maintains a non-conforming measure on the date of entry into force of the Agreement.  
These measures are subject to a "ratchet" clause (Ar ticles 80.1(c) and (d)) meaning that if a Party 
unilaterally modifies any existing non-conforming measure with the e ffect of making it more liberal, 
such liberalization is bound and becomes its new level of commitment towards the other Party. 
88. Annex 4 also sets out the sectors, sub-sectors or activities for which a Party reserves the right 
to adopt or maintain any measure not conforming with the national and MFN treatment obligations, 
and performance requirements49  (Article 80.2).  Any amendment or modification to an existing 
measure, or adoption of a new me asure relating to these sectors, sub-sectors or activities cannot be 
more restrictive for existing investors and investme nts than the measure applying immediately before 
such amendment, modification or adoption unless the sectors, sub-sectors or activities are indicated 
with the symbol "+" in Annex 4.50 
89. Amendments to existing measures, or the a doption of new measures for sectors, sub-sectors 
or activities listed in Annex 4 are to be notified to the other Party prior to their implementation or as 
soon as possible thereafter;  the notifying Party sh all hold consultations, upon request, with the other 
Party with a view to achieving a mutually satisfact ory outcome (Article 80.7).  The notification and 
consultation obligation also applies in cases of adop tion by the Parties of measures inconsistent with 
national and MFN treatment, and performance require ments in the sectors, sub-sectors or activities 
listed in Annex 4 with an asterisk due to exceptiona l financial, economic or industrial circumstances 
(Article 80.8).  The national and MFN treatment  obligations, and prohibition on performance 
                                                      
48 The obligation only refers to paragraph 1 of Article 79. 
49 See footnote 44. 
50 The terms "existing investors" and "existing investments" mean respectively, investors whose 
investments are present in a Country and investments th at are present in a Countr y immediately before the 
modification of existing measures or adoption of new measures (Article 80.4(a)).  WT/REG216/2 
 Page 33 
 
 
  requirements do not apply to any measure which a Party adopts or maintains for government 
procurement (Article 80.10) nor to any measure covered by an exception to, or derogation from, 
obligations under Articles 3 and 4 of the TRIPS Agreement (Article 80.11).51  Each reservation in 
Annex 4 contains the following:  the sector and sub-sector to which the reservation relates;  the industry classification;  the obligation(s)  against which a reservation is taken;
52  the level of 
government;  and the existing measure and its description. 
1. Japan 
90. In its Annex 4, Japan has taken a number of  reservations on existing measures for 22 sectors, 
sub-sectors or activities,53 mostly relating to national treatment and to a lesser extent 
MFN treatment.54  Such measures cover, inter alia  air transport, banking, railway transport, road 
passenger transport, security guard services and wate r transport (See Table IV.3).  Japan has also 
taken a number of reservations for future measures in  Annex 4 for 10 different sectors, sub-sectors or 
activities,55 mostly in the form of national treatment;  these reservations are indicated with the symbol 
"+" meaning that Japan reserves the right to make th e existing or new measures more restrictive.  The 
sectors listed include the aerospace industry, arms  and explosive industry,  broadcasting industry, 
energy, fisheries, land transactions and p ublic law enforcement (See Table IV.4). 
Table IV.3 
Existing non conforming measures listed by Japan in Annex 4 
Sector, sub-sector or activity Reservation Description of existing measure 
Agriculture, Forestry and Fisheries NT/MFN Domicile, reside nce requirement - establishment in case of a legal person 
Agriculture, Forestry and Fisheries and 
related services NT Prior notification requirement 
Finance: 
− Banking NT Commercial presence (head offices) in Japan 
Heat Supply NT Prior notification requirement 
Information and Communication:   
− Telecommunications; and Nationality limitations related to vo ting rights apply to Nippon Telegraph 
and Telephone (NTT) Corporation for the purposes of entering the name 
and address in its register of shar eholders – Nationality requirement for 
assuming the office of director or auditor of this corporation and NTT 
East Corporation and NTT West Corporation 
− Telecommunications and Internet 
based services NT 
Prior notification requirement 
Manufacturing:   
− Drugs and medicines 
− Leather and leather products NT Prior notification requirement 
Matters related to the nationality of a 
ship NT Japanese nationality shall be given to  a ship whose owner is a Japanese 
national or a company established unde r Japanese law of which at least 
two-thirds of executives are Japanese nationals 
Mining NT Nationality requirement 
Oil Industry NT Prior notification requirement 
Security guard services NT Prior notification requirement 
Transport:   
− Air transport NT/MFN Prior notification and nationality  requirement for permission – 
authorization requirement for foreign air carriers 
− Aircraft service NT Prior notification and nationa lity requirement for permission 
− Registration of aircraft NT Registration in the national registry subject to nationality requirement 
Table IV.3 (Cont'd)  
                                                      
51 The latter does not include the prohibition of perf ormance requirements as provided in Article 79. 
52 Some reservations relate to mode 3 of services trade rather than investment per se.  
53 These are indicated with an asterisk. 
54 There are no reservation with respect to performance requirements. 
55 These are indicated with the symbol "+". WT/REG216/2 
Page 34  
 
  Sector, sub-sector or activity Reservation Description of existing measure 
− Freight forwarding business NT/MFN Registration requirement – permission shall be granted to non-nationals on 
the basis of reciprocity 
− Freight forwarding business using air 
transportation only NT/MFN Freight forwarding businesses using a) air transportation within Japan are 
subject to nationality requirement; b) international air transportation is 
subject to registration/authorization requirement granted on the basis of 
reciprocity 
− Railway transport NT Prior notification requirement 
− Road passenger transport NT Prior notification requirement 
− Water transport NT Prior notification requirement except oceangoing/seagoing transport and 
ship leasing industry excluding coastwise ship leasing industry 
− Water transport NT/MFN Ships not flying the Japanese flag ar e prohibited from entering Japanese 
ports not open to foreign commerce a nd from carrying cargo or passengers 
between Japanese ports. 
Water supply and waterworks NT Prior notification requirement 
Source:  Annex 4 of the Agreement. 
 
Table IV.4 
Non conforming measures listed by Japan in Annex 4 
Sector Reservation Description of measure 
NT When transferring or disposing of its equity inte rests in, or the assets of, a state enterprise 
or a government entity, Japan may: (a) prohib it or impose limitations on the ownership 
of such interests or assets or on the ability to  control any resulting enterprise by investors 
from Malaysia or their investments; or (b) adopt or maintain any measure relating to the 
nationality of executives, managers or member s of the board of dir ectors of any resulting 
enterprise 
NT Right to adopt or maintain any measur e relating to specific activities (supply of 
telegraph, postal and betting and gambling services, manufacture of tobacco products, 
manufacture of Bank of Japan notes, minting and sale of coinage in Ja pan), if liberalized 
for entities other than the designated enterprise s or governmental entities, or in the event 
where such designated entities no longer operate on a non-commercial basis All 
NT/MFN NT and MFN may not be accorded to investors from Malaysia and their investments with 
respect to subsidies 
Aerospace industry: 
− Aircraft/space industry 
Arms and Explosive 
industry: 
− Arms industry 
− Explosive manufacturing 
Energy: 
− Electricity utility industry 
− Gas utility industry 
− Nuclear energy industry 
Information and 
communication: 
− Broadcasting industry NT Right to adopt or maintain any measure relating to investments in these industries 
Fisheries NT/MFN Right to adopt or maintain any measure re lating to investment in fisheries in the 
territorial sea, internal waters, exclusive economic zone and contin ental shelf of Japan 
Land transaction NT/MFN With respect to acquisition or lease of land properties in Japan, prohibitions or 
restrictions may be imposed by Cabinet Or der on Malaysian nationa ls or legal persons, 
where Japanese nationals or legal pers ons are placed under identical or similar 
prohibitions or restrictions in Malaysia 
Public law enforcement and 
correctional services and 
social services NT/MFN Right to adopt or maintain any measur e relating to investment  in these services 
Source:  Annex 4 of the Agreement. 
 
2. Malaysia 
91. In its Annex 4, Malaysia has taken reservations on future me asures for 35 different sectors, 
sub-sectors or activities, mostly in the form of national treatment and to a lesser extent  WT/REG216/2 
 Page 35 
 
 
  MFN treatment.56  Two of these reservations are indicated with the symbol "+" meaning that Malaysia 
reserves the right to make existing or new measu res more restrictive.  The sectors include 
manufacturing, forestry, fisheries, oil and gas, and mining (See Table IV.5). 
Table IV.5 
Non conforming measures listed by Malaysia in Annex 4 
Sector/sub-sector or activity Reservation Description of measure 
NT/MFN NT and MFN may not be accorded in  the provision of loans, grants, 
incentives and other subsidies 
NT Prohibitions or restrictions on land transactions, land property and 
natural resources associated with land 
NT Licensing requirement 
NT Right to adopt or maintain any meas ure with respect to acquisition of 
shares or any interest, merger s and takeover of companies and 
businesses in Malaysia by foreigners 
MFN MFN may not be accorded to foreign investors and their investments 
with respect to preferential tr eatment granted under any ASEAN 
agreement 
NT/MFN NT and MFN may not be accorded to foreign investors with respect to 
the privatisation or divestment of  assets owned by the government 
NT/MFN Right to adopt or maintain any measure relating to the transfer or 
disposal of equity interests or assets of a state enterprise, a government entity, or a government-linked company or a Minister of Finance 
Incorporated company 
NT/MFN Right to adopt or maintain any meas ures relating to activities restricted 
to designated enterprises or governme ntal entities which are liberalized 
to those other than the designated enterprises or governmental entities 
NT Right to adopt or maintain any measure relating to special preference to 
Bumiputera, Bumiputera status companies, trust companies and 
institutions All 
NT Right to adopt or maintain any measure relating to any sector that has 
not been established in Malaysia at th e time of entry in to force of this 
Agreement 
All services sectors NT/MFN/ 
PPR Right to adopt or maintain any measure relating to investments in 
services sectors provided it does not  constitute a violation of its 
obligations under Chapter 8 
NT Right to maintain or impose export requirements on new projects or 
expansion/diversification of project s, consistent with national and 
social objectives and the orderly development of manufacturing 
activities Manufacturing 
NT Right to impose local equity requirements on new projects or on 
additional capital for expansion or dive rsification of projects consistent 
with national and social objectives  and the orderly development of 
manufacturing activities 
Manufacturing: 
− Pineapple canning 
− Palm oil milling and refining 
− Sugar refining 
− Liquors and alcoholic beverages 
− Tobacco processing and cigarettes 
− Wood-based products utilizing local 
logs 
− Petroleum refining 
− Ordinary portland cement 
− Steel billets/blooms 
− Optical discs 
− Fabrics and apparel of batik 
− Manufacture/assembly of 
motorcycles, passenger cars, and 
commercial vehicles 
− Arms, weapons, ammunitions, 
explosives, pyrotechnic products, propellant powders, detonating or 
safety fuses, and the like+ 
   
                                                      
56 Article 80.5 requires the Parties to notify within six months after entry into force of the Agreement 
any existing non-conforming measure, with  an asterisk maintained by a prefect ure or a state as referred to in 
Article 80.1(a)(ii).  None appear in Malaysia's schedule in Annex 4.  WT/REG216/2 
Page 36  
 
  Sector/sub-sector or activity Reservation Description of measure 
− Collection, storage, treatment and 
disposal of hazardous and toxic 
wastes+ NT Right to adopt or maintain any measure in these sub-sectors 
Agriculture, forestry, fisheries and 
mining NT Right to adopt or maintain local equity requirements 
Forestry: 
− Extraction and harvesting of timber NT Right to adopt or maintain any measure in this sub-sector 
Manufacturing, forestry, agriculture, 
fisheries: 
− Biodiversity NT7MFN Right to adopt or maintain any measure relating to biodiversity 
Fisheries: 
− Capture fisheries NT/MFN Right to adopt or maintain any meas ure relating to capture fisheries in 
Malaysia's exclusive economic zone 
Oil and gas upstream industries NT/MFN Right to adopt or maintain any measure relating to the oil and gas 
upstream industries 
Mining and quarrying NT Right to adopt or maintain any measure relating to mining and 
quarrying 
Statutory bodies NT Right to adopt or mainta in any measure relating to statutory bodies 
National and state unit trusts NT Right to adopt or  maintain any measure relating to these activities 
Source:  Annex 4 of the Agreement. 
 
F. REGULATORY PROVISIONS ON TRADE IN SERVICES AND INVESTMENTS  
1. Domestic regulation 
92. Article 102 calls on the Parties to endeavour to ensure that any measure relating to 
authorization, licensing or qualification of service s uppliers from the other Party, is based on objective 
and transparent criteria, such as competence and the ability to supply the service;  not more 
burdensome than necessary to ensure the quality of  the services;  and do not constitute a disguised 
restriction on the supply of the service. 
2. Recognition 
93. Article 103 provides that a Party may rec ognize the education, experience obtained, 
requirements met, or licenses or certificates granted in  the other Party for the purposes of fulfilling, in 
whole or in part, its standards or criteria for the authorisation, licensing or certification of service suppliers of the other Party.  Where a Party recognizes such education, experience, licenses or 
certificates obtained in a non-Party, it is not bound to accord such recognition to those from the other 
Party.  The Party shall provide the other Party ade quate opportunity to demonstrate that the education 
or experience obtained, requirements met, or licenses or certifications granted in the other Party 
should also be recognized (Article 103.3(b)).   
3. Safeguard actions on services trade and investment 
(a) Emergency Safeguard Measures 
94. Article 106 provides that within one year from the entry into force of the Agreement, the 
Parties will initiate discussions to develop mutu ally acceptable guidelines and procedures for the 
application of emergency safeguard  measures within five years from the entry into force of the 
Agreement.  Notwithstanding these discussions, a Pa rty may request consultations with the other 
Party if it deems itself to be affected by the nega tive impact caused by its specific commitments in 
Annex 6;  the consultations w ill endeavour to reach a mutua lly acceptable solution within a 
reasonable time.  WT/REG216/2 
 Page 37 
 
 
  (b) Temporary Safeguard Measures 
95. In the event of serious balance of payments and external financial difficulties or threat 
thereof, or where movements of capital cause or threaten to cause serious difficulties for 
macroeconomic management in par ticular, monetary and exchange rate policies, the Parties may 
adopt or maintain restrictions on cross-border capita l transactions on investment and transfers related 
to investments.  Such restrictions are to be consis tent with the Articles of Agreement of the IMF, not 
exceed those necessary, and be temporary in nature and shall be promptly notified to the other Party 
(Article 88). 
(c) Restrictions to Safeguard the Balance of Payments 
96. In the event of serious balance of payments and external financial difficulties or threat 
thereof, the Parties may adopt or maintain restrict ions on trade in services, including payments or 
transfers for transactions relating to trade in services.  Such restrictions are to be consistent with the 
Articles of Agreement of the IMF,  not exceed thos e necessary, ensure the other Party is treated as 
favourably as any third state, be temporary in na ture and be phased out progressively and not be 
adopted or maintained for the purposes of protec ting a particular services sector (Article 108). 
4. Payments and transfers 
97. Except for circumstances of restrictions to saf eguard the balance of payments pursuant to 
Article 108, neither Party may apply restrictions on international transfers and payments for current 
transactions relating to trade in services (Article 107) .  With respect to investments, the Parties agree 
to allow all transfers in and out of their countries to be made freely and without delay in any freely usable currency except in specifi c cases such as bankruptcy, criminal offences and obligations of 
investors arising from social security and public retirement plans (Article 83). 
5. Transparency 
98. Article 104 sets out the transparency provisions for trade in services.  It requires each Party to 
provide upon request by the other Party, informa tion on its laws and regulations and any amendments 
affecting the market access and national treatment provisions as well as other relevant guidelines, 
policy statements and annual reports or any othe r generally available publication as appropriate.  
6. Other 
99. Chapter 7 contains several regulatory provisions relating to the treatment of investments and 
investors.  Under Article 77 each Party accords to inv estments by investors of the other Party, fair and 
equitable treatment, full protection and security.  Arti cle 78 provides for access to courts of justice for 
investors from either Party on terms no less favourable than those accorded to their own investors or 
those of a third country.
57  Article 81 prohibits the expropriatio n or nationalization of investments 
except in certain specific circumstances and subject  to adequate and effective compensation.  The 
Agreement has general and security exceptions (see  paragraph 101) as well as an exception for 
measures taken for prudential reasons (Article 89) , which has been modelled on the same provision 
contained in the GATS Annex on Financial Services.  Article 85 provides for an investor-state dispute 
settlement mechanism (See paragraph 108).  Article  92 provides for cooperation between the Parties 
to promote and facilitate investments, while Ar ticle 93 establishes a Sub-Committee on investments 
for the purposes of effective implementation and operation of the Chapter. 
                                                      
57 Article 78 also applies in respect of taxation meas ures, where Article 81 applies to taxation measures. WT/REG216/2 
Page 38  
 
  100. With respect to trade in services, Article 105 re quires the Parties to ensure that any monopoly 
supplier of a service does not act in a manner inc onsistent with their commitments under Chapter 8 
nor that it abuses its monopoly position.  Article 110 establishes a Sub-Committee on Trade in Services which is responsible for the impl ementation and operation of Chapter 8. 
V. GENERAL PROVISIONS OF THE AGREEMENT 
1. General and Security Exceptions 
101. Article 10 addresses general and security excepti ons for goods and services by incorporating 
into the Agreement mutatis mutandis  Articles XX and XXI of the GATT 1994 for goods
58 and 
Articles XIV and XIV bis of the GATS for investment and services-related issues.59  For the purposes 
of Chapter 7 (Investment), measures pursuant to Arti cle 10 that do not confor m to the provisions of 
that Chapter60 are to be notified to the other Party.  Under Chapter 9 on intellectual property, 
Article 73 of the TRIPS Agreement is  incorporated into the Agreement mutatis mutandis .  Other 
exceptions and reservations include measures to safe guard the balance of payments (Article 24) and 
taxation measures (Article 9).  With respect to the latter, although Article 9 provides that the 
provisions of the Agreement do not apply to taxati on measures in the case of investment, Article 81 
(expropriation and compensation) a pplies to taxation measures when  these constitute expropriation. 
2. Accession 
102. There are no accession provisions in the Agre ement.  Either Party may terminate the 
Agreement by giving one year's advance notice in writing (Article 159). 
3. Institutional framework 
103. The Parties agree to establish a Joint Co mmittee responsible for:  reviewing the 
implementation and operation of the Agreement;  considering and recommending to the Parties any 
amendments to the Agreement;  supervising a nd coordinating the work of all sub-committees 
established under the Agreement;  and adopting the Operational Procedures for Trade in Goods and 
for Rules of Origin (Article 13).  The sub-committees the Parties have agreed to establish are:  trade in 
goods;  rules of origin;  customs procedures;  technical regulations, standards and conformity 
assessment; sanitary and phytosanitary measures;  investment;  trade in services;  intellectual 
property; improvement of business envir onment;  and cooperation (Article 14). 
104. Articles 3 to 7 set out the transparency and ad ministrative provisions of the Agreement.  The 
Parties must make publicly available laws, regul ations, administrative procedures and rulings and 
judicial decisions of general application as well as international agreements to which they are party 
(Article 3).  They agree to make public, in advance,  regulations of general application that affect any 
matter covered by the Agreement and to provide a reasonable opportunity for comments by the public 
before adopting such regulations (Article 4).  With  respect to administrative procedures, the Parties 
endeavour to give reasonable notice about administ rative decisions which pertain to, or affect, the 
implementation and operation of the Agreement (Ar ticle 5); standard periods of time are to be 
established for the receipt of applications by the Parties' competent authorities and the response to 
such applications (Article 5.3).  Furthermore, each Party shall maintain independent judicial tribunals 
for the review and correction of actions on matters  covered by the Agreement (Article 6).  Other 
                                                      
58 For the purposes of trade in goods, rules of origin, customs procedures, technical regulations, 
standards and conformity assessment procedures, sanitary and phytosanitary measures, and investment other 
than Article 82 (Protection from strife). 
59 For the purposes of investment other than Article 82 and trade in services. 
60 Other than the provisions of Article 82 (Protection from strife).  WT/REG216/2 
 Page 39 
 
 
  related measures include administrative guidance (Ar ticle 7);  confidential in formation (Article 8); 
and the designation of contact point to facilitate communications between the Parties (Article 15).   
4. Dispute settlement 
105. Chapter 13 sets out procedures for the settlement  of disputes between the Parties relating to 
the application and interpretation of the Agreement.  These provisions also apply to arbitral tribunals 
established for disputes on prudential issues and other financial matters as pr ovided in Section 4 of 
Annex 5 relating to financial services.61  Article 145 provides a forum election clause for matters 
falling under both the Agreement and another trade agreement to which both Parties are party;  
however, once the complaining Party has chosen the fo rum to settle the dispute, that forum shall be 
used to the exclusion of the others (exclusive forum clause). 
106. The Chapter encourages the Partie s to resolve disputes through co operation and consultations.  
Article 146 lays down the procedures for consulta tions while Article 147 provides for good offices, 
conciliation and mediation procedures;  the latter ma y be initiated and terminated at any time and may 
continue while procedures of the arbitral tribunal are in progress.  A Party may request consultations 
in writing with the other Party on any matter on the in terpretation or application of the Agreement.  
The Parties shall enter into consultations within 30 days (15 days for perishable goods) following their 
initial request (Article 146.2).  In the event that th e Party complained against does not enter into such 
consultations or that the consultation between the Pa rties fail to settle the dispute within 60 days from 
the date of the request, the complaining Party may requ est the establishment of an arbitral tribunal if it 
considers that benefits accruing under the Agreement ar e being nullified or impaired as a result of the 
application of measures inconsistent  with the Agreement (Article 148). 
107. The JMEPA provides for detailed steps in the pr ocess for dispute resolution.  Articles 148 to 
150 deal, respectively, with the establishment and co mposition, functions, and proceedings of arbitral 
tribunals.  The tribunal is expected to submit its dr aft report to the Parties within 90 days following its 
establishment and its final award 30 days after the s ubmission of the draft award.  Its final report is 
binding and not subject to appeal .  Article 152 sets out the procedures re lated to the implementation of 
the award, failure to comply with the award, disagre ement between the Parties with respect to the time 
for implementation, compensation and retaliation. 
108. Article 85 provides for the settlement of investme nt disputes between a Party and an investor 
of the other Party that has incurred a loss or dama ge by reason of an alleged breach of any rights 
conferred under Chapter 7.62  The Article does not apply to disputes on any rights conferred by 
Articles 75 (National treatment) and 79 (Prohibitio n of performance requirements).  The Agreement 
encourages the settlement of an investment dis pute amicably through consultations.  Where the 
dispute cannot be settled within five months from the date of written request for consultations, the 
dispute may be referred to international arbitration.63  A notice of intent for arbitration must be made 
in writing to the other Party at least 90 days before submission of the claim.  The Parties' consent to the submission of investment disputes is invalidated where more than three years have elapsed since 
the date the disputing investor knew or ought to ha ve known, whichever is the earlier, of the loss or 
                                                     
 
61 Chapter 13 does not apply to matters arising under Chapter 5 (Technical regulations);  Chapter 6 
(SPS);  Article 128 (co-operation relating to intell ectual property);  Chapter 10 (Controlling Anti-competitive 
Activities);  Chapter 11 (Improvement of Business  Environment);  Chapter 12 (Cooperation).   
62 Article 85 also applies to in respect of taxa tion measures, where Article 81 applies to taxation 
measures (See paragraph 99). 
63 The disputing investor may submit the dispute to: a) the Kuala Lumpur Regional Centre for 
Arbitration (KLRCA);  arbitration in accordance with the provisions of the Convention on the Settlement of 
Investment Disputes between States and Nationals of Other States (Washington, March 18, 1965);  arbitration under the Arbitration Rules of the United Nations Commiss ion on International Trade Law;  or in accordance 
with other arbitration rules if ag reed with the disputing Party. WT/REG216/2 
Page 40  
 
  damage incurred.  Article 85.9 to 85.12 set out the procedures relating to the establishment of the 
arbitral tribunal, in principle within 60 days from th e date of submission of the dispute.  The arbitral 
award is final, binding and shall include in case of  a breach of the rights conferred under the Chapter a 
remedy in the form of payment of monetary damage s and/or restitution of property.  The award shall 
be executed without delay under the laws and re gulations of the Party bringing the dispute 
(Article 85.15). 
5. Relationship with other agreements concluded by the Parties 
109. In Article 11 the Parties reaffirm their right s and obligations under the WTO Agreement and 
any other agreement to which they are both par ties.  The WTO shall prevail in the event of 
inconsistencies;  in the event of inconsistencies with ag reements other than the WTO, the Parties will 
consult with a view to finding a mutu ally satisfactory solution (Article 11). 
110. Table V.1 lists all other regional trade agreem ents (RTAs) notified and not notified to the 
GATT/WTO and in force to which Japan and Malaysia are party. 
TableV.1 
Japan and Malaysia:  Participation in other RTAs (notif ied and non-notified in force), as of January  2009  
GATT/WTO Notification 
Partner/ 
Agreement Date of 
entry 
into 
force Type of 
agreement Year WTO Provision 
JAPAN  
Philippines 11.12.08 Goods & Services 2008 GATT Art. XXIV & GATS Art. V 
Brunei Darussalam 31.07.08 Goods & Services  2008 GATT Art. XXIV & GATS Art. V 
Indonesia 01.07.08 Goods & Services 2008 GATT Art. XXIV & GATS Art. V 
Thailand 01.11.07 Goods & Services 2007 GATT Art. XXIV & GATS Art. V 
Chile 03.09.07 Goods & Services 2007 GATT Art. XXIV & GATS Art. V 
Mexico 01.04.05 Goods & Services 2005 GATT Art. XXIV & GATS Art. V 
Singapore 30.11.02 Goods & Services 2002 GATT Art. XXIV & GATS Art. V 
MALAYSIA  
Pakistan 01.01.08 Goods & Services  2008 Enabling Clause & GATS Art. V 
ASEAN Agreements: 
 ASEAN-China  
01.07.07  
Services  
 2008  
 GATS Art. V 
 ASEAN-China 01.07.03 Goods  2004  Enabling Clause 
 AFTA 28.01.92 Goods  1992  Enabling Clause 
GSTP 19.04.89 Goods  1989  Enabling Clause 
 
AFTA: ASEAN Free Trade Area 
GSTP: Global System of Trade Preferences 
 
Source: WTO Secretariat.  
 
6. Other provisions 
(a) Intellectual property 
111. Chapter 9 of the Agreement contains provisions governing intellectual property.  The Parties 
agree to grant and ensure adequate, effective and non-discriminatory protection of intellectual 
property, promote efficiency and transparency in  the administration of the intellectual property  WT/REG216/2 
 Page 41 
 
 
  protection system, and provide for measures for enforcement of IPRs against infringement, 
counterfeiting and piracy (Article 112.1).  The Pa rties agree to accord ea ch other national and 
MFN treatment in accordance with the TRIPS Agreement (Article 114 and Article 115 respectively).64  
The Chapter includes provisions on most of the IPR categories covered in  the TRIPS Agreement; 
these include patents (Article 119), industrial designs  (Article 120), trademarks for goods and services 
(Article 121), and copyright and related rights (A rticle 122).  In addition, the Parties provide 
protection for new varieties of plants (Article 123) .  Article 124 requires the Parties to provide for 
effective protection against unfair competition, listing examples of those acts of unfair competition that are prohibited under the Agreement.  The Chapter also includes several IPR enforcement 
provisions such as border measures (Article 125), civil and criminal remedies (Article 126 and 
127 respectively).  The Parties agree to cooperate in  the field of intellectual property (Article 128);  
the details of this cooperation are spelled out in Chapter 3 of the Implementing Agreement.  
Article 129 established a Sub-Committee on intellectua l property which is responsible for reviewing 
and monitoring the implementation and operation of Chapter 9. 
(b) Competition 
112. Chapter 10 contains provisions relating to comp etition.  Each Party agrees to take measures 
which it considers appropriate against anti-comp etitive activities and when necessary endeavour to 
review and improve or adopt laws  and regulations to effectivel y control anti-competitive activities 
(Article 131).  The Parties agree to cooperate to control anticompetitive activities (Article 132);  the 
details of this cooperation are specified in Chapte r 4 of the Implementing Agreement.  Article 12 of 
the Implementing Agreement requires the implementing authorities of the Parties to promptly inform 
each other of any amendments to, and adoption of, new laws and regulations related to control of 
anti-competitive activities and to provide, as appropriate, other relevant information.  Article 13 of the 
Implementing Agreement sets out provisions for technical cooperation activities to control anti-competitive activities while Article 15 provides fo r review and possible e xpansion of cooperation 
pursuant to Chapter 4. 
(c) Environment 
113. The Parties agree not to encourage investment by investors from the other Party by relaxing 
environmental measures (Article 90). 
(d) Improvement of business environment 
114. The Parties agree to take appropriate measur es to further improve the business environment 
and to promote cooperation in th is regard (Article 134).  For this purposes the Sub-Committee on 
Improvement of Business Environment as well as Liaison Offices are established; Chapter 5 of the 
Implementing Agreement sets out the issues to be addressed by the Sub-Committee and the functions 
of the Liaison Offices. 
(e) Cooperation 
115. Chapter 12 sets out the basic principles for, and main fields of, cooperation under the 
Agreement.  These include:  agriculture, forestry, fisheries and plantations;  education and human 
resource development;  information and communica tion technology;  science and technology;  small 
and medium enterprises;  tourism;  environment;  and other fields to be mutually agreed upon by the 
Parties.  The areas and forms of cooperation for each of these fields are detailed in Chapter 6 of the 
Implementing Agreement.  Article 143 establis hes the Sub-Committee on Cooperation for the 
effective implementation and operation of Chapter 12. 
                                                     
 
64 National and MFN treatment obligations do not apply for the protection of new plant varieties in WT/REG216/2 
Page 42  
 
  ANNEX I 
 
 1. A comparison between the scheduled elimination of tariffs applied to the Parties' mutual 
imports and the duty rates applied by them on MFN im ports is shown in Tables AI.1 (Japan) and AI.2 
(Malaysia), by agricultural (WTO definition), non- agricultural and total products.  Applied MFN duty 
rates in 2006 serve as a comparison. 
2. Japan's overall average applied MFN rate in 2006 was 4.8%;  the average applied tariff on 
agricultural products was 11.2% compared to an av erage applied tariff of 3.4% for non-agricultural 
products.  Duty-free tariff lines accounted for 41.7% of all tariff lines.  On entry into force of the 
Agreement, Malaysian exporters en joyed a relative margin of preference of 13.4% for agricultural 
goods vis-à-vis  the prevailing average MFN tariff in 2006, and 82.4% for non-agricultural goods.  
Overall, Malaysian exporters enjoyed a relative margin of preference of 54.2% vis-à-vis the prevailing 
average applied MFN tariff, as well as an increase to 82. 6% in the share of Japan's duty-free lines.  By 
the end of implementation, the share of Japan's dut y-free lines for Malaysian imports is expected to 
increase to 90.1% of the total tariff, of wh ich 63.6% of agricultural lines and 96.4% of 
non-agricultural lines. 
Table AI.1 
Japan: Indicators of MFN tariff rates and pr eferential rates for imports from Malaysia 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2006 4.8 8.3 41.7 11.2 15.8 25.8 3.4 6.2 45.5 
Malaysia 2006 2.2 14.4 82.6 9.7 18.0 40.9 0.6 8.6 92.8 
 2007 2.1 13.9 82.6 9.5 17.5 40.9 0.6 8.1 92.8 
 2008 2.1 13.4 82.6 9.2 17.0 40.9 0.6 7.7 92.8 
 2009 2.0 12.9 82.6 8.9 16.5 40.9 0.5 7.3 92.8 
 2010 1.9 12.4 82.6 8.6 15.9 40.9 0.5 6.8 92.8 
 2011 1.8 12.9 83.8 8.3 16.3 43.4 0.5 7.2 93.6 
 2012 1.8 12.5 83.8 8.1 15.8 43.4 0.4 6.9 93.7 
 2013 1.7 14.6 86.3 7.8 17.3 48.8 0.4 8.9 95.4 
 2014 1.7 14.2 86.3 7.6 16.9 48.8 0.4 8.6 95.4 
 2015 1.6 13.9 86.3 7.4 16.5 48.8 0.4 8.4 95.4 
 2016 1.6 16.4 88.6 7.2 19.2 55.7 0.4 10.1 96.4 
 2017 1.5 16.2 88.6 7.1 18.9 55.7 0.4 10.1 96.4 
 2018 1.5 16.0 88.6 7.0 18.6 55.7 0.4 10.1 96.4 
 2019 1.5 15.8 88.6 6.9 18.3 55.7 0.4 10.1 96.4 
 2020 1.5 15.6 88.6 6.8 18.0 55.7 0.4 10.1 96.4 
 2021 1.5 18.3 90.1 6.6 23.1 63.6 0.4 10.1 96.4 
 
a WTO Definition. 
Note:  For tariff lines subject to TRQs only the out-of-quota duty  is included in the tariff-related calculations;  lines with specific duties 
and the non ad valorem  component of lines with compound and altern ate rates are excluded from the calculations. 
 
Source:  WTO Secretariat estimates based on data provided by Japan. 
 
3. Malaysia's average applied MFN rate in 2 006 was 7.7%;  the average applied tariff on 
agricultural products was 3.2% compared to an av erage applied tariff of 8.3% for non-agricultural 
products.  Duty-free tariff lines account for 58% of a ll tariff lines.  On entry into force of the 
Agreement, Japanese exporters enjoyed a relative margin of preference of 40.6% for agricultural 
goods vis-à-vis  the prevailing average MFN tariff in 2006, and 32.5% for non-agricultural goods.  
Overall, Japanese exporters enjoyed a relative margin of preference of 32.5% vis-à-vis the prevailing 
average applied MFN tariff, as well as an increase to 74. 7% in the share of Malaysia's duty-free lines.  
                                                                                                                                                                     
respect of the measure as set out in the reservation No.1 of schedule of Japan in Annex 4 (See Table IV.3).  WT/REG216/2 
 Page 43 
 
 
  By the end of the transition period, the share of duty free lines vis-à-vis  Japan is scheduled to increase 
to 98.9% of which 95.4% for agriculture and 99.3% for non-agricultural products. 
Table AI.2 
Malaysia: Indicators of MFN tariff rates a nd preferential rates for imports from Japan 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2006 7.7 18.5 58.0 3.2 9.1 63.0 8.3 19.4 57.3 
Japan 2006 5.2 20.8 74.7 1.9 10.0 79.0 5.6 21.8 74.1 
 2007 4.5 18.1 74.7 1.6 8.5 79.0 4.9 19.0 74.1 
 2008 3.8 15.2 74.9 1.3 7.0 79.0 4.1 15.9 74.3 
 2009 3.1 12.6 75.1 1.0 5.5 79.0 3.4 13.3 74.5 
 2010 2.4 10.2 75.7 0.7 4.0 79.0 2.7 10.7 75.2 
 2011 1.8 8.8 79.7 0.5 5.8 89.4 1.9 9.0 78.4 
 2012 1.2 6.1 80.1 0.3 3.9 89.4 1.3 6.2 78.9 
 2013 0.6 9.5 93.0 0.2 6.2 94.5 0.7 9.7 92.8 
 2014 0.5 6.9 93.0 0.1 5.4 94.5 0.5 7.0 92.8 
 2015 0.3 4.8 93.6 0.1 4.5 94.5 0.3 4.8 93.4 
 2016 0.1 13.9 98.9 0.1 5.8 95.4 0.1 16.4 99.3 
 2017 0.1 13.9 98.9 0.1 5.8 95.4 0.1 16.4 99.3 
 2018 0.1 13.9 98.9 0.1 5.8 95.4 0.1 16.4 99.3 
 2019 0.1 13.9 98.9 0.1 5.8 95.4 0.1 16.4 99.3 
 2020 0.1 13.9 98.9 0.1 5.8 95.4 0.1 16.4 99.3 
 2021 0.1 12.0 98.9 0.1 5.8 95.4 0.1 13.9 99.3 
 a WTO Definition. 
Note:  Tariff lines with specific duties and the non ad valorem  component of lines with compound and alternate rates are excluded 
from the calculations. 
 
Source:  WTO Secretariat estimates based on data provided by Malaysia. 
 
4. Table AI.3 shows the market access opportunities in Japan for Malaysia's top 25 exports, 
which in 2003-2005 accounted on average for 55.2% of  Malaysia's global exports.  The table shows at 
which year all HS 9-digit tariff lines corresponding to the product definition (i.e. applying to the 
6-digit HS code used to capture the volume of trade) will become duty-free in Japan. 
5. Malaysia's top 25 exports cover a total of 117 HS 9-digit tariff lines of which 73 are already 
duty-free on an MFN basis.  20 of Malaysia's top 25 exports (which account for 59 HS 9-digit lines 
and 48.1% of Malaysia's average global exports in  the period 2003-05) already benefit from zero 
MFN duties in Japan's market; a further 2 products (accounting for 4 tariff lines and a further 3.9% of 
Malaysia's average global exports) gain immediate duty-free access;  two more products are granted 
duty-free access in 2016;  and one remains subject to duties.  The margin of preference granted to 
Malaysia by Japan under the Agreement va ries from 0 to 3.5 percentage points. 
 
    
 
    
 
  WT/REG216/2 
Page 44  
 
  Table AI.3  
Market access opportunities under the agree ment for Malaysia's  top 25 exports 
Access Conditions to Japan's import markets 
MFN (2006) Malaysia's top export products in 2003-2005  
No. of Tariff Lines Duty-free in 
HS number and description of the product  Share in 
global 
exports (%)  Avg. 
applied 
rate 
(%) Duty-
free Dutiable 2006 2016 Remain 
Dutiable  
854221 Digital 7.3 0.0 15     
847330 Parts and accessories of the machines of 
heading 84.71 6.8 0.0 3     
270900 Petroleum oils and oils obtained from 
bituminous minerals, crude. 4.9 0.0 2     
847130 Portable digital automatic data processing 
machines, weighing not more than 10 kg, 
consisting of at least a central processing 
unit, a keyboard and a display 4.1 0.0 1     
271111 Natural gas 3.7 0.0 1     
854229 Other 3.3 0.0 2     
151190 Other 3.2 3.0  2 2   
854260 Hybrid integrated circuits 2.8 0.0 1     
852520 Transmission apparatus incorporating 
reception apparatus 2.1 0.0 5     
847160 Input or output units, whether or not 
containing storage units in the same 
housing 1.8 0.0 4     
271019 Other 1.6 2.2 9 22 11 11  
852812 Colour 1.3 0.0 5     
847170 Storage units 1.3 0.0 5     
853400 Printed circuits. 1.2 0.0 1     
847180 Other units of automatic data processing 
machines 1.1 0.0 1     
854129 Other 1.1 0.0 2     
853710 For a voltage not exceeding 1,000 V 1.0 0.0 1     
854290 Parts 1.0 0.0 1     
852990 Other 1.0 0.0 6     
400122 Technically specified natural rubber 
(TSNR) 0.9 0.0 1     
271011 Light oils and preparations 0.9 1.3 5 11 4 7  
441214 Other, with at least one outer ply of non-
coniferous wood 0.7 6.0  7   7 
401519 Other 0.7 0.0 1     
151620 Vegetable fats and oils and their fractions 0.7 3.5  2 2   
854210 Cards incorporating an electronic 
integrated circuit (smart cards) 0.7 0.0 1     
Total 55.2  73 44 19 18 7 
 
Source:  WTO estimates based on data provided by Japan  and UNSD, Comtrade data. 
 
6. Table AI.4 shows the market access opportunities in Malaysia for Japan's top 25 exports, 
which in 2003-2005 accounted on av erage for 37.1% of Japan's global exports.  The table shows at 
which year all HS 9-digit tariff lines corresponding to the product definition (i.e. applying to the 
6-digit HS code used to capture the volume of trade) will become duty-free in Malaysia. 
7. Japan's top 25 exports cover a total of 158 HS 9-digit tariff lines of which 27 are already 
duty-free on an MFN basis.  Eight of Japan's top 25 exports, 20 (which account for 8 HS 9-digit lines 
and 11.7% of Japan's average global exports in the period 2003-05) already benefit from zero 
MFN duties in Malaysia's market; a further 3 pro ducts (accounting for a further 4.4% of Japan's 
average global exports) gain immediate duty-free access;  two more products are granted duty-free 
access in 2010;  seven in 2013; and four in 2016 at  which point all of Japan's top 25 exports will 
benefit from duty-free access into Malaysia.  The margin  of preference granted to Japan by Malaysia 
under the Agreement varies from 0 to 24.4 percentage points. 
 
  WT/REG216/2 
 Page 45 
 
 
  Table AI.4  
Market access opportunities under the agreement for Japan's top 25 exports 
Access Conditions to Malaysia's import markets  
MFN (2006) Japan's top export products in 2003-2005  
No. of Tariff Lines Duty-free in  
HS number and description of the product  Share in 
global 
exports 
(%) Avg. 
applied 
rate 
(%) Duty-
free Dutiable 
2006 
2008 
2010 
2011 
2013 
2016 
870323 Of a cylinder capacity exceeding 
1,500 cc but not exceeding 3,000 cc 5.9 23.5  37 11   13 1 12 
870324 Of a cylinder capacity exceeding 
3,000 cc 4.3 22.7  11 3 4  3 1  
854221 Digital 3.5 0.0 1        
847330 Parts and accessories of the 
machines of heading 84.71 2.7 0.0 1        
852540 Still image video cameras and other 
video camera recorders; digital 
cameras 1.9 0.0 1        
847989 Other 1.8 1.7 2 1 1      
852990 Other 1.7 1.7 2 1 1      
870899 Other 1.4 12.9 4 8   7  1  
870840 Gear boxes (transmissions) 1.4 12.5 1 1   1    
870322 Of a cylinder capacity exceeding 
1,000 cc but not exceeding 1,500 cc 1.3 21.8 1 10 2   1 1 6 
890190 Other vessels for the transport of 
goods and other vessels for the 
transport of both persons and goods 1.1 8.3 2 1     1  
854229 Other 1.0 0.0 1        
870332 Of a cylinder capacity exceeding 
1,500 cc but not exceeding 2,500 cc 0.9 23.6  28 8   6 1 13 
842952 Machinery with a 360° revolving 
superstructure 0.9 5.0  1 1      
890120 Tankers 0.9 8.3 2 1     1  
840991 Suitable for use solely or 
principally with spark-ignition 
internal combustion piston engines 0.8 20.0 1 7 2  4  1  
854140 Photosensitive semiconductor 
devices, including photovoltaic 
cells whether or not assembled in 
modules or made up into panels; light emitting diodes 0.8 0.0 1        
847160 Input or output units, whether or 
not containing storage units in the 
same housing 0.8 0.0 1        
870333 Of a cylinder capacity exceeding 
2,500 cc 0.8 24.4  18 4 3  10 1  
870829 Other 0.7 12.5 1 1   1    
853400 Printed circuits. 0.5 0.0 1        
870422 g.v.w. exceeding 5 tonnes but not 
exceeding 20 tonnes 0.5 20.0 1 2      2 
853690 Other apparatus 0.5 8.8 1 3 1    2  
381800 Chemical elements doped for use in 
electronics, in the form of discs, wafers or similar forms; chemical 
compounds doped for use in 
electronics. 0.5 0.0 1        
901380 Other devices, appliances and 
instruments 0.5 0.0 1        
Total 37.1  27 131 34 7 13 33 11 33 
 
Source : WTO estimates based on data provided by  Malaysia and UNSD, Comtrade data. 
 
 
 
 
  WT/REG216/2 
Page 46  
 
  ANNEX II 
 
Table AII.1 - Product specific rules of origin of JMEPA 
HS Section and Description HS Ch. Rule RVC/notes (where applicable)  
I - Live Animals; Animal Products 1-5 CTC  
II - Vegetable Products 6-14 CTC  
III - Animal or Vegetable Fat and Oils 15 CTC  
16 CTC;  CTC* see note "a" 
17 CTC  
18 CTC;  CTC* see note "b" 
19 CTC;  CTC or CTC* see note "c" 
20 CTC;  CTC* see note "d" 
21 CTC;  RVC 40% 
22 CTC;  RVC;  CTC or  RVC;  CTC+RVC 40-50% 
23 CTC;  RVC 40% IV - Prepared Foodstuffs; Beverages, 
Spirits and Vinegar 
24 CTC  
25 CTC;  CTC or RVC 
26 CTC or RVC V - Mineral Products 
27 CTC;  CTC or RVC 40% 
28 CTC or RVC 
29 CTC;  CTC or RVC 
30-34 CTC or RVC 
35 CTC;  CTC or RVC 
36-37 CTC or RVC VI - Chemical Products 
38 CTC;  CTC or RVC;  WO 40% 
VII - Plastics 39-40 CTC or RVC 40% 
VIII - Raw Hides and Skins 41-43 CTC  
44 CTC;  RVC 
45 CTC or RVC IX - Wood and Articles of Wood 
46 CTC;  CTC or RVC 40% 
X - Pulp of Wood 47-49 CTC or RVC 40% 
50 CTC;  CTC* or TR 
51-52 CTC;  CTC*;  CTC* or TR 
53-54 CTC;  CTC* or TR 
55 CTC;  CTC*;  CTC* or TR 
56 CTC;  CTC* 
57-58 CTC* 
59 CTC;  CTC* 
60 CTC* or TR XI -Textile 
61-63 CTC* see note "f" 
64-65 CTC XII - Footwear 66-67 CTC or RVC 40% 
XIII - Stone, plaster, cement 68-69 CTC or RVC 40% 
XIV - Pearls 70 CTC;  CTC+RVC;  CTC or RVC 40% 
71 CTC;  CTC or RVC 
72-76 CTC or RVC XV - Base metals 
78-83 CTC or RVC 40% 
XVI - Machinery 84-85 CTC or RVC 40% 
86 CTC or RVC 40% 
87 CTC or RVC - RVC 40% - 50% - 60% XVII - Vehicles, Aircraft, Vessels 
88-89 CTC or RVC 40% 
90 CTC or RVC XVIII - Optical 91-92 CTC;  CTC or RVC 40% 
XIX - Arms and Ammunition 93 CTC or RVC 40% 
94 CTC;  CTC or RVC 
95 CTC or RVC XX - Miscellaneous 
96 CTC;  CTC or RVC 40% 
XXI - Works of Art 97 CTC or RVC 40% 
a  The CTC* rule applicable to certain subheadings require th at where non–originating materials of  chapter 3 are used these are  obtained by 
fishing in the territory of an ASEAN member state or by a vesse l registered and sailing under the flag of an ASEAN member state . 
b  The CTC* rule applicable to certain subheadings require one of the following: a) non-origina ting cocoa beans of heading 18.0 1 constitute 
no more than 50% by weight of the good; or b) the non-originati ng cocoa beans of heading 18.01 are harvested, picked or gathere d in an 
third state which is an ASEAN member state and constitute at least 50% by weight of the good. 
c The CTC* rule applicable to subheading 1905.90 require that where non–originating materials of heading 11.05 are used these a re 
produced entirely in an ASEAN member state. 
d The CTC* rule applicable to certain h eadings and subheadings require that where non-originating materials of chapter 7 (and i n some 
cases also chapters 8, 11, and 17) are used  these are harvested, picked, gathered or produced entirely in an ASEAN member state . 
__________