About trade and investment between the EU and Malaysia

SIAs serve to support major trade negotiations, providing a comprehensive analysis of the possible impacts of the future agreement which feeds into the negotiation process. They further serve to foster communication with the wider public, by gathering a broad range of inputs and providing information on the FTA under negotiation and on its likely impacts. Therefore, an important element of their successful delivery is to ensure that far-reaching stakeholder consultation, in addition to literature and data analysis, is thoroughly incorporated into the research process. This process also allows the integration of the views of the interested parties in the preparation of mitigation and accompanying measures to ensure that the expected positive impacts are maximised and the possible negative impacts are off-set following the adoption of the agreement. SIAs also serve to clarify complex issues related to economic, social, human rights and environmental development in policymaking, thereby promoting transparency in the policymaking process and generating an informed public discussion in addition to informed decision-making.

In 2007, region-to-region FTA negotiations were launched between ASEAN and the EU, with Malaysia as a Party to the negotiations. These negotiations were paused in 2009 and bilateral negotiations were launched between the EU and individual ASEAN member states.

Bilateral FTA negotiations between the EU and Malaysia were launched in September 2010. Due to different levels of ambition between the EU and Malaysia, these negotiations were put on hold in 2012 after seven rounds. It is expected that negotiations can be resumed in the course of 2018. The aim is to eliminate or reduce tariff and non-tariff barriers to trade in agricultural products, manufactured goods and services and thereby facilitate trade flows, expand the level of FDI and realize its untapped potential, level the playing field between private businesses and state owned enterprises, and contribute to and promote sustainable development objectives. It is in this vein that the Sustainability Impact Assessment (SIA) in support of FTA negotiations between the European Union and Malaysia was commissioned.

Malaysia was one of the 13 countries which were identified by the Commission on Growth and Development Report to have recorded an average growth of more than 7 percent per year for 25 years. Malaysia was ranked as the EU’s second largest import partner and third largest export partner in ASEAN in 2016. For Malaysia, the EU was its third largest trading partner in 2017.