The Federal Trade Minister Craig Emerson has signed off on a new free trade agreement with Malaysia on Tuesday in Kuala Lumpur.
Seven years in the making, the deal will guarantee tariff-free entry for more than 97 per cent of Australian exports to Malaysia once it comes into effect. That will increase to 99 per cent by 2017.
Malaysia is currently Australia's 10th largest trading partner, with trade in goods and services between the two countries worth $16 billion in 2011.
A spokesman for the Department of Foreign Affairs and Trade says most agricultural exports to Malaysia already enjoy tariff-free treatment under the existing ASEAN-Australia-New Zealand FTA (AANZFTA) or Malaysia's applied tariffs.
But DFAT says agricultural exporters will still benefit from the new agreement because of its "legally-bound commitments, the strengthened framework for co-operation on a broad range of trade issues, and the simpler administrative arrangements for trading under the FTA (use of a declaration of origin rather than certificate of origin)".
The department says the new agreement also provides for more liberal access for Australian milk, a guarantee that Australian wine will get the best tariff treatment Malaysia gives to any country, and a commitment to eliminate the tariff on rice.
Malaysia will also free up access conditions to allow the importation of retail rice product after a transition period.
"That is a significant precedent given the sensitivity surrounding rice in many Asian countries," the DFAT statement said.
Tariffs will also be eliminated by 2016 for Australian melons, mangoes, pineapples and longans.
National Farmer Federation vice-president Duncan Fraser says a Malaysian FTA is an important step as Australia moves to develop closer ties with its trading partners in Asia.
"The [Malaysian] market is worth about $1 billion in Australian agricultural exports at the moment," he said.
"Malaysia is our fourth largest sugar market and it's our fifth largest wheat export market, so there's areas with these commodities and others that we believe can be boosted throgh the free trade agreement."
Currently, Australia's top three most valuable agricultural exports to Malaysia are wheat, sheep and goat meat and sugar. The top three most valuable horticultural exports are oranges, dried shelled peas and carrots and turnips.
Source: ABC