'GSP status is not negotiable'

KUALA LUMPUR: THE Generalised Scheme of Preferences (GSP) status accorded to Malaysia by donor countries is not negotiable.


"The GSP status accorded by the donor countries to developing nations is unilateral. It is not negotiated," said Ministry of International Trade and Industry (Miti) secretary-general Datuk Dr Rebecca Fatima Sta Maria.

She said Malaysia graduated from the GSP status with the United States in 1995. As with the European Union (EU), it will expire at end of this year and with Canada, at the end of June 2014.

"The moment Malaysia's gross development product (which is the sum of goods and services) reaches a certain level, that preference will be taken away," she told Business Times on the sidelines of a seminar, here, recently.

Rebecca was responding to a query on the predicament faced by Malaysian palm oil exporters once the GSP status accorded by various developed nations expires. Miti is the government agency tasked to negotiate regional and bilateral trading arrangements to complement the multilateral approach to trade liberalisation.

Six months ago, Kuala Lumpur Kepong Bhd chief executive officer Tan Sri Lee Oi Hian highlighted that from January 2014, Malaysia's oleochemicals shipments entering the EU will be taxed between four and six per cent. 

The EU had announced that the current GSP status accorded to Malaysia will expire at the end of this year.

Last year, the Malaysian Palm Oil Board data revealed that Malaysia exported 2.22 million tonnes of palm oil to EU countries. This is about 13 per cent of the 17.58 million tonnes of palm oil shipped out from Malaysian shores.


"This is a very big problem for us in Malaysia because Indonesia is still considered a developing country," he said, implying that Indonesia's exports to the EU will continue to be tax-exempted.

"With losing GSP, if we don't tackle it well, it could be another nail in the coffin for us. 

"I would like to urge the government to put the free trade agreement discussions with the EU on a faster burner and try to resolve some of these issues," he added.

Lee was speaking at the first edition of Global Malaysia Series titled "Fuelling the Economy - The Business of Palm Oil", organised by Performance Management and Delivery Unit (Pemandu) of the Prime Minister's Department in March 2013.

When queried on Miti's stance with regards to barriers to palm oil trade, Rebecca said: "We are aware and it will be part of the free trade-agreement negotiations under the technical trade barriers segment.

"Palm oil trade barriers are not the only issue to be addressed at the meetings. We will try to get, or at least, minimise the barriers or bring the tariffs down to zero."