NZ signs trade deal with Malaysia 

Source: ReutersNZ's PM John Key and Malaysia's PM Najib Razak

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A trade deal with Malaysia is another step towards New Zealand's economic integration with Asia, Prime Minister John Key says.

Key on Tuesday witnessed the signing of the trade deal which builds on or speeds up on the agreement New Zealand signed earlier this year with the 10 members of the Association of South East Asian Nations  (Asean), of which Malaysia is a part.

Malaysia is New Zealand's eighth largest export market with exports of around $1 billion last year.

It is also one of the fastest growing markets with exports growing by more than 80% between 2004 and 2008, double the rate for New Zealand exports to the world over the same period.

"It's a comprehensive free trade agreement which essentially fast tracks the Asean FTA," Key says.

The result was that 95% of goods would be duty free and within seven years all goods tariffs will be phased out.

Some of the key aspects of the deal were in the non-tariff areas with business people allowed to get visas more easily and for longer.

Malaysian customs would also only be allowed to keep New Zealand goods for 48 hours before clearing them, the first time Malaysia has agreed to such a move.

Gains gains in the goods area include:

- A 15% tariff on kiwifruit exports will be removed next year
- Liquid milk export quotas are lifted
- Large tariffs on steel products will be eliminated by 2016
- Large tariffs on plastic products will be removed by 2012
- Paint tariffs will be gone by 2016.

Key says New Zealand had a strong relationship with Malaysia which had 15,000  people studying in New Zealand.

Malaysia was also a gateway into Asia and Fonterra was using it as a launch pad into other countries.

Key opened new offices for Datacom following the New Zealand company's recent expansion into Malaysia and a new production line of chilled yoghurt and other consumer products at Fonterra's plant in Kuala Lumpur.

The trade deal comes after positive talks at the East Asia Summit for New Zealand, which managed to secure agreement from the 15 other leaders at the summit for further work towards a pan-Asia free trade area.

After leaving Thailand Key was met at Kuala Lumpur International Airport by a  full guard of honour before being taken by motorcade to his hotel in the central city.

Around 70 business leaders have accompanied Key to Kuala Lumpur to attend the  trade deal signing and a conference on doing business with Malaysia.