KUALA LUMPUR, Oct 13 — Malaysia and the European Union (EU) have completed nearly 80 per cent of negotiations on their proposed free trade agreement (FTA), with discussions continuing on outstanding issues involving palm oil, steel and automotive trade.
Investment, Trade, and Industry Minister Datuk Seri Johari Abdul Ghani said the remaining 20 per cent of the negotiations involved issues both sides believe they can resolve, although discussions are still ongoing.
Malaysia is targeting the conclusion of the Malaysia-EU FTA by the end of June next year.
“I would say almost 80 per cent are already done. I think that can be reconciled, but it is still work in progress.
“I think we should be able to resolve it,” he said at a media conference during the EU-Malaysia Business Day 2026 at Kuala Lumpur Convention Centre today.
The Malaysia-EU FTA negotiations resumed last year, with both sides initially aiming to agree by the end of 2027.
Johari added that the agreement aims to provide greater market access for both sides amid changes in the global economy and growing geopolitical uncertainties.
“So it's good formation because, being an open economy, we want to trade as much as we can with all other countries in the world,” he said.
The minister noted that the United States, China, and the EU collectively accounted for nearly 70 per cent of the global economy.
Johari further explained that the outstanding issues included steel, palm oil, and automotive trade, with the agreement requiring approval from the EU’s 27 member states.
When asked to elaborate, he said it was not a red line for Malaysia, as the country is prepared to comply with the EU Deforestation Regulation (EUDR).
Major Malaysian palm oil producers, which accounted for more than 60 per cent of the country’s exports, have already taken steps to meet the requirements, including traceability, preventing deforestation, and addressing forced labour.
“Any export that we make from here on our palm oil has to be EUDR-compliant. So we are prepared to do that.
“We have been doing, in fact, while we are talking about this FTA, our big companies in Malaysia, right, the ones that I think about six, seven of them, they are producing almost more than 60 per cent of what we export,” Johari said.
An agreement with the EU could make it easier for Malaysian palm oil products to access markets across the bloc, as member states could recognise compliance more consistently.
When asked about the US’ tariff exemption for Malaysian semiconductors, he said Malaysia has not received any indication that the US would withdraw its current tariff exemption for Malaysian semiconductors.
Negotiations with Washington under Section 301 remain ongoing, with excess capacity among the outstanding issues.
Separately, Johari said Malaysia has addressed concerns relating to forced labour, environment, and state subsidies, while discussions on excess capacity remained unresolved.
The country is prepared to provide commitments on excess capacity involving third countries, subject to receiving a list of the countries concerned.
To this, it will no longer focus on accommodating foreign workers for routine factory operations, but would limit their employment to dangerous, dirty and difficult (3D) jobs.
“We are not here to facilitate foreign workers, just to run the factory, run your business,” he said.
Rather, Malaysia wanted investors to contribute to developing higher-value industries rather than rely heavily on foreign labour for factory operations.
