New Zealand has signed a free-trade agreement with Malaysia.
With Prime Minister John Key and Malaysian Prime Minister Najib Razak looking on, Trade Minister Tim Groser and his counterpart, Datuk Mustapa Mohamed, inked the deal in Kuala Lumpur on Monday night.
Mr Key says that the trade surplus is slightly in favour of Malaysia at the moment but that the free trade deal will help boost New Zealand industries.
He points to the 64% increase in exports from New Zealand to China since a free trade deal between the two countries was signed last year as an example of the benefits of such agreements.
Mr Razak says he hopes the deal will encourage New Zealand investors to see Malaysia as a gateway to the ASEAN (Association of South-East Asian Nations) market.
Thousands of tariffs to be progressively removed
The culmination of four years' negotiations, the deal will see import duties on thousands of product lines progressively removed over the next few years.
Mr Key and Mr Najib have also agreed to cooperate on education, forestry, health, biotechnology and the manufacturing sector as part of the deal.
Malaysia's major exports to New Zealand include crude petroleum, electrical and electronic products, manufactured metal and chemical products.
Fonterra supports more trade deals
A senior executive at New Zealand's largest exporter, Fonterra, supports further free trade deals with ASEAN countries.
Fonterra does not currently face tarriffs on milk powder which makes up the bulk of its exports to Malaysia.
But the deal with Malaysia increases the quantity of long-life liquid milk it can export to the south-east Asian country and removes tariffs on these exports three years earlier than under the ASEAN deal completed in March.
Mark Wilson, Fonterra's general manager for Africa, Asia and the Middle East, says the deal with Malaysia will underpin further investment in the country by the dairy cooperative.
Mr Wilson says he is supportive of further deals with ASEAN members if it benefits New Zealand exporters.
Tentative steps towards EU-style grouping
Over the weekend, Mr Key attended the East Asia Summit in Thailand where tentative steps were taken to set up a European Union-style economic and political grouping in the region.
Such a grouping would constitute the largest free-trade area in the world. Mr Key says it would expand the free-trade agreement covering the 10 ASEAN states and Australia and New Zealand to - possibly - China, South Korea, Japan and India, all of which were represented at the summit.
Later on Tuesday, Mr Key was due to fly to Japan for a state visit.
