Malaysia and the European Union will consider signing a free trade agreement (FTA) similar to FTAs being negotiated between the EU and three other Asian countries, a senior EU official said today.

Herve Jouanjean, Deputy Director General of the EU External Relations Directorate General, said Malaysia and the EU had agreed to first conduct a feasibility study into the possibility of an FTA.

"On the basis of this study we will decide whether we will go for a second stage, whether we start negotiating such agreements," he said.

"We have offered Malaysia the possibility to sign with us a bilateral agreement of the kind we are currently negotiating with Singapore, Thailand and Indonesia," he told reporters.

The study was expected to take several months and no time-frame was set.

EU Trade Commissioner Peter Mandelson has announced the EU would consider FTAs with Asian nations amid a continuing impasse in global trade talks.

Mandelson and Southeast Asian economic ministers in April agreed to study a potential FTA between the Association of Southeast Asian Nations (Asean) and the EU.

Asean groups 10 Southeast Asian countries and that feasibility study is expected to be completed this year. Malaysia is also expected to sign a free trade pact with Japan at the end of the year.

M'sia running big surplus

"Since the 1997 crisis, Malaysia has run a very big surplus with the EU, on average annually, four to six billion euros," EU head of delegation to Malaysia, Thierry Rommel, added.

Jouanjean said other possible areas of cooperation discussed at a meeting between Malaysian and EU officials included environmental protection, technological development and the pharmaceutical and agriculture sectors.

The EU was also prepared to contribute towards the Kuala Lumpur-based Southeast Asia Regional Centre for Counter-Terrorism and to Malaysia's early warning system for tsunamis, he said.

"On both sides, we agreed that we must be operational, we don't want this relation to be blah blah blah, we want it to be effective."

Jouanjean pledged that all Malaysian products except crude palm oil would continue to enjoy trade privileges currently offered by the EU, after a new system kicks off on July 1 this year.

"I hope this is appreciated by the Malaysian side," he said.

Under the new rules, exporters in China would no longer be offered benefits under the Generalised System of Preferences, which allows developing countries preferential tariffs on their exports to the EU, he said.