If the discussions are not stuck in a quagmire, Australia expects the agreement to come into force on Jan 1, 2007, to add considerable value to the economies of both countries over 20 years.
Howard said that the agreement will build on an already substantial economic relationship between the two countries.
The main stumbling block is expected to be the liberalization of services sector in Malaysia and concerns that Australian agricultural exports could put pressure on more inefficient Malaysian producers.
Australia has already struck a trade deal with Singapore.
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