KUALA LUMPUR, Jan 31 (Bernama) -- The Malaysia-Australia Free Trade Agreement (MAFTA) will be signed this May after the conclusion of the talks on the agreement, slated in March, said Minister of International Trade and Industry Datuk Seri Mustapa Mohamed.

He said the much-delayed agreement, which was mooted in 2005, would be concluded this year as per aspirations of Prime Minister Datuk Seri Najib Tun Razak and his Australian counterpart, Julia Gillard, when the latter paid an official visit to Canberra.

"The challenges and issues that were the stumbling blocks in the agreement's realisation are being resolved one by one," he told reporters after the 16th Malaysia-Australia Joint Trade Committee Meeting here Tuesday.

Australian Trade Minister, Craig Emerson, co-chaired the meeting.

Mustapa said in any negotiations, there would be gaps.

"The tasks of the negotiators are to bridge the gaps and I am pleased to inform that this session here has been successful in closing the gap between the two countries.

"A number of issues were on the table, including investor dispute settlement, wine, cars, export taxes and finance.

"The commitments from both sides are to bridge the gap and we think we have done it," he said.

Meanwhile, Emerson said the trade relationship with Malaysia was vital for Australia, as it was in line with Canberra's economic initiatives, which emphasised on being close to Asian countries.

"Malaysia is one of the potential countries which we see in the region.

"This one-day session has been positive in taking a step closer to the conclusion of the MAFTA talks, as the session is merely to solve problems.

"It is a good opportunity to understand each other's perspectives and share thoughts for better understanding prior to the proposed agreement," he said.

The MAFTA talks, which were earlier slated to be concluded in 2007, were delayed due to certain sensitive issues.

Over the last few years, Malaysia concluded bilateral free trade agreements (FTAs) with Japan, Pakistan, Chile, New Zealand and India and signed regional FTAs with China, Japan, South Korea, India and Australia/New Zealand.

Currently, 61 per cent of Malaysia's total trade was with FTA partners.