30/10/2025

THURSDAY | OCT 30, 2025

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Malaysia stands firm in US reciprocal trade pact

Framework promising but uneven: Academic

Ű BY KIRTINEE RAMESH newsdesk@thesundaily.com

PETALING JAYA: An academic has cautioned that the US trade agreement appears “somewhat asymmetrical” – favouring the US in terms of immediate benefits. Universiti Kebangsaan Malaysia’s Institute of Malaysian and International Studies senior lecturer Dr Muhammad Faliq Abd Razak said although the agreement strengthens bilateral ties, Malaysia’s gains will depend on how effectively its firms can leverage the new opportunities. “The US gains clearer access to Malaysia’s goods and services market, while Malaysia’s benefits hinge on how effectively firms can utilise the new openings. It’s more about strategic positioning.” He said expanded market access does not guarantee growth, stressing that Malaysian exporters must meet US’ stringent requirements on sustainability, certification and regulatory compliance. He said high-value industries such as electronics, medical devices and digital services are best positioned to benefit from the deal, as they already operate at or near international standards. However, traditional or resource-based sectors may struggle to adapt to tighter cost and regulatory frameworks. He also highlighted potential trade-offs, pointing out that past US trade agreements often came with tougher expectations on data governance, labour standards and intellectual property protection. “The key is maintaining regulatory coherence so Malaysia preserves policy flexibility while aligning with global practices. The real test is ensuring the deal complements Malaysia’s wider commitments under Asean, the Regional Comprehensive Economic Partnership, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.” PETALING JAYA: Malaysia’s bid for BRICS should be viewed as a continuation of its long-standing foreign policy of neutrality and diversification – positioning the nation as a connector rather than a competitor in an increasingly polarised global economy, said an international relations expert. Universiti Utara Malaysia Asian Institute of International Affairs and Diplomacy research fellow Assoc Prof Dr Bakri Mat said Malaysia’s strength lies in its balanced approach, which enables it to engage major powers without being drawn into rivalry. “Malaysia should make it clear that it is about expanding economic opportunities, not choosing sides. We have always practised an open and balanced foreign policy – working with all partners, whether from the West or the Global South. We can support BRICS initiatives while continuing to strengthen ties with the US, EU and Japan.” He added BRICS could boost Malaysia’s strategic autonomy by opening access to new markets, development funding and South–South cooperation. He, however cautioned against over-dependence on any single partner, especially China. Bakri said criticism could be expected from the US, but Malaysia could manage this diplomatically by clarifying that it is purely economic. “We can act as a bridge between East and West. That’s our comparative advantage – it keeps Malaysia relevant, respected and trusted by all sides.” – By Harith Kamal ‘BRICS is about expanding opportunities’

Ű BY HARITH KAMAL newsdesk@thesundaily.com

o Agreement protects exporters and workers, safeguards economy and sets clear boundaries without compromising sovereignty: Tengku Zafrul

He noted that the deal also commits Malaysia to rein in government-linked companies that distort markets, curb censorship of US TV news, address trafficking and child labour, and limit purchases of nuclear-energy equipment from certain countries. “There are lots of touch points Malaysia will struggle with.” Asked if Malaysia gained any clear wins, Williams was blunt. “None from facing a 19% tariff when previous tariffs were much lower. “The only indirect gain is being pushed to reform – like a doctor forcing you on a diet. You may not like it, but it could make you healthier in the long term.” – By Harith Kamal The deal cuts tariffs and secures exemptions for 1,711 product lines worth RM22 billion, including palm oil, rubber-based products, cocoa and aircraft components. “This approach gives Malaysia an advantage compared with doing nothing or retaliating.” Tengku Zafrul challenged critics to show any clause that breached Malaysia’s principles of sovereignty, economic independence or Bumiputera rights. “If anyone claims we sold the country, I challenge them to show one clause that crosses these red lines – not one exists. He clarified that Article 5.1.1 of the ART had been misinterpreted. “It does not allow the US to compel Malaysia to act on other countries. It only provides for discussions under Malaysian law – as equal partners, not subordinates.” On claims that the ART forces Malaysia into costly purchases from the US, he said Petronas’ liquefied natural gas (LNG) imports and Malaysia Aviation Group’s Boeing aircraft orders were existing commercial plans, not new government spending. “Even without tariffs, these are planned procurements. They are not political directives.” He reaffirmed Malaysia’s hala l standards remain intact. “Only halal products certified by US bodies recognised by Jakim and meeting Malaysian standards will be approved. Jakim retains full control.” Tengku Zafrul added that Malaysia’s rare earths and critical minerals remain under domestic control. “A sovereign country must have diverse energy and resource options – that is security, not dependency.” ART was finalised at the 47th Asean Summit in Kuala Lumpur on Sunday after six months of talks. Under the pact, Malaysia’s overall tariff rate stays at 19%, while 1,711 product lines gain zero-tariff access to the US market.

PETALING JAYA: The Malaysia– United States Agreement on Reciprocal Trade (ART) is no “blank cheque” to Washington but a carefully negotiated pact to safeguard Malaysia’s economic interests, sovereignty and jobs, said Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz. He told Parliament yesterday that Malaysia “did not bow its neck” during negotiations, saying that the pact was sealed under intense tariff pressure without crossing Malaysia’s red lines on halal standards, critical minerals or domestic procurement rules. “The trade pact is not a blank cheque to the United States. It is a fence – a fence we build so that any subsequent actions must go through negotiation, not unilateral threats.” Tengku Zafrul said Malaysia’s

had to face this reality. If we were careless or failed to act, it would not be Members of Parliament who suffer but it would be ordinary Malaysians losing jobs and income.” He warned that without ART, Washington could have raised tariffs from 19% back to 24% or even 100%, endangering export-reliant industries such as electrical and electronics, aerospace, rubber, cocoa and pharmaceuticals. “If the agreement is not finalised, there is a high likelihood tariffs will increase, undermining the competitiveness of Malaysia’s exports to the US market.”

six-month stance was guided by openness, sovereignty and long term national interest and not political expediency. Citing the US as Malaysia’s largest export market, he said bilateral trade reached RM325 billion in 2024, with Malaysian exports totalling RM198.65 billion and RM166.38 billion recorded from January to September this year alone. He said the government moved swiftly after the US imposed a 25% tariff on Malaysian goods in July, protecting exporters and workers from severe economic fallout. “Whether we like it or not, we

Tengku Zafrul said the reciprocal trade pact with the US protects local industries amid tariff pressure and global uncertainty. – AMIRUL SYAFIQ /THESUN

‘Deal offers limited benefits, tighter constraints’ PETALING JAYA: The US–Malaysia trade pact may have been hailed as a diplomatic breakthrough, but it could prove a costly victory for Malaysia, says an economist. On whether the pact could attract investment, Williams said Malaysia has limited leverage to draw new US foreign direct investment.

could see some indirect gains. “The benefit for Asean and Malaysia is that they’ve been forced to cut tariffs and tackle non-tariff barriers to US trade. In other words, protectionist policies have been challenged, paving the way for freer trade in the future.” Responding to International Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz’s claim that the deal “respects both countries’ national sovereignty”, Williams offered a guarded reading. “It seems to mean the US respects Malaysia’s right to impose trade restrictions in certain areas without specifying which. In return, the US imposed a 19% reciprocal tariff. So Malaysia is effectively paying for its sovereignty and policy autonomy.”

“US investments generally come from businesses, not governments. Some US rare-earth firms may see opportunities, but otherwise, nothing much has improved in trade or investment prospects.” He warned that Malaysia’s commitments under the agreement – including purchases of US aircraft, LNG and semiconductors could reduce flexibility. “The purchases align with existing plans, but there’s no room to manoeuvre. For instance, if there’s a backlog in US aircraft deliveries, Malaysia must simply wait in line.” Williams said Asean economies

Prof Geoffrey Williams cautioned that the benefits may be limited and could come with a sting in the tail. He said tariff exemptions cover only RM21.9 billion worth of Malaysian exports to the US, or just 11% of total trade value in 2024. “That means 89% of exports by value are now hit with a 19% reciprocal tariff.” “Before ‘Liberation Day’ – when President Trump unveiled his tariff package most Malaysian exports were tariff-free. Now, almost 90% by value face tariffs. So this is a big, bad impact.”