Malaysia-US Reciprocal Trade Agreement Safeguards National Economic Interests, Security -- Tengku Zafrul

KUALA LUMPUR, 29 Okt (Bernama) -- The Malaysia-United States (US) Reciprocal Trade Agreement (ART) contains clauses that safeguard national sovereignty, with its implementation based on the nation’s economic interests and security, as well as domestic laws and regulations. 

Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said that, through this agreement, the US agreed that any measures it wanted to take to address trade imbalances must go through a negotiation mechanism to reach a mutual understanding. 

“For example, Article 5.1.1 should not be seen as Malaysia complying with any US sanctions imposed on other countries. 

“On the contrary, the provision -- through the phrases ‘in accordance with its domestic laws and regulations’ and ‘a timeline for implementation that is acceptable to both parties’ -- gives Malaysia legal and diplomatic space to avoid taking actions against other countries,” he said during a special briefing session at the Dewan Rakyat today.

Tengku Zafrul said Malaysia only needs to discuss with the US, and if the country needs to resort to trade actions, it can do so under domestic laws and regulations, with its own timeline and mechanism.

“The provision also emphasises that any measures taken by Malaysia must be on an issue that is a ‘shared economic concern’ for both Malaysia and the US,” he added.

Tengku Zafrul stressed that the US, as the world’s largest economic power, is Malaysia’s largest export market, with total Malaysia-US trade in 2024 reaching RM325 billion, of which Malaysia’s exports to the US stood at RM198.65 billion.

Between January and September this year, Malaysia’s total exports to the US amounted to RM166.38 billion, he said.

“This is an important market for Malaysia, and whether we like it or not, we need to stand up to defend access to this market even in the face of unilateral reciprocal tariff pressure from the US government.

“We have no choice but to negotiate in the interests of our country and economy,” said Tengku Zafrul. 

Meanwhile, Tengku Zafrul said that Malaysia decided to initiate negotiations with the US as early as May 2025 to secure lower tariff rates, ensuring Malaysian exports remain competitive.

He said that this approach is seen as giving the country an advantage over doing nothing or taking retaliatory action against the US, the world’s economic superpower. 

On April 2, 2025, Malaysia was slapped with a 24 per cent tariff, later raised to 25 per cent in July 2025, due to trade imbalances between the country and the US.

As part of the outcomes from these negotiations, the Malaysia-US bilateral relationship has been elevated to a Comprehensive Strategic Partnership, he said.

“The main result of the negotiations that took six months was Malaysia’s success in reducing the tariff rate imposed by the US from 25 per cent to 19 per cent, which is the lowest rate imposed on ASEAN countries that also have a trade surplus with the US.

 “If the ART agreement is not signed immediately, Malaysia faces the risk that the US government would raise the tariff rate back to the original 24 per cent rate or higher,” said Tengku Zafrul.

-- BERNAMA