Malaysia trade deal fuels concerns of sovereignty, new US levies
Lawmakers are seeking clarity on whether the pact safeguards Malaysia’s interests and sovereignty in trade matters
[KUALA LUMPUR] Malaysian Prime Minister Anwar Ibrahim’s trade deal with the US is drawing fire at home as a group of lawmakers questions clauses that allow Washington to raise new tariffs and pressure the South-east Asian nation to align with its trade policies.
The lawmakers are seeking clarity on whether the pact safeguards Malaysia’s interests and sovereignty in trade matters. They are inviting the Ministry of Investment, Trade and Industry – helmed by Zafrul Aziz – and the US Embassy in Kuala Lumpur to respond to questions on Nov 12, said Wong Chen, who heads a parliamentary select committee on international trade.
While Malaysia’s parliament does not have the authority to vote on trade agreements, the lawmakers said they are seeking to ensure government transparency and accountability in policy decisions.
The provisions reflect Washington’s broader push to align trade partners with its economic and security priorities amid its intensifying rivalry with China – a stance that puts Malaysia in a delicate position as it seeks to maintain balanced ties with both powers. India and the US have also been locked in a trade dispute after Trump slapped 50 per cent tariffs on the South Asian nation’s exports, partly to penalise the country for buying oil from Russia.
Such provisions present a “nightmare scenario” for Asean countries, said Daniel Kritenbrink, the former US assistant secretary of state for East Asian and Pacific Affairs and former ambassador to Vietnam.
Governments want to pursue independent geopolitical and trade strategies, not be “squeezed and put in that uncomfortable position,” Kritenbrink, a partner at the Asia Group, said at an event in Singapore on Friday (Oct 31).
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Under the agreement, Washington can notify Malaysia when it imposes trade restrictions on another country for economic or national security reasons, and the Asian nation is expected to take similar steps or agree on a timeline to do so. The pact also commits Malaysia to align with US export controls and sanctions on sensitive technologies, and to prevent its companies from helping others circumvent those measures.
“We should prepare for the reactions of our large trading partners such as China and India,” said Wong, a former corporate lawyer in Kuala Lumpur. “If the trade ties between these countries and US improves, then the more onerous terms can be managed, but if it becomes more difficult, Malaysia will be pressed to decide on which direction to pivot.”
Indeed, President Xi Jinping’s message to the region is “do whatever you want in terms of cooperating with the United States, just don’t do it at our expense,” Kritenbrink said. “Otherwise, there’ll be consequences. So this will be challenging going forward.”
Another clause allows Washington to impose additional tariffs to counter what it believes are unfair trade practices and to safeguard its national interests. The pact signed on Sunday reaffirmed the 19 per cent tariff rate for Malaysia that President Donald Trump has already imposed.
Lawmakers say the provision could expose Malaysian exports to fresh levies even as the government touts the deal as a gateway to deeper access to the US market.
Malaysia has also expressed its intention to join the Brics bloc of developing nations that includes Brazil, Russia, India, China and South Africa. BLOOMBERG
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