Malaysia defends US trade pact dubbed 'act of surrender' amid sovereignty concerns

Clause on toeing US line on economic curbs or sanctions raises alarm bells

- Hadi Azmi Malaysia Correspondent

Malaysia has defended its reciprocal trade agreement with the US, saying on Oct 29 that the country has not surrendered its sovereignty in safeguarding the economy from harsher sanctions.

The deal, signed by Malaysian Prime Minister Anwar Ibrahim and US President Donald Trump on the sidelines of the Asean summit, maintains the White House’s unilateral 19 per cent tariff on Malaysian exports, but grants exemptions for 1,711 essential products, including electronics, rubber and palm oil derivatives.

However, a clause requiring Malaysia to align itself with the US on matters of economic restrictions or sanctions against a third country has raised alarm bells on both sides of the political divide, with critics warning that it may threaten the country’s independence and longstanding neutrality stance.

Addressing the issue in Parliament on Oct 29, Investment, Trade and Industry Minister Tengku Zafrul Aziz said the government had no choice but to negotiate with the US, and that the agreement represented “the best possible outcome” for Malaysia.

“There are some who said we surrendered our necks in the negotiations,” Datuk Seri Zafrul told lawmakers.

“But this is the geopolitical reality we face as a freely trading nation engaging with the world’s largest economic power, which is also our biggest trading partner.”

Trade between the two countries reached RM325 billion (S$100 billion) in 2024, with Malaysian exports accounting for RM200 billion. The surplus led to Malaysia being hit with a 24 per cent tariff, later raised to 25 per cent before being revised again to 19 per cent in September.