A Calmer Look At The Malaysia Us Trade Deal

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Muhammed Abdul Khalid’s recent commentary titled, “How US–M’sia Trade Pact Sells Our Sovereignty Short,” makes for passionate reading.
His concern for national autonomy is shared by many Malaysians who care deeply about economic independence.
However, passion must be matched with precision. A fair assessment of the Malaysia -United States Agreement on Reciprocal Trade requires us to separate emotions from facts, see this pact not as a surrender, but as a calculated act of damage control in a difficult global environment.
Let us begin with what the agreement actually is. The trade deal is an executive agreement, concluded under US President Donald Trump’s authority through Executive Order 14,257.
ADSIt is not a treaty ratified by the US Congress. This means that while the agreement is diplomatically binding, it has no statutory force in American law and can be suspended or revoked by any future administration.
This distinction matters. It means Malaysia has not locked itself into an irreversible legal obligation.
Washington can “walk away at will”, and so can Kuala Lumpur, should the terms become untenable. To describe such an arrangement as a permanent surrender of sovereignty is therefore inaccurate.
The tariff reality
Critics emphasise that only a small portion of Malaysian exports - perhaps 10 to 12 percent - will enjoy zero tariffs. This is correct but incomplete. The broader context is that Malaysia avoided a threatened tariff hike to 25 percent under the so-called “Liberation Day Tariffs”.
Under the deal, the US has capped tariffs at 19 percent and granted zero-tariff access to 1,711 Malaysian products - mainly in electronics, palm-oil derivatives, and rubber goods.
US President Donald TrumpThis represents stability for more than RM 15 billion in exports, particularly for Penang and Johor’s manufacturing clusters.
The deal is therefore not a bonanza, but a buffer. It prevented substantial trade disruption and bought time for exporters to adjust.
Clauses on consultation and sanctions
Much attention has focused on Article 5.1, which states that Malaysia “shall adopt or maintain a measure with equivalent restrictive effect” when the US imposes sanctions relevant to its own national security.
This clause has been interpreted as forcing Malaysia to mirror US sanctions automatically. That interpretation overreaches. The text includes a qualifying phrase - “or agree to a timeline for implementation acceptable to both parties.”
In international practice, such wording signals consultation, not compulsion. Malaysia retains the right to interpret, delay, or decline such alignment through domestic processes. No Malaysian law has been amended, nor has Parliament ceded its power to legislate.
Likewise, Article 5.3 allows Washington to terminate the pact if Malaysia signs a future agreement “jeopardising essential US interests”. This is a termination right, not a veto power. Every trade agreement contains exit clauses.
Petronas and investments
Muhammed alleged that Malaysia has pledged nearly RM1 trillion in investments to the US, including an annual RM 10 billion obligation for Petronas to purchase US liquefied natural gas.
No such figures appear in the public text or joint statements released by either government.
What exists is a memorandum of understanding on energy cooperation, encouraging commercial partnerships between Petronas and US suppliers.
These arrangements are subject to business discretion, not political command. To describe them as “mandates” misrepresents their legal nature.
Another concern is that Malaysia has “diluted” Islamic Development Deparment’s (Jakim) authority by recognising US halal certifiers.
The relevant annex merely states that Malaysia “shall allow the usage of a halal logo issued by any US halal certifier designated by the Department of Islamic Development Malaysia.”
The phrase designated by Jakim is decisive. Certification power remains in Malaysian hands. This provision reflects Malaysia’s effort to internationalise halal standards while maintaining domestic oversight - a move consistent with its ambition to remain a global halal hub.
Digital tax
It is true that Malaysia has agreed not to impose discriminatory digital-service taxes or universal-service contributions on US firms.
However, the clause applies only where such measures single out American entities “in law or in fact”. Malaysia remains free to design non-discriminatory taxes applicable to all digital service providers.
Similarly, the provision on state-owned enterprises (GLC) merely codifies principles Malaysia already applies under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in relation to commercial conduct, transparency, and non-discrimination. It does not forbid legitimate public service support or developmental policy.
Overall, to view trade agreement through a purely economic lens misses its strategic dimension. It was signed in the shadow of global tariff escalation and the US-China rivalry. For a trade-dependent, medium-sized economy like Malaysia, staying out of the US crosshairs is vital.
The agreement allows Malaysia to buy space - to safeguard export access while positioning itself within the Asean framework of strategic neutrality.
Indeed, the pact was concluded when Malaysia was chairing Asean, underscoring its role as a bridge, not a pawn, between competing powers.
The deal is neither a panacea nor a sell-out. It is a temporary equilibrium: politically binding yet legally reversible, imperfect yet stabilising.
The true test lies not in rhetoric but in implementation - whether Malaysia can convert this breathing space into investment, technology transfer, and industrial upgrading.
To call it a “surrender” may satisfy the politics of outrage, but it obscures the diplomacy of survival.
In a turbulent world, Malaysia must navigate with prudence and purpose. Sovereignty today is not maintained by isolation, but by intelligent negotiation. - Mkini
SAMIRUL ARIFF OTHMAN is an economist and adjunct lecturer with Universiti Teknologi Petronas.
The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.

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