MRT commuters packed the Bukit Bintang station. —YAP CHEE HONG/The Star
KUALA LUMPUR: Thousands of jobs in Malaysia will probably be saved by the Agreement on Reciprocal Trade (ART) signed between Malaysia and the United States.
This was among Malaysia’s priorities in its negotiations with the United States to reduce tariffs since US tariffs were announced in April this year.
As an export-oriented country, Malaysia aims to keep business costs down and continue exporting, and the nation did well in reducing the tariffs from the initial 24% to 25%, to 19% when the ART was inked Oct 26.
The agreement has put Malaysia on a more level playing field, if not in a stronger position, compared with neighbouring countries with similar export profiles.
Businesses here were hopeful that Malaysia’s negotiating team, led by Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Abdul Aziz, would look at the whole scenario objectively and not emotionally.
The business sector wants certainty to be able to plan and strategise their costing, and the ART provides that stability
It must be remembered that Malaysia is one of the United State’s largest trading partners and has been recording trade surpluses with Washington.
Last year, the trade surplus fell to about RM25bil, compared with RM40bil four years ago. It was narrowing, but we are still in the top 15 trading nations, and President Donald Trump had clearly stated that tariff negotiations were aimed at balancing its economic interests by reducing trade deficits with trading partners.
The United States is Malaysia’s biggest export market at RM200bil, led by semiconductors, a mainstay of our export economy.
Bilateral investments are also significant. Since the 1980s, the United States has invested RM225bil in Malaysia, and they are the biggest investor here – bigger than China.
Clearly, the American and Malaysian economies are intrinsically intertwined.
As such, in the ongoing polemics over ART, Malaysians need to look at the whole ecosystem painstakingly built around exporting to the United States.
Thousands of jobs, either directly or indirectly, probably depend on trade and investments with the United States, currently the world’s economic superpower. We cannot just depend on domestic demand, more so since our economy is an open one.
One question which detractors of ART have to ask is what will happen to Malaysia if it does not engage in negotiations with the United States while other countries do so.
Even China, an economic superpower, is engaging the United States, as are major economies like the European Union, Japan, South Korea, and long-time ally Canada
As an export-oriented country, Malaysia must be consistently practical in its outlook and economic relations with trading partners.
As for some of the terms of the agreement, it is very clear in one of the clauses that Malaysia should not do something with any other party that is contrary to US interests.
Meanwhile, critics comparing Malaysia’s ART to Cambodia’s are not exactly comparing apples to apples.
Cambodia gets some preferential treatment even in the World Trade Organisation as it is regarded as a least developed country. Understandably, Washington has given them a slightly different treatment and a bit more leeway.
By contrast, Malaysia is a strategic partner to the United States, and ART reflects its status as a trusted and secure supply chain partner. — Bernama
