KUALA LUMPUR: Malaysia and the United States have signed the Agreement on Reciprocal Trade between both countries.
The agreement was signed by US President Donald Trump and Prime Minister Datuk Seri Anwar Ibrahim at the sidelines of the 47th Asean Summit and Related Summits.
According to the White House, key terms of the Agreement on Reciprocal Trade include a commitment by the US to maintain a 19% tariff rate for Malaysia.
“Malaysia has committed to providing significant preferential market access for US industrial goods exports, including chemicals, machinery and electrical equipment, metals, and passenger vehicles, and for US agricultural exports including dairy, horticultural products, poultry, processed products, beverages, pork, rice, and fuel ethanol,” the White House said.
Malaysia and the US also inked a Memorandum of Understanding (MOU) on Critical Minerals during the ceremony.
According to the White House, Malaysia has committed to refraining from banning, or imposing quotas on, exports to the US of critical minerals or rare earth elements.
“Malaysia has committed to the expedient development of its critical minerals and rare earths sectors in partnership with US companies, including granting extended operating licences to create certainty for businesses to increase production capacity.
“Malaysia has committed to ensuring no restrictions are imposed on the sale of rare earth magnets to US,” it said.
On Oct 9, Beijing announced plans to limit the export of rare earth materials and retaliatory port fees on vessels that are US-build, flagged or operated, beginning Oct 14.
Meanwhile, the White House said other key terms in the reciprocal trade agreement were Malaysia’s commitment to procure 30 aircraft plus a purchase option for 30 additional aircraft from the US, as well as the purchase of semiconductors, aerospace components, and data centre equipment with an estimated value of US$150bil.
Malaysia also committed to purchase up to five million tonnes per annum (MTPA) of liquified natural gas estimated at up to US$3.4bil per year.
At the same time, the White House said Malaysia committed to the purchase of coal and telecommunication products and services valued at US$204.10mil and to have capital fund investments in the US of US$70bil.
“The US may positively consider the effect that the Agreement has on national security, including taking the Agreement into consideration when taking trade action under section 232 of the Trade Expansion Act of 1962.
“Additionally, to support a fair economic relationship between Malaysia and the US, the US Department of the Treasury and Bank Negara Malaysia are in discussion to finalise their mutual understanding on currency policy.
“In the coming weeks, the United States and Malaysia will undertake domestic formalities in advance of the Agreement entering into force,” the White House added.
Meanwhile, the White House said Malaysia has committed to addressing non-tariff barriers that affect bilateral trade in priority industrial areas.
“Malaysia has committed to accepting US manufactured vehicles built to US motor vehicle safety and emissions standards; streamlining import licenses for US alloy steel and pipe products and steel-containing goods; streamlining halal requirements for products including cosmetics, pharmaceuticals, and medical devices; and addressing US concerns with conformity assessment procedures.
“Malaysia has committed to address and prevent non-tariff barriers to US food and agricultural products in the Malaysian market, including by accepting currently agreed certificates issued by US regulatory authorities; streamlining halal and facility registration requirements to facilitate imports of US food and agricultural products; and implementation of regionalisation of the United States for animal diseases.”
Other key terms in the agreement is another commitment by Malaysia to address barriers impacting digital trade, services, and investment.
“Malaysia has committed to refrain from imposing digital services taxes that discriminate against US companies or requiring US social media platforms and cloud service providers to pay into Malaysia’s domestic fund; ensure the transfer of data across trusted borders, with appropriate protections, for the conduct of business; support a permanent moratorium on Customs duties on electronic transmissions at the World Trade Organisation; and remove broadcasting terrestrial airtime restrictions on US programming,” it said.
The White House also said the US and Malaysia have finalised commitments to address intellectual property protection and enforcement, customs and trade facilitation, good regulatory practices, and distortionary behaviours of state-owned enterprises.
“The US and Malaysia have committed to strengthening economic and national security cooperation and to enhancing supply chain resilience and innovation, addressing duty evasion, and cooperating on investment security and export controls,” it said.
Trump is in Malaysia on Oct 26 to attend the 47th Asean Summit and Related Summits. He is expected to leave for Tokyo, Japan on Oct 27 morning.
