KUALA LUMPUR: Malaysian goods would have faced the original 24% tariff rate or be subject to an even higher percentage without the reciprocal trade agreement with the United States, the Dewan Rakyat heard on Wednesday (Oct 29).
International Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said the government secured exemptions from the 19% retaliatory tariff for 1,711 tariff lines.
These cover major exports such as palm oil, rubber based products, cocoa products, aircraft parts and components and pharmaceuticals.
He said these products contributed RM22bil, or about 12% of Malaysia’s total exports to the United States last year.
“This is not a small figure. Therefore, this agreement ensured continued access for Malaysian exports to the US market,” said Tengku Zafrul.
“Had this agreement not been finalised promptly, Malaysia would have faced the risk of the US government reinstating the original tariff rate of 24%, or even imposing significantly higher rates at 30%, 40%, 50% or possibly 100%,” he added.
Tengku Zafrul said that the US is able to act abruptly, as has been demonstrated in negotiations with other countries.
“Without the conclusion of this agreement, there is a high likelihood that tariffs would have risen sharply, thereby undermining the competitiveness of Malaysian exports to the US market,” he added.
Tengku Zafrul then said that if the agreement were not finalised, he said investor confidence to invest or expand in Malaysia would also erode.
“Who would bear this burden? Who would be affected and potentially forced to shut down? Our companies too,” he said.
“Who would lose their jobs and source of income? Malaysians. Predictability and certainty are extremely important to the business community. Investors do not invest in a country that appears hesitant and unprepared to safeguard its own export markets,” added Tengku Zafrul.
With the recently signed agreement, he said Malaysia continues to enjoy additional benefits.
“Notably, as part of the negotiation outcomes, Malaysia US bilateral relations have been elevated to a Comprehensive Strategic Partnership,” he said.
“This is not symbolic as it places Malaysia among a select group of Washington’s key partners,” he added.
He said this provides a direct line of sight to high technology investment opportunities, technology transfer and access to more secure supply chains.
