Zafrul: We could have faced the original 24% tariff or higher
KUALA LUMPUR: Malaysian goods would have been subject to the original tariff rate of 24% or potentially higher had the reciprocal trade agreement not been signed between Malaysia and the United States, according to Tengku Datuk Seri Zafrul Abdul Aziz.
The Investment, Trade and Industry Minister said the government also succeeded in securing exemptions from the 19% retaliatory tariff for 1,711 tariff lines on Malaysian products exported to the United States.
These include major exports such as palm oil, rubber-based products, cocoa products, aircraft parts and components, and pharmaceuticals, which collectively contributed RM22bil which accounts for 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. Had this agreement not been finalised promptly, Malaysia would have faced the risk of the US government reinstating its original tariff rate of 24% or even imposing significantly higher rates at 30%, 40%, 50%, or possibly 100%.
“We know 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 told a special ministerial briefing in the Dewan Rakyat.
Tengku Zafrul warned that not finalising the agreement would also erode investor confidence in Malaysia.
National victory: Tengku Zafrul at a special ministerial briefing in the dewan rakyat. — Bernama
“Who would bear this burden? Who would be affected and potentially forced to shut down? Our companies. Who would lose their jobs and source of income? Malaysians,” he said.
As part of the negotiation outcomes, he said Malaysia-US bilateral relations had been elevated to a Comprehensive Strategic Partnership.
“This is not symbolic, as it positions Malaysia among a select group of Washington’s key partners, providing a direct line of sight to high-technology investment opportunities, technology transfer, and access to more secure supply chains,” he added.
Tengku Zafrul indicated that total exports to the United States reached RM166.38bil during the period from January to September.
The government had acted with prudence, negotiating to safeguard and preserve business continuity, export markets and national dignity when negotiating the trade agreement, he said.
Malaysia, he said, must continue to negotiate with the United States despite facing unilateral tariff pressures in the interest of the economy and the nation.
He also pointed out that the trade deal contained clauses that preserve the nation’s sovereignty.
“The US has also agreed that any measures it wishes to take in addressing issues of trade imbalance must be pursued through a consultative mechanism aimed at reaching mutual understanding,” he added.
Tengku Zafrul said that the trade deal does not serve as a “licence” for the United States to impose any measures on Malaysia.
On Malaysia’s halal standard, he said the standard had never been compromised by the government throughout the course of the reciprocal trade agreement.
The deal clearly stipulates that only halal products certified by US halal certification bodies recognised by the Department of Islamic Development Malaysia (Jakim) will be acknowledged and allowed for import into Malaysia, he said.
“I wish to emphasise that any concerns or allegations about Malaysia compromising on halal matters are completely unfounded.
“Under this agreement, the approval process for the storage of halal products from the US remains unchanged. They must comply with Malaysia’s halal standards and relevant trade requirements for commercial purposes within Malaysia,” he said.
Tengku Zafrul explained that Jakim’s recognition of any halal certification body in the United States is subject to a rigorous audit and verification process.
“There will be absolutely no relaxation of Malaysia’s halal policies or procedures.
“If there are parties attempting to alarm the public by claiming that our halal standards will be dictated by others, let me categorically state in this august House that is not true.
“Malaysia’s halal standards are determined by Malaysia, certified by Jakim, and safeguarded by the Muslim community in this country. Period,” he added.
On another matter, he said PETRONAS had been importing liquefied natural gas (LNG) from several countries, including the United States, prior to the US-Malaysia reciprocal trade agreement.
The move is to ensure a stable LNG supply, allowing the national oil company to meet its obligations to both domestic and international clients, he said, noting that it was not a political directive from Washington.
Tengku Zafrul said the measure is taken particularly in view of PETRONAS’ long-term supply commitments exceeding its current production capacity.
“It is a commercial decision made by PETRONAS to guarantee a secure supply, fulfil its contractual obligations, and avert a potential energy crisis for the country,” he said.
“A sovereign nation must have diverse energy sources and options. That is what we call energy security, not dependency,” he added.
