Trans-Pacific View | Economy | Southeast Asia

Malaysia Has Not Informed US of Withdrawal From Trade Deal: Official

The status of the deal has been unclear since the Malaysia’s trade minister said that last month’s U.S. Supreme Court ruling rendered the agreement “void.”

Malaysia has not informed the United States of its withdrawal from their recently-agreed trade agreement, despite its trade minister saying that the deal was “null and void” following a U.S. Supreme Court ruling.

A U.S. official with knowledge of the negotiations with Malaysia told The Diplomat that Washington “has not received any notification from the Prime Minister’s office that Malaysia is exiting the Agreement on Reciprocal Trade (ART).”

The agreement was signed by Malaysian Prime Minister Anwar Ibrahim and U.S. President Donald Trump on the sidelines of the ASEAN Summit in October. Under the ART, Malaysia agreed to grant expanded market access to U.S. firms and pledged to spend $240 billion in investments and purchases of American goods, including beef and aircraft. In exchange, the U.S. agreed to reduce tariffs on Malaysian goods to 19 percent, down from the 24 percent set during President Donald Trump’s “liberation day” announcement last April.

Last month, however, the U.S. Supreme Court ruled 6-3 that the 1977 International Emergency Economic Powers Act did not provide the legal justification for most of the tariffs imposed last year.

Speaking with reporters on Sunday, Malaysian Trade Minister Johari Abdul Ghani said that the Supreme Court ruling had effectively voided the agreement. “It is not on hold. It is no longer there, it’s null and void,” he was reported as saying. His statement was followed by a confusing turn of events in which Johari’s statement was retracted by the ministry and then reconfirmed by the minister’s press secretary later in the week.

The Trump administration is pursuing a new legal avenue for the tariffs by initiating investigations of major trade partners, including Malaysia, for unfair ​trade practices under Section 301 of ​the Trade Act of 1974. Until then, it is also urging its partners to uphold existing “reciprocal” trade agreements.

“We fully expect Malaysia to uphold its commitments,” the U.S. official said. “The Malaysian officials have told us they want the preferential access offered by the agreed-upon deal, so we expect they will stick to it, and it’s in their best interest to do so.”

The official added that the U.S. Trade Representative’s Office had “spoken to officials at all levels of the Malaysian government” and that “we look forward to continuing engagement with Malaysia on this good deal.”

However, from comments that Johari made earlier this week, it appears that Kuala Lumpur may await the outcome of the recently announced U.S. trade investigations, which he said complicated the negotiations aimed at finalizing the ART.

“When they get their findings, they will submit their proposal to us,” Johari was quoted as saying by the Malay-language daily Berita Harian. “We will take that and discuss their conditions.”

Get to the bottom of the story

Subscribe today and join thousands of diplomats, analysts, policy professionals and business readers who rely on The Diplomat for expert Asia-Pacific coverage.

Get unlimited access to in-depth analysis you won't find anywhere else, from South China Sea tensions to ASEAN diplomacy to India-Pakistan relations. More than 5,000 articles a year.

Unlimited articles and expert analysis

Weekly newsletter with exclusive insights

16-year archive of diplomatic coverage

Ad-free reading on all devices

Support independent journalism

Already have an account? Log in.

Malaysia has not informed the United States of its withdrawal from their recently-agreed trade agreement, despite its trade minister saying that the deal was “null and void” following a U.S. Supreme Court ruling.

A U.S. official with knowledge of the negotiations with Malaysia told The Diplomat that Washington “has not received any notification from the Prime Minister’s office that Malaysia is exiting the Agreement on Reciprocal Trade (ART).”

The agreement was signed by Malaysian Prime Minister Anwar Ibrahim and U.S. President Donald Trump on the sidelines of the ASEAN Summit in October. Under the ART, Malaysia agreed to grant expanded market access to U.S. firms and pledged to spend $240 billion in investments and purchases of American goods, including beef and aircraft. In exchange, the U.S. agreed to reduce tariffs on Malaysian goods to 19 percent, down from the 24 percent set during President Donald Trump’s “liberation day” announcement last April.

Last month, however, the U.S. Supreme Court ruled 6-3 that the 1977 International Emergency Economic Powers Act did not provide the legal justification for most of the tariffs imposed last year.

Speaking with reporters on Sunday, Malaysian Trade Minister Johari Abdul Ghani said that the Supreme Court ruling had effectively voided the agreement. “It is not on hold. It is no longer there, it’s null and void,” he was reported as saying. His statement was followed by a confusing turn of events in which Johari’s statement was retracted by the ministry and then reconfirmed by the minister’s press secretary later in the week.

The Trump administration is pursuing a new legal avenue for the tariffs by initiating investigations of major trade partners, including Malaysia, for unfair ​trade practices under Section 301 of ​the Trade Act of 1974. Until then, it is also urging its partners to uphold existing “reciprocal” trade agreements.

“We fully expect Malaysia to uphold its commitments,” the U.S. official said. “The Malaysian officials have told us they want the preferential access offered by the agreed-upon deal, so we expect they will stick to it, and it’s in their best interest to do so.”

The official added that the U.S. Trade Representative’s Office had “spoken to officials at all levels of the Malaysian government” and that “we look forward to continuing engagement with Malaysia on this good deal.”

However, from comments that Johari made earlier this week, it appears that Kuala Lumpur may await the outcome of the recently announced U.S. trade investigations, which he said complicated the negotiations aimed at finalizing the ART.

“When they get their findings, they will submit their proposal to us,” Johari was quoted as saying by the Malay-language daily Berita Harian. “We will take that and discuss their conditions.”

Sebastian Strangio is Southeast Asia editor at The Diplomat. 

Trump administration trade policy

U.S.-Malaysia relations

© The Diplomat