US President Trump and Prime Minister Datuk Seri Anwar Ibrahim signed a new Agreement on Reciprocal Trade. The agreement was signed on the sidelines, during the 47th ASEAN Summit.
As per the new deal, the US will maintain the tariff rate on Malaysia, which currently sits at 19%, with the new deal set to exempt no less than 1,711 products from it. “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,” said the official press release from the White House.
At the same time, Malaysia and the US also inked a new Memorandum of Understanding (MoU) on Critical Minerals, a move that speaks volumes of the US’ current relationship with China – Beijing announced recently that it plans on limiting the export of rare earth minerals, as well as retaliatory port fees on vessels that are US-built, flagged, or managed. Trump reacted to this move by threatening to impose a 100% on all Chinese imports into the country. That threat is currently on hold.
As to the key terms of the new Reciprocal Trade agreement, Malaysia is expected to procure 30 aircraft from the US, plus the option to purchase 30 more from the US. Further, the country will also purchase US-made semiconductors, aerospace components, and datacentre equipment worth US$150 billion (~RM633 billion). That, and the promise to also purchase up to US$3.4 billion (~RM14.36 billion) of liquified natural gas.
Malaysia also promised the US to address barriers impacting digital trade, services, and investments with US companies. “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.”
(Source: WhiteHouse.gov, Bloomberg, Malay Mail)
