SOVEREIGNTY, POLICY AUTONOMY, NATIONAL INTERESTS REMAIN FULLY PROTECTED UNDER ART - MITI

KUALA LUMPUR, Nov 17 (Bernama) -- The Ministry of Investment, Trade and Industry (MITI) has reiterated that Malaysia’s sovereignty, policy autonomy and national interests remain fully protected under the Malaysia-United States Agreement on Reciprocal Trade (ART).

In a statement, MITI stated that the ART is not a conventional free trade agreement initiated by Malaysia.

“It is a measured response to defend national interests, protect jobs and maintain the country’s export market against the unilateral tariffs imposed by the US on Malaysia and many other trading partners.

“No amendments to Malaysian laws were required as a precondition to signing — which affirms our sovereignty in the whole negotiation process,” it stressed.

MITI said without ART, Malaysian exports could have been subject to tariffs of 24 per cent, 25 per cent or even higher, with risks of further unilateral escalation and steep tariffs on sensitive sectors such as semiconductors and pharmaceuticals, potentially impacting RM56.2 billion in semiconductor exports alone. 

It said an adverse outcome would have jeopardised thousands of businesses and the livelihoods of millions of Malaysians across key sectors, including electrical and electronics, aerospace, rubber, cocoa and pharmaceuticals.

In 2024, Malaysia-US trade reached RM325 billion, with exports making up RM198.65 billion. And from January to September 2025, Malaysia’s exports to the US totalled RM166.38 billion, making the US effectively Malaysia’s largest export market.

MITI emphasised that through the ART, Malaysia secured tangible gains as the reciprocal tariff rate has been reduced to 19 per cent, the lowest applied to most ASEAN countries with a trade surplus with the US.

“More importantly, Malaysia obtained exemptions for 1,711 tariff lines, safeguarding around RM22 billion in exports covering palm oil, rubber, cocoa, aerospace parts and pharmaceuticals. 

“With the exemption, there is also strong potential for this value to grow beyond RM22 billion in the future. At the same time, Malaysia has maintained, on average, seven per cent import duties against US goods and continues to maintain import duties for sensitive sectors,” it said.

MITI also highlighted that at least 10 engagement sessions with policymakers have been organised since May 2025, including a briefing session for the Backbenchers Club, a special Parliamentary Sitting on the issue of the US’ Reciprocal Tariff and a meeting with the Special Select Committee on International Relations and International Trade.

“The ART, together with its implications, was presented to and approved by the Cabinet. 

“Additionally, engagement sessions with relevant ministries include the Ministry of Finance (on tariff and fiscal implications), the Ministry of Foreign Affairs (on diplomatic alignment), the Ministry of Agriculture and Food Security, the Ministry of Plantation Industries and Commodities, as well as the Ministry of Health (on food safety and security),” it said.

MITI added that agencies consulted include the Attorney-General’s Chambers (to ensure constitutional alignment and compliance), Bank Negara Malaysia (on macroeconomic, financial services and currency impact), the Department of Islamic Development Malaysia (JAKIM) and the Department of Veterinary Services (on halal standards, sanitary and phytosanitary measures), the National Pharmaceutical Regulatory Agency and Medical Device Agency (on technical regulations and marketing authorisation), and the Royal Malaysian Customs Department (on customs duties and taxes).

The ministry said that from the outset, the government also stood firm on clear red lines, which include Bumiputera policies, government procurement, and ownership in strategic sectors such as energy and telecommunications. 

It said that none of the clauses in the ART override these red lines, and provisions, such as Article 5.1 (on complementary actions) and Article 5.2 (on export controls), are explicitly anchored in Malaysia’s domestic laws and apply only where there are shared economic or national security concerns.

“Malaysia retains full autonomy to decide its course of action, consistent with its longstanding neutral and non-aligned foreign policy. Articles 3.3 and 5.3 require consultations with the US but do not confer any veto power over Malaysia’s future trade agreements.

“The ART, therefore, functions as a defensive, stabilising instrument. It mitigates the risk of sudden tariff shocks, secures better treatment than many peers facing the same US unilateral measures, and sends a clear signal that Malaysia is committed to protecting critical export markets while upholding its sovereign right to regulate in the national interest,” it said.

MITI said that finalising the ART reinforces Malaysia’s position as a resilient, predictable and trusted trading nation in an increasingly challenging geopolitical and economic environment.

The ministry added that it welcomes genuine and well-informed, fact-based discourse and discussions on sovereignty and other concerns related to ART. 

“MITI will continue to brief Parliament, engage stakeholders and provide clear explanations so that the rakyat can evaluate the ART based on accurate and complete information. Implementation of the ART will remain firmly grounded in Malaysia’s laws, national interest and independent foreign policy,” it said.

-- BERNAMA