The ART is out, so time to get ourselves a fair deal

 With our industries, such as the E&E and our expanding digital infrastructure and data centre hub, we can position ourselves as vital to the US economy and security.

From Jaziri Alkaf Abdillah Suffian

Investment, trade and industry minister Johari Ghani has pointed out that the US supreme court decision to declare Trump’s tariffs illegal has effectively nullified the Agreement on Reciprocal Trade (ART) between Malaysia and the United States.

However, this has also raised questions about the other provisions in the ART.

For a start, it is not just a trade agreement. It is a “manual” for Malaysian domestic reform, tying the country down with 48 specific provisions ranging from sweeping overhauls of labour and environmental laws to the surrender of our right to tax digital services.

In return, the US is bound by only three minor obligations and a zero-tariff list that has now been invalidated.

Logic dictates that if the contract is rescinded, the policy concessions must go with it.

Malaysia cannot afford to be the nation that honours a “ghost treaty”. We must immediately reclaim our right to impose digital services taxes on US tech giants and halt the legal amendments intended to satisfy the ART’s intellectual property and labour requirements.

If our exports are subject to a 15% tariff regardless of our compliance, there is no longer a reciprocal basis for these costly reforms. To continue implementing them is not diplomacy — it is a surrender of sovereignty.

As we look towards the next move, Malaysia must pivot from unilateral concessions to a strategy of “strategic reciprocity”.

The US has been a longstanding and important trade partner for Malaysia, and we acknowledge that the US will remain one of the world’s top economies in many years to come.

I believe a replacement deal will eventuall emerge but going into this future engagement, Malaysia must ensure we are on an equal footing rather than entering into another lopsided arrangement. To achieve this, we must leverage the three sectors where Malaysia is a global champion.

Firstly, the electrical and electronics (E&E) sector, where Malaysia commands 13% of the global back-end semiconductor market, is a linchpin that the US cannot afford to lose.

Secondly, our palm oil and biomass industry remains essential for global food security and the green energy transition.

Thirdly, our rapidly expanding digital infrastructure and data centre hub provides the platform on which the next generation of American AI will grow.

By positioning these industries as vital to the US economy and national security, we ensure that the US is incentivised to invest in us as a partner rather than just a market.

Ultimately the goal of the new trade framework must be to ensure fairness and provide a launchpad for our domestic growth engines.

We must capitalise on our local expertise to ensure that our SMEs, especially our Bumiputeras, are not sidelined but are instead empowered to expand into global markets.

This means negotiating for strategic benefits and mandatory vendor development programmes that move our local businesses from being simple suppliers to high-value global partners.

We are ready to make our trillion-ringgit pledge, but we want the US to reciprocate on par.

With the BRICS bloc now accounting for approximately 40% of global GDP, Malaysia, as a “partner country”, has options.

We must use this leverage to hedge deals that protect our policy space and prioritise our people.

Malaysia must be able to exercise our ability to independently control our own economic policies, resources, and financial decisions, taking precedence over foreign influence or global market demands.

Economic sovereignty is all-important. - FMT

 Jaziri Alkaf Abdillah Suffian is a former senator and chair of Bersatu’s international affairs bureau.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.