Malaysia–US trade deal raises sovereignty concerns – MPs

Wong Chen, Nik Nazmi Nik Ahmad and Rafizi Ramli

We are issuing this press statement as members of Parliament.

(Wong Chen is the current chairman of the parliamentary Special Select Committee on International Relations and International Trade, but is issuing this joint statement not in that capacity but as an MP who has taken an oath to bear true faith and allegiance to Malaysia and to defend the Constitution.) 

We refer to the agreement between the United States and Malaysia on ‘reciprocal’ trade, which was signed on 26 October in Kuala Lumpur.

After much deliberations and study, we are convinced that the agreement is heavily lopsided in favour of the US.

We further note that Deputy Investment, Trade and Industry Minister Liew Chin Tong, in a public forum on 3 November, stated that Malaysia was forced into the negotiations and this was not an equal partnership.

Additionally, we are convinced, based on the official responses and lack of clarity of the text, that the signing of the agreement was done without a comprehensive cost-benefit analysis and adequate public consultations.

Regarding the political question as to whether Malaysia had signed away its sovereignty as per the agreement, we are convinced that certain articles, in particular but not limited to Articles 5.1, 5.2.and 5.3 therein, if exercised by the US and complied by Malaysia, will constrain and limit Malaysia’s sovereign rights, forcing Malaysia to align with the national security and economic interests of the US.

This scenario will be a major departure from our long-standing foreign and trade policy of active neutrality and Asean centrality.

Nevertheless, we note that Malaysia has two legal options to defend its sovereign interests.

First, Malaysia can request to amend the agreement under Article 7.3 or second, Malaysia can terminate the agreement under Article 7.4.

We agree with Prime Minister Anwar Ibrahim, who on 30 October asserted in Parliament that Malaysia has an “exit clause” and can terminate the agreement as a way out of the sovereignty question.

Similarly, the Attorney General’s Chambers on 3 November also affirmed that Malaysia retains the right to terminate the agreement by written notice to the US.

We also note with deep concern that there are direct and indirect negative impacts of the agreement to Malaysia, including but not limited to the trade balance, fiscal implications and investment outflow.

We are also concerned that the agreement could possibly affect existing free trade agreements and existing commercial agreements with third-party countries.

Conversely, we acknowledge that there could be some positive impacts of the agreement on matters related to digital trade, semiconductors and pharmaceuticals.

We also welcome some articles of the agreement for better regulatory practices, labour rights and environmental protection.

We wish to now make the following recommendations to the “Madani” (trustworthy) government.  

We are fully supportive of the Madani government’s commitment to good governance, transparency and accountability. As such, to walk the talk, we urge the Madani government to advise the Agong to form a royal commission of inquiry to investigate all matters related to the signing of the agreement, in particular on the matter of being ‘forced’ to negotiate.

We also want an answer as to why Malaysia opted for an agreement instead of a Memorandum of Understanding (MoU) or a framework.

We believe that the royal commission of inquiry will help to restore and enhance public accountability in this controversial matter. The commission should also be tasked with recommending a more robust governance structure, prior consultation mechanisms, and checks and balances with a view to improving future trade negotiation processes.

We urge the Madani government to engage reputable external international trade lawyers and experts to:

• initiate the process of amending the more onerous sovereignty-related articles of the agreement
• clarify and advise on all articles related to definitions, scope, obligations and enforceability of the agreement and
• conduct a legal matrix study on the potential market access impacts of the agreement on existing free trade agreements and multilateral agreements including but not limited to the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) and the European Free Trade Association

We urge the Madani government to create a task force of international trade experts including economists to conduct a comprehensive cost-benefit analysis of the agreement to study and project the impacts on – including but not limited to – Malaysia’s gross domestic product, market access, trade balance, currency flight concerns and flow of investments between the US and Malaysia and to report the same to Parliament;

We urge the Madani government to create a high-level advisory foreign policy team on the geopolitical impacts and consequences from this agreement on Malaysia’s foreign and international trade policies regarding – but not limited to – Brics, Asean, the Organisation of Islamic Cooperation (OIC) and the Global South and to report this to Parliament.

We urge Miti to set-up a special division to coordinate with other ministries to regularly update, answer and engage investors and industry leaders on matters related but not limited to market access, nuclear reactors, critical minerals, biosafety, medical devices, pharmaceutical, labour, environment and digital trade related to the agreement.   

Wong Chen is the MP for Subang, Nik Nazmi Nik Ahmad is the MP for Setiawangsa and Rafizi Ramli is the MP for Pandan

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