Malaysia’s US trade deal: Why legal rights don’t guarantee real power

Former attorney general Tommy Thomas’s assertion that the United States’ recent ‘reciprocal’ trade deal with Malaysia represents a form of “neo-imperialism at its worst” has sparked crucial debate.

The issue is whether Malaysia retains meaningful control over its own economic decisions under this treaty – or whether it has entered a new era of dependency disguised as ‘reciprocity’.

The central question is whether Malaysia can legally and politically invoke Articles 7.2 and 7.5 of the agreement. These are provisions supposedly designed to protect national economic stability and regulatory space. But they are structurally constrained by the geopolitical architecture surrounding the treaty.

Malaysia theoretically holds the right to invoke Articles 7.2 (Safeguards) and 7.5 (Reviews and Renegotiation Mechanism). However, the realities of dependency, geopolitical hierarchy and resource-security entanglements make such an invocation extremely difficult in practice.

An analysis of unequal exchange (Amin, 1976), comprador facilitation and the US–Australia’s critical minerals framework, signed on 20 October, shows that the US-Malaysia deal is embedded in a broader imperial security regime. This regime is designed to limit Malaysia’s policy autonomy.

Legal text versus material power

Article 7.2 (Safeguard Measures) generally allows a state to temporarily restrict commitments when its economy, financial stability or industries face significant threat.

Article 7.5 (Reviews and Renegotiation Mechanism) typically permits actions necessary to protect sovereignty, domestic peace or security interests.

On paper, Malaysia can invoke these clauses. Both provisions mirror World Trade Organization-style safeguards and security exceptions, which theoretically preserve state sovereignty.

However, dependency theorists – from Samir Amin to Immanuel Wallerstein – warn that formal legal rights mean little when power imbalances determine enforcement, interpretation and retaliation. In unequal exchange, the peripheral or weaker state’s autonomy exists only on paper. Structural dependence ensures compliance.

In the case of the US-Malaysia trade deal, Malaysia’s ability to invoke safeguards is constrained by several factors.

These include potential retaliatory trade measures by the US and investor-state pressures from US-linked capital. There’s also Malaysia’s reliance on US technology and capital flows. US dominance in global financial governance (Treasury, SWIFT, sanctions regimes) plays a role too. So does the political cost of invoking national security against a superpower.

Thus, while Articles 7.2 and 7.5 appear to preserve sovereign space, the surrounding geopolitical environment may render their invocation impractical – or even self-defeating.

Tommy Thomas’s warning

Thomas’s assertion that the “US trade treaty is far more sinister and insidious… neo-imperialism at its worst” aligns with classical interpretations of imperial control.

This control operates through legal, regulatory and financial mechanisms rather than direct colonial administration rule (Harvey, 2005).

Post-colonial states increasingly face agreements that freeze regulatory space and industrial policy. They encounter ‘poison pill’ provisions targeting cooperation with non-US partners. They also face enforcement mechanisms that favour capital mobility over social protection.

In this context, the US-Malaysia deal is not simply a trade agreement but a geopolitical instrument. It represents a formalisation of dependency in an era of data, digital infrastructure, rare-earth minerals and technological dominance.

Malaysia’s voluntary entry into this deal represents the exact pattern described in 1965 by Kwame Nkrumah, Ghana’s first president and a leading Pan-Africanist thinker: neo-colonialism is the survival of the colonial system in spite of formal independence.

Dependency dynamics

Applying unequal exchange theory (Amin, 1987), Malaysia’s position in the trade deal reflects structural subordination.

The US exports high-value industrial, agricultural and technological products. Malaysia exports lower-value commodities and critical mineral inputs.

US firms gain preferential regulatory and investment protections. Malaysia gains market access without leverage to transform its industrial structure.

In short, Malaysia remains trapped in what scholars call the periphery–semi-periphery trap (Wallerstein, 2004). Value is systematically extracted upwards while policy space is constrained downwards.

Hidden architecture

Before the US–Malaysia deal was signed, the US–Australia critical minerals framework – signed on 20 October – established a security-centric supply chain network designed to bypass China and consolidate rare-earth sourcing within US-aligned jurisdictions (CSIS, 2025; Yap, 2025).

Australia was designated as Washington’s strategic anchor for processing and refining rare earths. It became a security partner under Aukus, the Australia–UK–US security partnership, and serves as a gateway for US influence over regional mineral value chains (CSIS, 2025).

Malaysia, through Lynas in Kuantan, became structurally subordinated within this architecture. Its rare-earth upstream activities serve US-Australia strategic needs. The regulatory and environmental burden is localised in Malaysia. But the value addition and strategic control remain in Australia and the US.

Malaysia becomes a resource appendage rather than a sovereign actor.

The US–Malaysia deal, therefore, is not a standalone treaty. It is the legal and financial extension of a pre-existing security framework (Yap, 2025), where Malaysia’s minerals, data infrastructure and industrial policy become instruments of US geopolitical calculations.

Can Malaysia realistically invoke these clauses?

A realistic geopolitical reading suggests yes – legally. Malaysia retains textual rights to invoke safeguards and security exceptions.

But structurally – no. Malaysia’s invocation would clash with US strategic supply chain goals (minerals, semiconductors, data infrastructure). It would conflict with the US–Australia mineral security architecture (CSIS, 2025) and the US Treasury’s influence over foreign exchange and capital flows.

Malaysia’s dependence on US tech platforms and cloud infrastructure also presents challenges. So do existing power imbalances, where the superpower defines what ‘security’ means.

Invoking these articles may trigger diplomatic pressure, market retaliation and delisting threats. It could bring restrictions on technology transfers and financial tightening through sanctions (Harvey, 2005).

Thus, Malaysia faces the classic dependency dilemma: invoke sovereignty and risk economic punishment, or comply and deepen structural dependence.

The path forward

Malaysia’s theoretical ability to invoke Articles 7.2 and 7.5 of the trade deal cannot be separated from the wider context. This includes the US-led regional mineral strategy, geopolitical security frameworks and historical patterns of unequal exchange (Amin, 1976; Wallerstein, 2004).

Thomas’s critique reflects not hyperbole but a structural reality: the treaty is embedded in an imperial architecture that limits genuine autonomy.

Malaysia’s challenge now is not merely about legal interpretation. It is about escaping dependency through industrial upgrading, regional solidarity, and sovereign policy design – a task far beyond the formal rights articulated in the US–Malaysia trade deal.

Support our work by making a donation. Tap to download the QR code below and scan this QR code from Gallery by using TnG e-wallet or most banking apps: