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Critics see the ART not as a trade agreement, but as a receipt for appeasement
WE PARTIED last week. The world came and admired the Maju Expressway (MEX). But now the euphoria is evaporating, and we’re looking at some fine print.
Over the summit weekend, Malaysia signed the Agreement on Reciprocal Trade (ART) with the US.
Our negotiators called it “geostrategic wizardry” — a deft sidestep to avoid a full flying kick from American bullying tariffs. We are told we now have “economic certainty” in exchange for a few quibbling items.
Nonsense.
Critics see the ART not as a trade agreement, but as a receipt for appeasement. Malaysia has just dragged a Trojan Horse of trade inside the gates for a celebratory tariff cut, and now the commandos are ready to open our doors from within.
Now this has become a hot political potato and, as usual in these kinds of debates, the first casualty is truth. Before that haze sets in, let’s see what’s inside this ART.
A Regulatory Clearance Sale
This whole frantic, sweaty ART scramble is to trim US bullying tariffs from 25% down to 19%. The trade minister, bless his heart, called the agreement a “best-case scenario.”
Translation: The Americans waved a big stick of sanctions — and the “best case” was to flinch.
This isn’t a victory; it’s the US graciously agreeing to kick us in the legs instead of the face.
In exchange, Malaysia secured zero tariffs on 1,711 export lines — palm oil, rubber and other staples. Defenders of the deal use this like a trophy but forget to mention the jewels we have conceded.
FDA Fast-pass, Halal Streamline
In pharmaceuticals, we have outsourced our drug safety regime. The US Food and Drug Administration (FDA) can now slap a seal on a pill or a scalpel and ship it in, while local regulators can do the ceremonial nodding.
It’s like outsourcing our immigration to some Bangladeshi “Datuk”.
Even the mandatory halal certification — the national consumer assurance bedrock — has been tossed aside for these imports. We traded a Malaysian global staple for a tariff trim. For food, the oversight is merely “streamlined” — ie even our halal assurance now needs an American fast-pass.
In automotive, Malaysia’s domestic champions must now suffer American détente. US-built vehicles, adhering only to US standards, get a simplified entry.
Digital Tax Haven Clause
Worse still, we’ve promised not to impose new Digital Services Taxes (DSTs) on US tech giants.
While Europe scrambles to tax Google LLC, we have promised to leave their pockets alone. It’s like promising a thief you won’t call the police.
This is not a balanced deal; it’s extraterritorial tax immunity. Malaysia becomes a digital tax haven for its largest trading partner. The US didn’t just win; they wrote the rule book and made us sign it in blood.
Article 5.1: The Geopolitical Handcuffs
Now we arrive at Article 5.1 — the diplomatic blackmail clause, where all the fuss is.
It binds Malaysia to coordinate economic actions against “third countries” (insert China) if the US deems it a “shared economic concern.”
Malaysia’s foreign policy — once a glorious, cynical dance of non-alignment — is now a circus tight-rope walk without a balance pole. We’ve handed that to Washington.
If the US decides to slap sanctions on Beijing for, say, using the wrong font on their official stationery, Malaysia has agreed to “coordinate its response.”
This is not a shared concern; it’s a shared ultimatum.
The moment Malaysia signed this clause, its cherished neutrality became a historical anecdote. It signals to Beijing that when the brown stuff flies, Kuala Lumpur will look for cues from the US Federal Reserve (Fed), not the People’s Bank of China (PBOC).
The Exit Clause Booby Trap
The ART has no expiry date. The only way out is the so-called “Exit Clause,” which the government touts as proof of sovereignty.
In reality, it’s a booby trap. Exiting would trigger the return of 40%, 50%, or even 100% US tariffs — crippling our export sector.
We have secured a slight trade advantage, yes, but we paid for it by signing up as an American reserve player in a practically permanent commitment.
The government is on the defensive about how we ended up with ART, but in reality, what could our negotiators have done?
We could have demanded a sunset clause that would force the US to renegotiate terms periodically. We could have joined forces with ASEAN and negotiated as a bloc. Or we could have included a buy back clause that forces technology transfers from the advanced American companies that make our drugs, automobiles and digital commerce platforms.
Our negotiators had a choice: Immediate trade pain or the slow, dignified erosion of policy control. They chose the latter, concluding that stability is worth more than the hassle of true independence.
A pragmatic choice, perhaps. But in the grand, dangerous game of superpower chess, Malaysia has just announced its team colours. And the Chinese are taking notes.
- ZB Othman is an editor of The Malaysian Reserve.
- This article first appeared in The Malaysian Reserve weekly print edition
The post The ART of the no-deal appeared first on The Malaysian Reserve.
