U.S. envoy dismisses claim trade pact undermines Malaysia’s economic sovereignty

KUALA LUMPUR: United States ambassador to Malaysia Edgard D. Kagan has dismissed claims that the newly signed trade deal could pressure Malaysia to align with future U.S. trade restrictions.

“I don’t buy that argument at all. I think it is completely wrong,” he said at a press conference on Monday.

Kagan said the pact instead demonstrates Malaysia’s independence in choosing to deepen cooperation with the U.S. as both countries move up the economic value chain.

“I think that the agreement protects Malaysia’s sovereignty by making clear that Malaysia is making a sovereign decision to look for a closer relationship with the United States,” he said.

Earlier today, Perikatan Nasional secretary-general Datuk Seri Azmin Ali warned that the new trade agreement Malaysia signed with the United States could undermine the nation’s economic sovereignty, as it obliges Putrajaya to adhere to Washington’s trade and investment regulations.

Azmin, who previously served as minister of international trade and industry, described one of the most concerning provisions in the Malaysia–U.S Reciprocal Trade Agreement as the clause requiring Malaysia to replicate any U.S-imposed trade restrictions or sanctions on other countries.

In response, the ambassador noted that calls for closer ties with Washington were not new, pointing out that Malaysian opposition parties had previously urged such an agreement.

“If you go back to April, what was the opposition in Malaysia saying? They were saying Malaysia needs an agreement with the United States,” he said.

The agreement, signed yesterday, seeks to strengthen bilateral economic ties, expand market access, and enhance supply chain resilience between Malaysia and the United States.

Under the deal, Malaysia has agreed to grant significant preferential market access to U.S exports, including industrial goods such as chemicals, machinery, electrical equipment, metals, and passenger vehicles, as well as agricultural products like dairy, poultry, and rice.

In return, the US will maintain a 19% reciprocal tariff on Malaysian goods, with selected products enjoying a 0% tariff under a list of aligned partners.

Additionally, Malaysia has committed not to ban or impose quotas on exports of critical minerals or rare earth elements to the US and will collaborate with American firms to “create certainty for businesses to increase production capacity.”