US pact faces sovereignty concerns, clauses on sanctions and tech under scrutiny - Rais

Honourable Members, Distinguished Guests,

EMIR Research has consistently argued that Malaysia’s strength lies in credible active neutrality, dignity in the Global South, and policy anchored in justice.

This Agreement between Malaysia and the United States has drawn strong public interest. It is important that our discussion today reflects both friendship and frankness with the right clarity.

Malaysia values its partnership with the United States — a nation with which we share longstanding ties in trade, education, technology and security. Yet friendship, to endure, must rest on mutual respect for sovereignty and equality. It is in that spirit that we examine the agreement before us.

While presented as “reciprocal”, the document contains provisions that reach deeply into Malaysia’s policy domain — from digital governance and taxation to export controls and security cooperation. Some of these clauses, if left unamended, could unintentionally limit Parliament’s constitutional authority and Malaysia’s freedom to shape policies that fit our own development path.

For example, the requirement to mirror certain foreign sanctions or align with external export controls may blur the line between partnership and policy dependence. Other clauses constrain Malaysia’s ability to impose a digital-services tax, to localise critical data, or to prioritise domestic investment. These are areas where our laws, institutions and national plans must remain the primary reference points.

The most troubling clauses strike at the heart of Malaysia’s sovereignty. Article 5.1 binds Malaysia, upon U.S. notification, to adopt “equivalent” restrictive measures on third countries, tying our trade stance to American economic or national-security actions. Article 5.2 then explicitly pushes that alignment into national security terrain, requiring cooperation on security-sensitive technologies, alignment with unilateral U.S. export controls, and restrictions on dealings with entities on U.S. sanctions lists. Taken together, these provisions subordinate our foreign-economic policy to another capital’s priorities, replacing independent strategic choice with compliance by default.

Our economic and industrial sovereignty is equally eroded. Articles 6.1 to 6.3 require Malaysia to promote U.S. investment in strategic sectors such as energy, telecommunications and infrastructure, while also committing us to facilitate US$70 billion (RM293.8 billion) of investment in the United States over the next decade, primarily aimed at job creation there. This alone represents an inversion of developmental logic for a capital importing economy.

The United States may demand information on Malaysian subsidies and compel “corrective” action if they are deemed distortive. Such provisions not only weaken our ability to pursue state-led industrial policy, a tool every successful late-industrialiser once relied on, but also risk crowding out investment and credit needed for domestic innovation and industrial upgrading. The result is a development strategy increasingly shaped by external validation rather than national priority.

In the technological and digital sphere, the loss of sovereignty is even more pronounced.

Articles 3.1 to 3.5 forbid Malaysia from imposing a digital-services tax on U.S. firms, constraining a fiscal instrument established under our own domestic law. They also restrict our ability to regulate data flows and require consultations with Washington before entering any new digital trade agreements. Article 3.4 prohibits technology-transfer or localisation requirements, removing tools essential for building national capability. In effect, Malaysia cedes control over its digital future, the very domain that will determine competitiveness in the decades ahead.

Fiscal and trade policy are also curtailed. Article 2.12 obliges Malaysia to “coordinate and endeavour to align” its border measures with any future U.S. border-adjusted taxes, while prohibiting value-added-tax distinctions that disadvantage American firms. Together with a pledge not to challenge U.S. export rebates at the WTO, these provisions restrict our fiscal manoeuvrability and multilateral defences. They narrow the government’s ability to shape tariffs, incentives, or counter-cyclical tools responsive to local realities.

Our strategic autonomy is further compromised by clauses that blur the line between trade and security. Section 5 mandates alignment across export controls, shipping, and even defence procurement, prohibiting nuclear-energy purchases from specified countries unless no U.S.-approved alternative exists. This effectively places Malaysia’s national-security choices under American scrutiny and undermines our doctrine of active neutrality—one of the cornerstones of ASEAN stability.

Taken together, these commitments amount to a structural dependency disguised as partnership. Each clause may appear technical, but collectively they codify a hierarchy in which Malaysia bears fixed obligations while the United States retains unilateral discretion - including the right, under Article 7.4, to impose further tariffs whenever it “considers” Malaysia non-compliant.

The price of this asymmetry is not only policy space but developmental freedom. By surrendering control over standards, sanctions, and technology policy, Malaysia risks mortgaging the very levers required for long-term resilience, diversification, and national progress.

Across ASEAN, Malaysia’s version of this so-called “reciprocal” agreement stands out as unusually restrictive. Only Cambodia has concluded a similar framework, yet even its text contains explicit safeguards stating that implementation must not “infringe Cambodia’s sovereignty” and confines alignment to economic—not national—security. Thailand and Vietnam are still negotiating, while Singapore and Indonesia have not even entered the framework. Why then did Malaysia sign so hastily such a critical document?

Equally troubling are the economic commitments embedded in the annexes that points to large-scale procurement from U.S. suppliers, including aerospace, energy and digital infrastructure sectors. Although described as commercial transactions, these purchases will inevitably involve government-linked corporations such as Malaysian Aviation Group (Malaysia Airlines), Petronas, Telekom Malaysia, Tenaga Nasional Bhd, with long-term fiscal implications for public balance sheets. Together, these obligations risk locking Malaysia into potentially high-cost, foreign-serviced systems that significantly shrink the space for domestic industry and innovation. The combined exposure could exceed RM1 trillion (US$240 billion) over time.

In addition, the US Supreme Court is still deliberating on the legality of President Donald Trump's tariffs, imposed under the International Emergency Economic Powers Act (IEEPA).

The justices are questioning whether Trump has overstepped his authority by using IEEPA to impose broad tariffs on nearly all US trading partners.

1. Major Questions Doctrine : The court is considering whether Trump's tariffs violate the "major questions doctrine," which requires clear congressional authorization for executive actions with significant economic and political implications.

2. Constitutional Authority : The justices are debating whether Trump's use of IEEPA to impose tariffs infringes on Congress's constitutional power to regulate commerce and impose taxes.

3. Executive Power : The administration argues that the president has inherent authority to impose tariffs in the realm of foreign affairs, while critics contend that this would give the executive branch too much power.

Chief Justice John Roberts even suggested that Trump's tariffs are "the imposition of taxes on Americans, and that has always been the core power of Congress".

The court's decision is expected in the coming months, with significant implications for global trade, the US economy, and the balance of power between the executive and legislative branches.

Four potential outcome :

• Uphold the Tariffs in Full : Granting presidents broader emergency powers in trade, setting a new precedent for executive authority that could lead to increased prices for consumers and businesses, potentially harming the US economy.

• Strike Down the Tariffs Entirely : Reaffirming Congress's exclusive control over tariff policy, potentially triggering significant financial adjustments and refunds.

• Issue a Limited Ruling : Upholding tariffs under narrow conditions, requiring future actions to meet stricter standards.

• Remand the Case : Sending the case back to a lower court for further review, potentially delaying a final decision.

Beyond substance, the manner in which this agreement was concluded compounds the concern. The process itself raises serious governance concerns.

EMIR RESEARCH have suggested in our op-ed dated November 3, 2025, published across all mainstream media, a parliamentary select committee on foreign affairs should urgently determine whether the Cabinet had full sight of the agreement before it was signed, whether inter- and intra-ministerial consultations and standard operating processes were completed, and whether legal, economic and security assessments were properly conducted involving subject matter experts. And we see that today, and we are thankful for that.

However, the magnitude and permanence of these obligations demand scrutiny of the highest order. What is now evident is that this agreement potentially breaches Malaysia’s sovereign and security boundaries in clear and measurable ways.

Clauses that compel alignment with a foreign power’s sanctions, export controls and national security policies strike at the constitutional principle of self-determination. Even if unintended, the act of binding Malaysia to another nation’s security architecture represents a profound lapse in institutional oversight—one that must be addressed transparently and corrected without delay.

And to avoid such recurrence, perhaps a RCI should be convened to specifically identify if there are indeed any lapses in the standard operating procedures or processes in signing such critical agreement. More importantly, to avoid such circumstances in the future to safeguard national interests.

Yet the path forward must be constructive. EMIR Research proposes that Malaysia invoke Article 7.3, which allows reasonable modifications and amendments which will be applicable 60 (sixty) days after the date on which the Parties exchange written notification, to introduce sovereign carve-outs and compliance clauses ensuring that our Constitution and domestic laws take precedence wherever conflict arises. Should amendments prove insufficient, Article 7.5 provides for termination with due notice—though that route must be weighed carefully. A multidisciplinary taskforce of legal, economic, and technical experts should immediately be convened to review each article, propose protection language, and realign the agreement with Malaysia’s national interest.

EMIR Research would like to submit herein the proposed amendments to the said Agreement, Section by Section in the following format :

1. Existing Clause as was what signed 2. Identifying specific issues with the said Sections / Articles / Clauses 3. Suggested Amendments 4. Summary of Key Legal Protections Added post suggested amendments

This is no longer about partisan politics. It is about safeguarding the nation’s future and restoring the moral and strategic compass that defines Malaysia’s place in the world. EMIR Research’s call is simple: act swiftly, transparently, and in unity to amend what can be amended, protect what must be protected, and ensure that never again will a document of such consequence slip past the nation’s collective scrutiny.

None of this implies rejection of cooperation. On the contrary, Malaysia seeks a partnership that is transparent, balanced and forward-looking — one that strengthens both economies, enhances technological exchange, and supports regional stability through ASEAN centrality and international law.

Accordingly, to reiterate, EMIR Research recommends a constructive path. We should invoke the amendment mechanism under Clause 7.3 to introduce sovereign-safeguard language affirming that all obligations operate within the Federal Constitution and domestic legislation.

Such adjustments will ensure that this agreement becomes a model of genuine reciprocity — one that protects Malaysia’s constitutional integrity while deepening trust with our American counterparts.

This is not about confrontation. It is about calibration — ensuring that our cooperation reflects parity, clarity and shared benefit. Let us work together, transparently and in good faith, to align this agreement with the principles that have long guided Malaysia’s diplomacy: dignity, balance and the pursuit of peace through understanding.