Borneo Post Online (01/11/2025) - It seemed inevitable that opposition leaders in Malaysia would quickly surface with sharp criticism of the recent Malaysia-US trade deal, denouncing it as a “surrender of national independence” or characterizing it as a loss of sovereignty.

Among the loudest critics was Tun Dr Mahathir Mohamad, who warned that Malaysia had “bowed to American pressure” and was now “signing away its economic sovereignty.” Such remarks, however dramatic, reflect a short-sighted and overly nostalgic view of global trade, one that misunderstands both the realities of modern interdependence and the actual content of the agreement itself.

Hassan Abdul Karim loudly argued in parliament that the agreement represents an economic surrender.

“Without a single bomb or bullet, we’ve handed over our economy and our country’s wealth. Every year, we struggle to collect revenue … yet we’re giving away billions to America.” He further stated that Malaysia’s purchase commitments under the deal exceed RM 1 trillion, asking: “Why are we ‘surrendering’ RM1 trillion to the US?”

But if we evaluate the agreement’s provisions, its strategic implications, and the validity of the criticisms, we must conclude that the deal represents pragmatic economic diplomacy rather than a forfeiture of national autonomy.

Dr Mahathir’s comments — echoed by several opposition MPs and nationalist groups — stem from an outdated zero-sum perception that any alignment or concession to a larger power automatically weakens Malaysia.

Yet in today’s global economy, strategic engagement often safeguards sovereignty better than isolation. The new Malaysia–U.S. deal did not “surrender” the country’s autonomy; rather, it secured Malaysia’s export access, preserved tariff advantages, and strengthened the nation’s strategic role in regional supply chains.

In truth, Malaysia was facing a harsh reality: without this agreement, many of its key exports — including electronics, palm oil, rubber goods, and aerospace parts — would have been subjected to tariffs as high as 25%. That would have crippled thousands of Malaysian businesses and potentially cost tens of thousands of jobs. Instead, the government negotiated a 19% tariff cap and secured exemptions for over 1,700 export categories, worth more than US $5 billion annually.

Far from surrendering, Malaysia protected its economic lifelines in a tightening global trade environment.

Equally important, the deal elevates bilateral relations to a Comprehensive Strategic Partnership (CSP) — opening doors to technology transfers, U.S. investments in semiconductors and aerospace, and expanded market opportunities for Malaysian SMEs.

These are long-term structural gains, not short-term concessions.

While critics decry “dependence,” pragmatic leaders recognize that global partnerships, when negotiated carefully, enhance Malaysia’s leverage rather than diminish it. The U.S. too benefits — through deeper supply-chain access and commercial opportunities — but Malaysia’s wins are tangible and immediate:

market access secured, investor confidence restored, and export stability achieved.

In short, the opposition’s rhetoric of “surrender” is a convenient political weapon, not an economic truth. Malaysia did not yield; it adapted wisely.

These remarks reflect a nationalist perspective that views deep trade engagement with a major power as undermining independence. Yet Malaysia remains a highly open economy—external trade totals over 130% of GDP—and continued access to major markets is central to its economic strategy.

Key Provisions and Quantitative Impact

Prior to the agreement, Malaysian exports to the U.S. faced potential tariff escalation up to 25%. The deal capped the tariff rate at 19%, while exempting 1,711 tariff lines of Malaysian goods—among them electronics, rubber products, and palm oil derivatives. These exempted exports are valued at approximately US $5.2 billion (RM 21.9 billion) annually, representing roughly 12% of Malaysia’s exports to the U.S. in 2024.

The avoidance of higher tariffs therefore plausibly preserved hundreds of millions of ringgit in export revenue — defensive gains of magnitude. For the electrical & electronics (E&E) sector — responsible for nearly 38% of total exports and employing over 600,000 workers — maintaining U.S. access is particularly significant.

Strategic and Investment Dimensions

Beyond tariff relief, the agreement elevated bilateral ties to a Comprehensive Strategic Partnership (CSP).

Malaysia is expected to attract up to US $7–8 billion in new U.S. investment over the next five years, with potential creation of 10,000–15,000 high-skilled jobs. For Malaysia’s SMEs (which constitute 97% of all businesses), the deal simplifies export documentation, lowers non-tariff barriers, and enhances U.S. market access.

Sovereignty Concerns and Policy Safeguards

Hassan’s concerns center on sovereignty: “We’ve handed over our economy … giving away billions to America.” While the agreement includes a clause (Article 5.1) requiring Malaysia to “discuss and act if necessary” in tandem with U.S. trade‐oriented restrictions, the government emphasizes that obligations apply only when there are shared economic or national security concerns, and Malaysia cannot be compelled to adopt U.S. policies unilaterally.

Therefore, while the concerns about alignment are genuine, the treaty retains domestic policy autonomy and does not legally subordinate Malaysia’s sovereignty.

Comparative Gains and Strategic Balance

Malaysia’s gain: Preservation of export competitiveness, tariff predictability, investor confidence, and retention of a role in global value chains.

U.S. gain: Expanded access to Malaysian markets in aerospace, telecommunications, and renewables; stronger supply‐chain ties in semiconductors and critical minerals.

Although Malaysia’s immediate gains are defensive (avoiding worse outcomes), the strategic value is real. The U.S. benefits from longer-term export and supply-chain integration; the asymmetry reflects structural differences rather than exploitation.

Conclusion and Policy Implications

The Malaysia–U.S. trade agreement demonstrates pragmatic economic diplomacy in the face of global trade disruption. While Hassan Abdul Karim and other critics characterize the deal as a surrender of sovereignty, this interpretation overlooks the complex realities of an open, export-oriented economy. Malaysia has not relinquished agency; it has negotiated terms that secure market access and strategic positioning.
Going forward, transparent implementation is essential — particularly scrutiny of the sanction‐alignment clause and its interplay with Malaysia’s existing trade agreements. The deal strengthens Malaysia’s trade resilience, underscoring the importance of pragmatism in economic policy.

Read more at https://www.theborneopost.com/2025/11/01/malaysia-us-trade-deal-pragmatism-over-protectionism/