KUALA LUMPUR, Aug 4 — The agreement for no export restrictions on rare earth elements to the United States does not mean Malaysia has granted the US exclusive rights to the supply of those critical minerals.
Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz said this commitment was made as the country currently does not impose export restrictions on rare earth elements/critical minerals to any country.
The agreement reached under “Section 5 - Economic and National Security of the Malaysia-US” reciprocal trade negotiations also touched on the issue of restrictions on the export and transit of artificial intelligence chips from the US to certain countries.
Under this section, Tengku Zafrul said Malaysia agreed to strengthen controls by enforcing Section 12 of the Strategic Trade Act 2010 (catch-all controls), which came into effect on July 14.
“The tariff reduction/elimination negotiations initially focused only on a list of specific requests from the US, but were later expanded to include the entire range of goods imported from the US.
“As a result, Malaysia has offered to reduce/eliminate tariffs (import duties) for 98.4 per cent of the total tariff lines,” he said at a ministerial briefing on reciprocal trade negotiations with the US in the Dewan Rakyat today.
On sales tax, he said Malaysia had agreed to exempt rates that discriminate against agricultural products imported from the US, such as fruits and seafood, while maintaining excise duties.
“Malaysia has not relaxed any controls and conditions that will affect the rights of the people and the survival of local industries, namely, by providing a blanket exemption to importer licence requirements for products imported from the US and there is no full liberalisation of foreign equity requirements in strategic sectors. Bumiputera equity requirements are also maintained for related strategic sectors,” he said.
On the digital services tax (DST) exemption, which the US says is discriminatory to its companies, Tengku Zafrul said Malaysia implements DST policies and similar taxation based on the principle of non-discrimination.
The government also said it agreed to abolish the requirement for social media platforms and cloud service providers from the US to contribute 6 per cent of their total revenue in Malaysia to the Universal Service Provision Fund as one of the conditions for operating in Malaysia.
In addition, Malaysia has repealed or permanently suspended the directive for all Domain Name System (DNS) traffic to be redirected to local DNS services.
“The US has stated its priority for the implementation of control measures on export activities, particularly transshipment, to ensure there is no circumvention or avoidance of tax payments through false declarations of origin.
“Apart from the commitment to negotiate rules of origin, the government has proactively taken steps to control this matter by tightening the issuance of Non-Preferential Certificates of Origin (NPCO),” he said.
Effective May 6, the Investment, Trade and Industry Ministry is the only authority to issue NPCOs for all exports to the US, Tengku Zafrul added.
