KUALA LUMPUR, Oct 26 — Approximately 1,711 items will be exempted from the 19 per cent reciprocal tariff imposed by the United States (US) on Malaysian exports, said Investment, Trade, and Industry Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz.
This was confirmed following the signing of the US-Malaysia Agreement on Reciprocal Trade today, with the exempted items including palm oil, rubber-related products, cocoa, aerospace equipment, and certain pharmaceutical components.
These exemptions represent 12 per cent of Malaysia's total exports to the US, accounting for US$5.2 billion (RM21.96).
"This has been agreed before, but today it is formalised in writing. There are no changes to our earlier commitments.
“In fact, the US has given us better access to their market. So, I can say that today's agreement is better than what was announced previously.
"The US is one of our largest trading partners, particularly in electrical and electronics, semiconductor, machinery, and aerospace, among others. By having this access to the US, it ensures that trade between the countries remains strong and gives certainty to both exporters and importers.
"And as mentioned before, this agreement guarantees the tariff to be maintained at 19 per cent, although we have exemptions to 1,711 tariff lines," he said during a press conference on the sidelines of the 47th Asean Summit at the Kuala Lumpur Convention Centre today.
Tengku Zafrul added that the agreement will benefit Malaysian industries, with imports from the US of items such as medical devices becoming more competitive and cheaper.
The agreement will take effect within 60 days.
Earlier today, the US and Malaysia signed the Agreement on Reciprocal Trade, which aims to strengthen economic and national security cooperation, enhance supply chain resilience and innovation, address duty evasion, and support investment security and export controls.
Under the agreement, Putrajaya has committed to the expedient development of its critical minerals and rare earths sectors in partnership with US companies, including granting extended operating licences to create certainty for businesses to increase production capacity.
The White House said that Putrajaya has committed to refraining from banning or imposing quotas on exports of critical minerals or rare earth elements to the US.
When asked if the new trade agreement would affect national sovereignty, the minister said that any decision and actions would be made in accordance with the country's laws and regulations.
"We will follow the laws here... No, it will not affect our national security. If you look at the agreement, it will respect both national sovereignties.
“We would not sign something that will affect our sovereignty,” he said.
Whether he was disappointed not to be able to negotiate a lower tariff, Tengku Zafrul said: "No. In fact, we are satisfied because what was offered before stays, and we are quite glad that we do not have to backtrack on what we agreed upon before.""We are also happy about the tariff lines, as we managed to get more (items exempted) than what was discussed before."
In April, the US initially imposed a 24 per cent tariff on Malaysian exports, which it later lowered to 19 per cent in August.
