Minister of Investment, Trade and Industry, Johari Abdul Ghani confirmed that the reciprocal trade agreement (ART) between Malaysia and the United States is no longer applicable after a court ruling in the United States nullified the tariffs introduced by Donald Trump.
According to him, the decision of the US Supreme Court to annul the tariffs directly rendered the agreement null and void and had no legal effect.
Johari explained that the court ruled that the US government cannot impose tariffs across the board without a clear reason. If tariffs are imposed on the basis of trade surplus, the authorities must specify the industries involved and provide specific justification.
The ART agreement was previously signed between Trump and Anwar Ibrahim in October last year during the US President's official visit to Kuala Lumpur in conjunction with the ASEAN summit.
Under the agreement, a tariff of 19% is imposed on some Malaysian goods entering the US market. However, certain products enjoy a zero tariff rate through the list of trading partners.
However, following the court ruling, four Members of Parliament from the People's Justice Party (PKR) had previously urged the government to postpone all ratification processes of the agreement.
In a related development, Johari informed that the US is now relying on its domestic legal provisions to impose tariffs.
Among the mechanisms used is Section 122 of the US Trade Act of 1974 which allows the government to impose temporary tariffs of up to 10% on countries that are alleged to be violating international trade rules.
In addition, investigations can also be conducted under Section 301 of the same act to determine whether a country is engaging in trade practices that are considered unfair.
The United States this week began an investigation into the actions, policies and trade practices involving 15 major trading partners including Malaysia and the European Union. The investigation is related to the issue of structural overcapacity and production in the manufacturing sector.
A day later, US Trade Representative Jamieson Greer announced that Washington had launched a broader investigation involving 60 countries under the same legal provisions, including related to the issue of forced labor in the global supply chain.
Meanwhile, Trump also stated a proposal to introduce a global tariff of 15% to replace the previous tariff that was struck down by the court.
