Malaysia And US RTA – WTO, The ‘Walls’ And Is ‘The Pie Fixed’…

The agreement between Malaysia and USA on reciprocal trade (RTA) was signed on 26^th October 2025. It was supposed to be a strategic tool for stabilising market access and emphasises reciprocity. The selling point is it is a strategic boost for Malaysia, enhancing its role as a preferred trade and investment destination for US companies in South-east Asia. 

Some view it as a strict legal treaty while others see it as more political, allowing flexibility for future modifications. 

A closer look reveals an asymmetry. Malaysia made binding commitments and opened markets to US goods, while US tariff reductions and market access are limited and discretionary. It seems Malaysia has little room to manouvre on digital trade, energy, critical minerals, and telecommunications and has to follow US standards.

Is it really a balancing act between defending our national interests and engaging with a major economy to safeguard our exports and attract investments? These are verbal statements that are not spelt out in the agreement and I doubt its flexibility for future modifications.

The tariff exemptions Malaysia secured on 1,711 products and avoided potentially higher tariffs is valued at about US$5.2 billion only. We have heard and seen numerous comments on the cost-benefit analysis and I will refrain from commenting here.

What really happened to the World Trade Organization (WTO)? It is the successor to the General Agreement on Tariffs and Trade (GATT), that deals with global trade rules by ensuring that trade flows as smoothly, predictably and freely by lowering trade barriers through negotiations. At the heart of the system is the multilateral trading system and dispute settlement.

Why are governments now negotiating directly and side-lining WTO? Trade policies are meant to be transparent and predictable which is to everybody’s benefit. As of late 2024 and 2025, USA has not paid its full contributions to the WTO. That much for engagement and trust that we are expecting.

Were there ‘walls’ during negotiations?

1. Was our experienced negotiating team fully briefed on our ‘needs and wants’? I guess they saw ‘the writings on the wall’ in the draft and were not able to be the ‘power behind the throne’. Surely, there must be a ‘big person’ (with power, influence, responsibilities and accountability) to guide them.  
2. Were stakeholders (ministries, GLCs, GLICs, state governments, etc) fully briefed and their feedback discussed or they were just stonewalled? A recent experience is the Urban Redevelopment Bill – having had 105 stakeholders’ engagements – there were still dissatisfactions on fundamental issues in the final draft.
3. Did we exercise maximum efforts to get our needs and wants or ‘go balls to the wall’?
4. Did the other party create obstacles and we were ‘banging our head against a wall’ or the team was ‘driven up the wall’ or did we attempt to propose a contingent contract?
5. Was there information that’s only ‘between you and me and the wall’ during negotiations or was there a ‘wall of silence’?
6. Were there instances where we ‘hit a wall’ and what did we do next?
7. We must avoid being like ‘Humpty Dumpty who sat on a wall’ and breaks into pieces after falling and cannot be repaired.
8. I am sure the task is not ‘like nailing jello to the wall’ or like we needed to ‘tear down this wall’!
9. Opposition and some government backbenchers consider the RTA as ‘off-the-wall’ from Malaysia’s perspective. And many out there are ‘climbing the wall’. Cambodia seems to have done a better job in negotiations.
10. The RTA has been signed and are we going to whine or place written prayers on the ‘Wailing wall’?  
11. Bear in mind, we also have the “’Great Wall of China’ to contend with.
12. Most Malaysians are ‘bouncing off the walls’ to know what really happened during negotiations.

Given the above, how is Asean’s commitment to centrality in maintaining balanced engagement with major global powers be respected when the Chairmanship itself does not exhibit assertiveness to get a fair deal on a negotiated agreement? Steady engagement that fosters trust is not enough if there is no mutual benefit and win-win results while hoping for a stable and meaningful relationship.

The worry that if this deal had not been inked immediately, Malaysia risked having its tariffs raised up to 100% with adverse effects is a sign of unpreparedness, a lack of confidence and the belief that the ‘pie is fixed’. This mindset is a hurdle in negotiations when we should be seeking mutually beneficial solutions towards a unilateral action by the other party. There should be predictability and stability in conducting business but at what cost and attendant benefits.

I am not sure that the RTA will become a benchmark for other nations to follow since there is not much flexibility and protection of autonomy. Washington has warned of ‘red lines’ and the potential consequences that would come from crossing those as Malaysia explores closer ties with BRICS.

So, was RTA truly negotiated or a knife put to our throat? The process doesn’t seem to be fast-paced as other countries are still buying time. Even if Washington set the time, was it non-negotiable?

At the recent ASEAN summit, the Chinese premier called on regional leaders to uphold free trade and the multilateral trading system, oppose all forms of protectionism and continuously advance regional economic integration. China has firmly opposed the Liberation Day tariffs and restrictions, stating they harm global economic growth and the stability of supply chains. 

This assertion is as clear as daylight.

Clearly, we don’t need to act tough but be firm. Did we tell them that they had favorable trade balances in services with us or our perceived timidity stopped us?

What say you…

 

Saleh Mohammed