Agreement On Reciprocal Trade: Understanding Malaysia’s Sovereign Choices

By Chairman of ISIS Malaysia, Datuk Prof Dr Mohd Faiz Abdullah

KUALA LUMPUR, Nov 1 (Bernama) -- Contentions based on fundamentally erroneous premises may appear sound, even cogent, at first blush, but when examined more closely, do not have a leg to stand on.

This goes for the spate of criticisms coming from detractors on the Agreement on Reciprocal Trade (ART), signed recently between Malaysia and the United States.

In panning the deal, these critics conjure up the spectre of Malaysia being a proxy for America, held hostage by the demands of US mercantilism, and teetering on the edge of surrendering our economic and political sovereignty.

Captive mindset

As we step back, it would appear that we still have captive minds stuck in colonialist patronising mode that are unable to accept the fact that Malaysia possesses the capacity to act with agency and conviction on the world stage.

Statutory and contractual interpretation of trade agreements is never an exact science, but to launch a full-frontal assault on a trade agreement based on myopic and narrow interpretations is an invitation to be hoisted by one’s own petard of logical fallacies, imprisoned in the dungeon of one’s own prejudices and predilections.

Now, it is true the American jurist Oliver Wendell Holmes once said that “the life of the law has not been logic: it has been experience.” But when contentions are advanced based on the reading of legal documents, first principles must apply, and that is, arguments must be based on facts, and the reasoning behind them must be logical.

As a general response to the contentions of the doubting Thomases and derisive detractors, I would venture to say that they are talking through their hat and their assertions are merely “argumentum ad ignorantiam,” where ignorance prevails over facts, and a deficiency of critical thinking causes a breakdown in reasoning.

Let us address seriatim the various contentions and assertions of these detractors. First, Article 5.1(1) and the claim that we have signed a death warrant on our sovereignty.

The entire clause would take up too much space – remember what Shakespeare said about killing all lawyers? – So, we’ll have to demystify the language and paraphrase it as follows: If the US imposes a customs duty, etc., on another country to protect its economic or national security interests, then Malaysia shall do likewise or agree to a timeline for implementation that is mutually acceptable, guided by principles of goodwill and a shared commitment to enhancing bilateral relations.

Detractors insist this is a mandatory provision which obliges Malaysia to adopt the same measure at the behest of the US. If the Americans say jump, then we shall do so, or if they say do a Trump boogie, we shall too.

This is nonsense since it is legally fallacious. In international trade, such language is used to establish a consultative alignment mechanism, conditional on mutual agreement. It is not a command clause. There is no automaticity. There is no compulsion.

The very existence of timelines acceptable to both parties, as well as the reference to a shared economic or national security concern clearly points to discretion and sovereignty. Consider how far-fetched the claims are.

If we adopt their interpretation, then every sovereign agreement with a consultation provision would spell surrender. If this were the guiding interpretation, then joining ASEAN, RCEP, and the WTO would all constitute capitulation.

Second, the claim that Malaysia will act as a proxy executor of US sanctions, purportedly on account of Article 5.2, which deals with export controls and sanctions.

Again, to paraphrase, Malaysia shall, through its domestic regulatory process, cooperate with the US to regulate trade in national security-sensitive technologies and goods through existing control regimes, align with all unilateral export controls in force by the US, and ensure that its companies do not backfill or undermine these controls.

The critics contend that this clause compels Malaysia to amend its laws according to the wishes of the US – the same ‘jump and dance’ drill! Again, this is a fundamental misinterpretation because the phrase “through its domestic regulatory process” means that it is dispositive and that domestic law remains paramount.

Where cooperation is conditioned on domestic legal process, it is not coercion. It sure sounds sensational, even looks heroic, to climb atop the hill and shout, “We shall not surrender and be a proxy to America,” but once we cut through the rhetoric and examine the written word, you might well end up “the fool on the hill!” Anyone reading the text will immediately recognise that Malaysia retains sovereign filtration and discretion.

The claim of proxy status collapses upon contact with the actual language. The bluster falls silent faster than the scattering smoke puffed from their low-tariff cigars.

Thirdly, the claim that the US gains veto power over Malaysia’s trade partners and deals, purportedly thanks to Article 3.3 on Digital Trade Agreements, which provides that Malaysia shall consult with the United States before entering into a new digital trade agreement with another country that jeopardises essential US interests.

Yes, there is a mandatory duty to consult, but to be sure: Consultation is conversation, not consent. In my book “The Wars of Jurisprudence”, I dedicated an entire chapter to the doctrine of consent. So, I concede we can't give short shrift to this concept and presume we have made our case on this point, but this much I can say: This provision in no way obliges Malaysia to agree or follow the advice given during the consultation.

Malaysia’s duty is discharged once we engage in the process of seeking views and opinions. Treaty law draws a clear line between consultation and approval. The clause does not mandate compliance, let alone grant a veto. Malaysia retains sovereign treaty-making authority.

Fourthly, Malaysia will be forced to target firms linked to China, Russia, or others unpopular in Washington, purportedly on account of Article 5.1(2), which says that Malaysia shall adopt and implement measures, in accordance with its domestic laws and regulations, to address unfair practices of companies controlled by third countries operating in Malaysia’s jurisdiction.

What’s the beef here? If anything, it is a good principle that underscores rules-based fair trading arrangements. In any event, Malaysia already has in place such protocols which discipline economic actors under competition, customs, and fair-trade laws.

Detractors need to get their priorities in order. Do they or don't they want fair market conduct? This clause is right up the street of advocates of free and fair trade.

But in chasing the phantom of geopolitical targeting, they end up barking up the wrong tree. The fact of the matter is, Malaysia retains complete sovereign privilege over how, when, and whether to act, and through which legal instruments.

Finally, there is the contention about the risk of alienating China and BRICS partners, and when that happens, we lose our neutrality. This is in for some serious non-sequitur. For the sake of argument, how would alienating China and BRICS be tantamount to losing neutrality? If anything, it means reinforcing neutrality.

That will be the logical effect, but this is purely an academic exercise. This issue does not arise because our relations with China and BRICS are stronger than ever before. So strong that we were being castigated for pivoting too much towards China and “selling out the nation’s sovereignty” as a trade-off for quick gains.

Our continued engagement with China is neither threatened nor diminished by constructive ties with the United States. Nor do the US or Europe, Japan or India, expect us to abandon longstanding partners.

This is not the logic of the twenty-first century. It is the ghost of Cold War binaries that no longer holds sway in a multipolar world.

While there’s no doubting the importance of terms of endearment, the assumption that Malaysia cannot deepen relations with one major economy without losing the affection of another borders on diplomacy as romantic melodrama: an imagined zero-sum contest in which nations behave like jealous suitors.

Our friends know that we value balance and openness, not alignment with any singular pole of power. Neutrality is not the absence of relationships; it is the presence of many. That is called a diversified strategic agency, conducted via a policy of active non-alignment.

Nothing to fear

Let us be clear: Malaysia does not barter sovereignty for convenience. We have never done so, and we’re not about to start now. Further, what the sceptics mistake, willfully or naively, for submission is, in truth, the steady practice of modern statecraft.

There is nothing to fear but fear itself. Serious nations engage, consult, and build partnerships without fear that conversation will dissolve their identity. To suggest that Malaysia loses independence whenever it cooperates betrays a shocking lack of understanding of diplomacy and what it entails.

When global norms align with our interests, we act. We chose our own path in relation to Iraq. We maintain our own approach to the South China Sea. We continue robust economic ties with China, the United States, the Gulf, Europe, and others.

Above all, we have remained steadfast in our principled stance on Palestine, doubling down on our condemnation of the genocide in Gaza.

Is this the behaviour of a nation waiting for permission? Will signing this trade agreement alter our posture as a country confident in its judgment and comfortable in multilateral, diversified engagement? Whatever the scoffers might want to say, the answer is an emphatic “no.”

Sovereignty is not demonstrated by reflexive rejection. Nor is it compromised by selective agreement. It lies in the freedom to choose and the maturity to exercise that freedom wisely. To portray Malaysia as a reed bending willy-nilly to foreign winds is to turn a blind eye to decades of consistent foreign policy.

Fear amplifies easily when discipline crumbles. The critic invokes images of sabotage and global intrigue, implying that cooperation invites peril.

This may stir drama, but sovereign nations do not shape policy based on cinematic angst. We remain alert to risks, certainly, yet we do not confuse imagination with inevitability. Nothing in the agreement obliges Malaysia to adopt punitive measures simply because another state does so.

Claiming otherwise is to abandon the text entirely and to sleepwalk into speculation. This government has articulated a sophisticated view of sovereignty, one that the Prime Minister himself has emphasised: sovereignty today is not isolation.

It is the ability to safeguard national interests through engagement while retaining the capacity to say no when necessary. It is measured not by how loudly one declares independence, but by the ability to implement it with competence and composure in an interdependent world.

Malaysia’s tradition of non-alignment has never been a doctrine of avoidance. It has been a discipline of engagement without servility, pragmatism without fear, and partnership without loss of self. That tradition continues. The ART does not upend it. It affirms it. We have always chosen our partnerships based on national interest, and we will continue to do so.

Those who suggest otherwise see shadows where there are none and threats where there is only the steady exercise of national agency. Beyond that is condescension arising from the inability to liberate oneself from the shackles of a colonial mindset.

Others may rant and rave, but Malaysia charts its own course, speaks in its own voice, and will not allow others to define our posture by their anxieties or assumptions. We stand by our principles, maintain a strategic balance, and advance our national interests through proactive diplomacy, not retreat into isolation.

In a region where great powers press their interests, Malaysia has never survived by hiding. We have endured and prospered by standing, by engaging, and by deciding for ourselves. That is not a surrender of sovereignty. It is the fullest expression of it.

-- BERNAMA