1 week Ago
WHERE do I even begin with this week’s column? Malaysia’s response to US President Donald Trump’s reciprocal tariffs will be calm and firm, so we are told. Yet our southern neighbour is already bracing for a potential recession. And the last one week has seen global trade turmoil, worrying many governments unsure of Trump’s next move.
Just a few weeks ago, Foreign Minister Datuk Seri Mohamad Hasan told senators in Dewan Negara to be careful about criticising the US to avoid hurting Malaysia’s economy. He was responding to a question from the floor on Malaysia’s preparations in case the new US administration imposed a high tariff on Malaysia. That remark, which he added just before sitting down, certainly didn’t go unnoticed.
A few days later Tun Dr Mahathir Mohamad issued a media statement: “The Minister for Foreign Affairs says we have no issue with the US. So we must be guarded when criticising the US. Does this mean that we do not mind the US backing Israelis with weapons and money to commit mass murder of Palestinians in Gaza and the attack against Lebanon? Please state clearly that it is OK.
” Does Dr Mahathir’s statement warrant reaction? Maybe. But that last line coming from the Foreign Minister in the senate was perhaps unnecessary. Mohamad said that despite Malaysia’s strong support for the Palestinian cause, this country has no issue with the US and has no intention to cut ties with it, especially considering that the US is the biggest foreign direct investor in Malaysia, with the cumulative figure amounting to RM324bil.
He then added just before sitting down: “I would like to remind those either in Dewan Rakyat or Dewan Negara, when we speak about the US, we must be careful because we do not want to lose economically.” Mohamad should have just stuck to the prepared narrative. There are ways to get the message across out there, especially from a Foreign Minister whose statements are closely monitored domestically and abroad.
Malaysia cannot be seen as if we’re cowering before the US. We don’t have to behave as if we’re inferior and allow them to tell us what to do. What is the meaning of equal sovereignty if we suddenly become muted just because we are scared of the implications? Which brings me back to the government’s initial response to Trump’s tariff announcement.
Prime Minister Datuk Seri Anwar Ibrahim, in his first remarks addressing the issue, said, while the government was still analysing the impacts and consulting stakeholders, including communicating those in Washington, he does not foresee a recession in Malaysia and that our economy is still resilient. Reassuring words. Or, as one former trade negotiator put it: “Very nice words.
” Investment, Trade and Industry (Miti) Minister Datuk Seri Tengku Zafrul Aziz, in one of his first responses, uploaded a video on his social media explaining the US tariff but those who are familiar with trade negotiations felt the Trade Minister’s explanation fell short and did not make a lot of sense. Since Trump’s announcement of his “reciprocal tariffs”, everyone is an expert all of the sudden, said one senior official. “First of all, trade issues are not sexy, many people don’t understand the topic.
But when Trump’s tariffs become front page news, everybody jumps on board wanting to talk, but with limited understanding. “When the comments come from people with positions, that creates problems and misunderstanding since their views are taken seriously when in fact they don’t really understand the issues,” said the official who has been involved in various free trade agreement (FTA) negotiations. It doesn’t help that the government’s initial response to the tariff issue fell flat and was unconvincing, causing anxiety among people fearing the unknown.
In one week since Trump’s announcement, the situation is still fluid. Anwar has held talks with more than half of his Asean counterparts. On Thursday Tengku Zafrul chaired an online Asean economic ministers meeting during which the grouping remained committed to safeguarding Asean’s economic interests as well as maintaining strong and mutually beneficial trade relations with the US.
Tengku Zafrul had earlier said he was heading to the US to discuss the tariff imposed on Malaysia. Finance Minister II Amir Hamzah Azizan said at the end of the Asean finance ministers meeting this week that Asean and Malaysia should go back to the group’s core principle, which is promoting multilateralism, free trade, and clear dialogues. He said there is no point in overreacting at the moment but instead it is important to work on matters that are under Asean’s control, such as improving areas that still has potential for economic integration.
As Amir rightly said, Malaysia should go back to basics especially in promoting multilateralism and setting our priorities. “[Tengku] Zafrul is going to the US to negotiate what, exactly?” asked a former trade negotiator. “Look at China.
It is now tit for tat announcements between the American and Chinese how much tariffs they are imposing against each other, but China can do it because it has a big market and economic power to retaliate. The EU is also playing hard ball because US investments in the EU reached trillions dollars. “Trump is fulfilling his election promise and wants to be seen as a real leader in promoting America first.
But how long will this tariff war will go on, who will be affected eventually, that remains to be seen,” he said. Malaysia, under this government, has been highlighting the billions of dollars of foreign investments coming in, and perhaps we have started taking things for granted . “We have forgotten the importance of the multilateral trading system, and how important the role of the World Trade Organisation is.
This is one of the first things we must address,” said another former government official. “When Trump’s tariffs announcement came, Malaysia started talking about WTO. Our communications on this issue have failed because some of us are looking at it from a political perspective and making a political score.
” Trump’s move is totally against WTO rules, and he seems to be trying to dismantle the global trading system. In trading, there must be rules. Otherwise how do you create a fair trade environment? Malaysia needs to reset our priorities and give greater importance to the multilateral trading system.
It is not just about attracting foreign investments or launching new FTAs. Although Malaysia’s voice at the WTO has become louder in recent years, perhaps ministries other than Miti could participate more in Geneva. Many do not.
For the record, there are 166 members of the WTO. The US was instrumental in establishing, strengthening, and promoting the multilateral trading system through the WTO since the 1990s. This is to ensure developing countries and the global South subscribe to transparent policies and predictable trade measures while advancing its economic and development agenda.
However, the increased dominance of China in global trade in recent years triggered the narrative by conservative Americans that the WTO is no longer able to guide the global trading system, especially in ensuring fair competition among its members. These are challenging times and nobody can predict what Trump will do next. The government of the day must sit down and seriously discuss short and long-term measures moving forward.
There is no need to have more committees or issue more statements that the masses would not be able to comprehend fully..
