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US-Malaysia FTA may be delayed due to CPTPP

The prospect of a US-Malaysia bilateral trade agreement continues to be bleak until the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) is completely adopted. The CPTPP came into force when the US pulled out of the Trans Pacific Partnership. The remaining 11 members of the pact agreed to proceed with the treaty, following the US’ exit. So it is unlikely that a US-Malaysia free trade agreement (FTA) will transpire anytime soon.

A US-included TPP would have provided Malaysia the access to nearly 300 million consumers in America, as well as lower tariffs for Malaysian exports, among other benefits. Lower tariffs and access to US government procurements to increase Malaysian electrical and electronic exports would have also led to tariff savings along with business opportunities.

Malaysia had earlier expressed a disinterest to pursue the TPPA without the US. Now, however, it has become more receptive in proceeding with the multilateral trade agreement, while engaging with the US in a separate dialogue. Malaysia feels a FTA would be vital to elevate trade and investment ties between the two countries and that the TPPA framework, which has been delayed since 2008, could be used as a template to complete the FTA negotiations. The US is Malaysia’s third largest trade partner, behind China and the European Union.