The Malaysian Insight

MALAYSIA is not a “trade cheat”, as labelled by United States President Donald Trump in March, says International Trade and Industry Minister Mustapa Mohamed.

In a written parliamentary reply dated November 9, Mustapa said the allegation was not true and that both he and the prime minister had highlighted the differences in the systems used by both countries when a Malaysian delegation visited the US in September.  

“Malaysia’s trade statistics recorded that the US trade deficit with Malaysia was only US$5 billion (RM20.9 billion) while the US’ statistics showed a deficit of US$25 billion.

“In this case, the prime minister and I have explained that the difference in the data is due to the fact that the US takes into accounts imports via third countries. For instance, electrical and electronic goods that are exported to the US via Singapore are recorded as imported goods from Malaysia and not Singapore,” he said. 

Selayang MP William Leong Jee Keen had asked about the steps taken by the Malaysian government to address the allegation that Malaysia was one of many countries responsible for the US’ nearly US$50 billion trade deficit. 

Mustapa added that Malaysia also uses the Free on Board (FOB) method, which excluded shipping and insurance costs, unlike the US, which uses the Cost, Insurance and Freight (CIF) method. 

“Malaysia is not a trade cheat as claimed by the US. Malaysia is one of the largest trading countries in the world that practises free and fair international trade. The Malaysian government also does not manipulate currency or provide assistance that goes against international laws, including rules set by the World Trade Organisation (WTO),” he said. 

He said both countries had agreed to use the Trade and Investment Framework Agreement (TIFA) as a platform to resolve bilateral trade investment issues. 

In March, Trump’s administration said it would pinpoint countries and goods responsible for the country’s US$50 billion trade deficit and would look for evidence of “cheating”, lax enforcement and currency misalignment, among others.

The other countries on its list are Japan, Germany, Mexico, Ireland, Vietnam, Italy, South Korea, India, Thailand, France, Switzerland, Taiwan, Indonesia and Canada. – November 13, 2017.