KUALA LUMPUR: Malaysia has raised concerns with the United States over sectoral tariffs imposed on critical industries, such as semiconductors, says Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.
He said this was conveyed during his bilateral meeting with US Trade Representative Jamieson Greer, adding the government will wait for the United States to complete its investigation into the exemption for semiconductor products coming from Malaysia.
“We have to wait until investigations are completed and the review on certain sectors under the US’s Section 232 (of the Trade Expansion Act of 1962)
“At the same time, we have to continue to engage and explain how Malaysian and American companies based here and exporting to the US actually complement the latter’s ecosystem,” he said when met on the sidelines of the 57th Asean Economic Ministers (AEM) meeting.
Tengku Zafrul also said the United States is satisfied with Malaysia’s efforts to curb the transhipment of products that do not originate in Malaysia.
Transhipment is the routing of exports via another country to disguise their true origin.
In May, the ministry announced that it would be the only body that would issue non-preferential certificates of origin (NPCOs) for shipments to the United States.
This new measure aims to eliminate loopholes that enable Malaysia to be used as a conduit for goods seeking to bypass tariffs imposed by US trade regulations.
On another matter, Tengku Zafrul said Malaysia aims to conclude the Reciprocal Trade Agreement between Malaysia and the United States before President Donald Trump’s visit in October for the 47th Asean Summit and Related Summits.
However, Tengku Zafrul said the issue of lowering tariffs was not discussed with Greer.
“It is up to the US administration. For now, we want to finalise what we agreed on; the details of that will be in the (tariff) agreement that we will announce.
“Once the agreement is out, then we have to go line by line on what we want to agree on moving forward,” he said.
Tengku Zafrul also said he and Greer had been entrusted by Trump and Prime Minister Datuk Seri Anwar Ibrahim with the responsibility of finalising the Reciprocal Trade Agreement by next month.
Malaysia’s tariff rate was set at 19% after it was reduced from 25% in July.
Meanwhile, Greer told reporters that the semiconductor supply chain is complex and critical to the United States’ and Asean nations’ national security.
“We want to be thorough on how we address the international trade situation.
“We have to have the supply chain back in the US, but of course, South-East Asia remains an important source for the semiconductor supply chain,” he said.
The exemption for semiconductor products is still subject to an ongoing probe by the United States, and tariffs could potentially be imposed depending on the outcome.
Last year, Malaysia exported about RM120bil worth of electrical and electronic (E&E) products to the United States, of which semiconductors made up RM60.6bil of that figure.