Prof. Geoffrey Williams shares his analysis on the economic impact of the U.S.–Malaysia trade pact signed during the 47th ASEAN Summit in Kuala Lumpur.
BY TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Oct 29 — The 47th ASEAN Summit, hosted by Malaysia in Kuala Lumpur, drew international attention with the presence of U.S. President Donald Trump. While his attendance was headline-grabbing, it also brought substance, as Washington pressed its agenda of “reciprocal trade” and witnessed the signing of several landmark agreements.
For Malaysia, the most significant outcome was the signing of a new U.S.–Malaysia reciprocal trade arrangement, part of a broader package that included four major trade deals across Thailand, Cambodia, and Vietnam. These developments, according to Prof. Geoffrey Williams, Economist and Director at Williams Business Consultancy Sdn Bhd, highlight both ASEAN’s entrenched protectionist policies and the urgent need for reform to boost competitiveness.
Trump’s Attendance: Substance Beyond Symbolism
“President Donald Trump’s presence at the ASEAN Summit was not just symbolic,” Prof. Williams explained. “Four significant trade deals were signed for Malaysia, Thailand, Cambodia and Vietnam which are important for the wider region.
“These have highlighted structural protectionist policies in ASEAN as well as serious issues in global cooperation such as transhipment to avoid trade sanctions. The new agreements address these issues and require changes which should lead to concrete economic outcomes, freer trade and a better basis for investment cooperation.”
The U.S.–Malaysia Reciprocal Trade Agreement
At the core of Malaysia’s commitments is its new reciprocal trade pact with Washington.
“Malaysia has agreed to a reciprocal trade arrangement with the U.S. but Malaysia has not made progress in reducing non-tariff barriers to trade,” Prof. Williams said. “There is a long list of areas Malaysia has committed to change and until that happens the 19% reciprocal tariff will remain in place.
“Is it genuinely balanced? In this sense, Malaysia retains its protectionist policies and Washington retains its tariffs.”
Domestic Impact: Not One-Way
Addressing concerns that Malaysia may be disadvantaged, Prof. Williams dismissed the notion of a lopsided deal.
“This is not a one-way trade arrangement that exposes Malaysia to more imports without equal benefits. Malaysians do not have to buy American products — they have choices and can buy from wherever they like.
“Malaysians can export to the U.S. but they have to be competitive, innovative and agile. They will find markets in the U.S., which is the second largest market for Malaysian exports already.”
ASEAN’s Collective Trade Weakness
The agreements, Prof. Williams noted, also expose the limits of ASEAN unity on trade.
“The trade agreements affect ASEAN’s collective trade position by forcing countries to cut protectionist policies and open up trade, especially as the bloc tries to negotiate with other major partners like China and the EU.
“It is clear that the claim of ASEAN unity on trade is very weak because each country looks after its own interests. By cutting protectionist policies together, ASEAN countries can open up to many trading partners in the EU, China, BRICS, CPTPP, RCEP and others.”
Competitiveness and Industrial Policy
For Malaysia, the U.S. deal could serve as a catalyst for long-overdue reforms.
“This deal will force Malaysia to rethink its industrial policy and competitiveness, especially in manufacturing and services — and this will be positive,” he argued.
“Cutting protectionist policies will help industrial development more than the NIMP, which is an old-style policy of government interference. The U.S. trade deal commits Malaysia to cut GLC distortions in the economy so this should benefit industrial development by improving competitiveness, innovation and agility.”
Risks, Opportunities, and Outlook
Prof. Williams stressed that the main risk lies in resistance to reform.
“The key risks Malaysia should watch out for in this trade agreement come from the pushback from those resisting the chance for change. There is a long list of commitments to change and Malaysia — through the new MITI Minister in December — must address these proactively because there are real opportunities to leverage it for growth.”
On the long-term outlook, he was unequivocal:
“Malaysia should prioritize cutting protectionist policies to ensure this U.S. deal strengthens rather than weakens its long-term economic trajectory within ASEAN.”
Closing Note
Prof. Williams’ analysis underscores the double-edged nature of Trump’s reciprocal trade push. While the agreements challenge ASEAN’s fragmented trade practices, they also offer Malaysia a rare opportunity to modernize its economy.
The decisive question, he emphasizes, is whether Malaysia will act decisively to cut barriers, reform industrial policy, and build a more competitive foundation in an increasingly demanding global trade environment. – TNS NEWS