US strikes trade and critical minerals deals at ASEAN
The United States has signed a series of agreements on trade and critical minerals with four Southeast Asian partners to address trade imbalances and diversify supply chains due to China’s tighter export restrictions on rare earths.
US President Donald Trump, who is in Kuala Lumpur to attend the Association of Southeast Asian Nations summit, signed bilateral trade agreements with his Malaysian and Cambodian counterparts, as well as a framework trade agreement with Thailand that will allow the countries to overcome tariff and non-tariff barriers.
According to the joint statement published by the White House, the United States will maintain a 19 percent customs duty on exports from all three countries within the scope of the agreements, and the tax will be reduced to zero for some goods.
The US announced a similar framework agreement with Vietnam; This agreement imposed a 20 percent tariff on exports to the United States.
Vietnam, which recorded a US$123 billion ($189 billion) trade surplus with the US last year, has vowed to greatly increase its purchases of US products to reduce the trade deficit between the two countries.
Trump on Sunday signed two separate U.S. agreements with Thailand and Malaysia seeking cooperation to diversify critical mineral supply chains, amid China’s efforts to compete in the fast-growing sector.
Reuters reported this month that China is in talks with Malaysia over rare earth processing and that Malaysia’s sovereign wealth fund, Khazanah Nasional, is expected to partner with a Chinese firm to build a refinery in Malaysia.
China, the world’s top miner and processor of rare earths, has imposed increasingly stringent export controls on refining technology, leaving global manufacturers scrambling for alternative supplies of critical minerals widely used in semiconductor chips, electric vehicles and military equipment.
Host Malaysian Prime Minister Anwar Ibrahim agreed on Sunday to refrain from imposing quotas or banning exports of critical minerals or rare earth elements to the United States, the countries said in a statement.
However, the statement did not specify whether Malaysia’s commitment applied to raw or processed rare earths.
Malaysia, which has an estimated 16.1 million tonnes of rare earth reserves, has banned the export of raw rare earths to prevent resource loss as it plans to develop its downstream sector.
The agreements were signed after Trump oversaw the signing of an enhanced ceasefire agreement between Thailand and Cambodia following deadly border clashes between the neighbors earlier this year.
Under the agreements, the four Southeast Asian countries pledged to remove trade barriers and provide preferential market access to various U.S. goods.
The agreements also include commitments on digital trade, services and investments, as well as promises by Southeast Asian countries to protect workers’ rights and strengthen environmental protection.
According to the statements, Thailand, Malaysia and Vietnam have also agreed to accept vehicles produced according to US motor vehicle safety and emissions standards.
Malaysia, which is Muslim-majority and known as a world leader in halal certification, has agreed to adjust requirements for US products such as cosmetics and pharmaceuticals.
Malaysia also provides tariff exemptions for commodities such as palm oil, cocoa and rubber, as well as aviation equipment and pharmaceutical products, Commerce Minister Tengku Zafrul Aziz told reporters.
Thailand will remove tariff barriers on about 99 percent of goods and loosen foreign ownership restrictions on U.S. investments in the telecommunications sector, both countries said in a statement.
They also noted several upcoming business deals between Thai and U.S. companies worth about $2.6 billion a year, including the purchase of agricultural products such as feed corn and soybean meal.
