Malaysia Removed from US Treasury’s Monitoring List of Trade Partners

The United States Treasury has officially removed Malaysia from its monitoring list of major trading partners whose currency and macroeconomic policies require close scrutiny. This development, disclosed in the Treasury’s latest report to Congress, titled Macroeconomics and Foreign Exchange Policies of Major Trading Partners of the United States, highlights that Malaysia no longer meets the conditions set by the Trade Facilitation and Trade Enforcement Act of 2015 (2015 Act) for inclusion on the list.

Malaysia No Longer Monitored

In the previous reports from June and November, Malaysia met only one of the three criteria required for monitoring. According to the 2015 Act, trading partners must meet at least two out of three conditions to remain on the list. These criteria include:

1. A bilateral trade surplus with the US exceeding $15 billion (approximately RM67.2 billion).
2. A material current account surplus equivalent to at least 3% of the country’s GDP.
3. Persistent, one-sided intervention in the foreign exchange market for at least eight months within a year, with net purchases exceeding 2% of GDP over a 12-month period.

The Act mandates the Treasury to release semiannual reports evaluating macroeconomic and foreign exchange rate policies of major trading partners. For partners meeting two or more criteria, an enhanced analysis of their policies is required.

Malaysia’s removal signals a shift in its trading dynamics with the US, reflecting alignment with international trade and currency practices, as per the Treasury’s analysis.

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