Mustapa: M’sia branded ‘trade cheat’ due to differing calculations

A DISCREPANCY in trade statistics caused by differing calculation methods was the reason why Malaysia was accused by the United States as being a “trade cheat”, said the International Trade and Industry Ministry.

It said Prime Minister Datuk Seri Najib Razak and Minister Datuk Seri Mustapa Mohamed had clarified the issue with the US government during their working visit to the United States in September.

“Commerce secretary Wilbur Ross had, in our meeting on Sept 11, clarified that the US wasn’t accusing Malaysia of being a trade cheat, but was referring to a discrepancy in trade calculation between the United States and Malaysia.

“Malaysian trade statistics only recorded a US$5bil (RM20bil) trade deficit with the US, while statistics by the US showed that there was a US$25bil (RM104bil) trade deficit,” it said in a written reply to William Leong (PKR-Selayang), who had asked the ministry to state the steps taken by Malaysia to defend itself from the US allegations.

The ministry stated that the US had taken into account trade import data through third parties.

“For example, electronics that were exported to the US through Singapore were recorded as imports from Malaysia, not Singapore.”

It added that Malaysia had used the Free on Board (FOB) calculation method to record export data, which does not take into account shipping costs and insurance.

“On the other hand, the US used the Cost, Insurance and Freight (CIF) method, which takes into account all costs involved in the exports of Malaysian goods to the US,” it said.

In order to address the discrepancy in statistics, Malaysia and the United States have decided to use the Trade and Investment Framework Agreement (Tifa) as a platform to resolve issues arising from bilateral trade and investments.

“Tifa is also seen as a strategic approach by Malaysia to ensure that the US gets the right picture regarding this issue,” the ministry said.

For example, electronics that were exported to the US through Singapore were recorded as imports from Malaysia. International Trade and Industry Ministry