Agreement between the United States of America and Malaysia on Reciprocal Trade (ART), and Good Regulatory Practices (GRP)

On 26 October 2025, Malaysia and the US signed the Agreement on Reciprocal Trade (ART) during the 47^th ASEAN Summit in Kuala Lumpur.  Under Executive Order 14257 issued by the US President on 2 April 2025, the agreement is a US proposal to renegotiate tariffs on Malaysia from 25 percent to 19 percent.

The agreement covers many areas including among others in relation to Good Regulatory Practices (GRP).  This update will only focus on Good Regulatory Practices (GRP), and it is beyond the scope of this update to discuss the ART as a whole.

Good Regulatory Practices (GRP)

Article 2.8 in relation to Good Regulatory Practices (GRP) specifically states that:

Malaysia shall adopt and implement good regulatory practices as  set out in Article 2.21 of Annex III that ensure greater transparency,  predictability, and participation throughout the regulatory lifecycle.

Under Annex III: Specific Commitments, Article 2.21 in relation to Adoption and Implementation of Good Regulatory Practices (GRP) sets out the following:

With respect to the adoption and implementation of  good regulatory practices at the central level of government, Malaysia  shall─

(a)    ensure  that laws, regulations, procedures, and administrative rulings are promptly  published and made easily         accessible online;

(b)    under  normal circumstances,[1] publish  and make easily accessible online the text of proposed regulatory          measures,[2] as  well as any regulatory impact analysis, an explanation of the regulation, and  its objective;

(c)     conduct  public consultations for proposed regulatory measures in a transparent  manner; allow adequate         time for interested persons, domestic and foreign, to  submit comments, taking into account the complexity         or possible impact of the  proposed regulation; and give consideration to comments received;

(d)    give  reasonable notice of planned regulatory measures and publish regulatory  policy priorities that will be          developed, modified, or eliminated in the near  term;

(e)    use  publicly accessible high-quality data, evidence, technical information, and  risk assessments, where          appropriate, during the planning and development of  regulation;

(f)     support  international regulatory cooperation through the use of, as appropriate,  relevant international         standards, guides, and recommendations to avoid  unnecessary obstacles to trade;

(g)    conduct  reviews of regulation in effect to determine whether new information or other  changes justify          modification or repeal of regulation; and use tools, such as  regulatory impact analysis, to assess the need for          and possible impacts of  regulations, which could also include alternative approaches to regulation,  where          appropriate.

Key observations on the Good Regulatory Practice (GRP) requirements

• The requirement operates ‘one way’ for Malaysia as it only requires Malaysia to comply, perhaps on the assumption that the US has already complied with such Good Regulatory Practice (GRP) requirements in its domestic legal framework.
• The requirement is only imposed at the ‘central government’ level which is interpreted as Federal Government level and thus, is an important consideration given the autonomy of States and Local Governments to legislate on their own.
• The requirements from (a) to (g) Annex III: Specific Commitments, Article 2.21 already are reflective in our National Policy on Good Regulatory Practice (NPGRP).  The author does not intend to cover this exhaustively, but these requirements can be seen for example in our Regulatory Process Management System (RPMS) framework, adoption of evidence-based tools such as Regulatory Impact Analysis (RIA) and Behavioral Insights (BI), and specific elements there under such as the consultation process and option development.

According to the Attorney General’s Chambers (AGC), ART will only come into effect 60 days after both parties exchange written notifications confirming that their domestic legal procedures have been completed.  It is thus unclear when this will specifically occur given the range of matters agreed in the ART that would require domestic policy to be revisited.

Notwithstanding this, it is the author’s view that signing the bilateral reciprocal trade agreements would have the impact of requiring parties to upgrade domestic requirements in line with international standards, particularly on Good Regulatory Practices (GRP).[3]  Malaysia is no stranger to this where it ratified the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) on 30 September 2022 which also included Good Regulatory Practices (GRP) requirements in Chapter 25: Regulatory Coherence.  

It is also the author’s view that from a domestic perspective on Good Regulatory Practices (GRP), it can be perceived that our domestic Good Regulatory Practices (GRP) ecosystem is already in line with best practice. In line with ASEAN’s Vision 2045 call to action to ‘embed’ GRP in every workstream, such requirements have already seamlessly been integrated into the domestic policy and regulatory development cycle.  It is then with optimism that we look forward to the next transformation of our National Policy on Good Regulatory Practice(NPGRP) that will set the benchmark of our Good Regulatory Practices (GRP)ecosystem for years to come.

The Agreement can be accessed here https://www.miti.gov.my/ART.                                                                                                                

If you have any questions or require any additional information, please contact our Partner and Head of the Government Advisory Practice, Mohamad Izahar Mohamad Izham at izaharizham@ziclegal.com of Zaid Ibrahim & Co.  

This alert is for general information only and is not a substitute for legal advice.

[1] “normal circumstances” do not include, for example, situations in which: publication in accordance with subparagraph (b) would render the regulatory measure ineffective in addressing the particular harm to the public interest that the regulatory measure aims to address; urgent problems (for example, of safety, health, or environmental protection) arise or threaten to arise for Malaysia; or the regulatory measure has no substantive impact upon members of the public, including persons of the United States.

[2] “regulatory measures” means measures of general application adopted, issued, or maintained by a regulatory authority with which compliance is mandatory, except: general statements of policy or guidance that do not prescribe legally enforceable requirements or measures concerning: (i) military, foreign affairs, or national security functions of the Government; (ii) public sector management, including personnel, pensions, public property, loans, grants, benefits, or contracts;(iii) departmental organization, procedure, or practice; or (iv) taxation, financial services, anti-money laundering, monetary policy, exchange rate policy, or government procurement. For greater certainty, a regulatory authority at the central level of government does not include legislatures or courts.

[3] At the time of writing, it is understood that the only two ASEAN countries that have signed the bilateral reciprocal trade agreements with the US is Cambodia and Malaysia.

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