Some Questions about the Cambodia and Malaysia Trade Deals

The White House released the texts of trade agreements with Cambodia and Malaysia today. I have lots of questions about this.

Let me start with some general questions:

• How do Cambodia and Malaysia see these preferential agreements in terms of compliance with GATT Article XXIV?
• What non-trade considerations, if any, did Cambodia and Malaysia get here?
• With regard to some of the substantive obligations, to what extent should we expect compliance?
• In terms of U.S. domestic law, assuming the U.S. government re-opens at some point, will Congress want to have a say about any of this?

Now I'll turn to some specific substantive obligations in the agreements that I found interesting/surprising/confusing.

First up is labor rights. Article 2.9.1 of the Malaysia agreement says:

Malaysia shall adopt and implement a prohibition on the importation of goods mined, produced, or manufactured wholly or in part by forced or compulsory labor. Malaysia may acknowledge U.S. government determinations on entities under Section 307 of the Tariff Act of 1930 and shall take appropriate action to prohibit importation of goods from those companies. The Parties shall cooperate by sharing best practices on the development and enforcement of forced labor import prohibitions, as appropriate. Malaysia shall implement the obligations in this paragraph within two years of the date of entry into force of this Agreement.

The Cambodia agreement has a similar provision.

My specific question here relates to the broad question above about the extent to which we can expect compliance. My impression is that developing domestic regulations in this area and then enforcing them takes a lot of effort and resources. Do Cambodia and Malaysia really intend to go ahead with this? Or are they just signing the agreement and hoping that enforcement is less than vigorous? (See below for more on enforcement).

Next up is digital regulation. Article 3.2 of the Malaysia agreement says:

Malaysia shall facilitate digital trade with the United States, including by─

(a)        refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally;[7]

...

[7] For greater certainty, Malaysia has the right to regulate in the public interest.

Normally I'm skeptical that "right to regulate" provisions will have an impact, but the one in footnote 7 is linked directly to an obligation, so maybe it functions as a broad exception to the obligation in (a)? I would be surprised if the U.S. negotiators had that in mind, of course, but there's an argument for that result.

Adding to the interpretive confusion here is that the Cambodia agreement does not have that footnote:

Cambodia shall facilitate digital trade with the United States, including by refraining from measures that discriminate against U.S. digital services or U.S. products distributed digitally, ...

Does this textual difference lead to significantly different obligations for each country?

And of course we have all the usual questions about how you identify discrimination in the first place.

Then in the section on "economic and national security," the Malaysia agreement says:

Article 5.1: Complementary Actions

1.         If the United States imposes a customs duty, quota, prohibition, fee, charge, or other import restriction on a good or service of a third country and considers that such measure is relevant to protecting the economic or national security of the United States, the United States intends to notify such measure to Malaysia for the purpose of economic and national security alignment. Upon receiving such notification from the United States, Malaysia shall adopt or maintain a measure with equivalent restrictive effect as the measure adopted by the United States or agree to a timeline for implementation that is acceptable to both Parties, to address a shared economic or national security concern, guided by principles of goodwill and a shared commitment to enhancing bilateral relations between the United States and Malaysia.

The Cambodia agreement language is similar.

If I'm reading this correctly, it sounds like it says that if the U.S. imposes, for example, a tariff or other import restriction under Section 232 on a particular product, Cambodia and Malaysia will impose – although maybe not right away – a similar tariff or import restriction. I guess my question here is something like: Really?

Finally, there are questions about enforceability. Here's the Malaysia agreement provision on enforcement:

Article 7.4: Enforcement

...

2.         If a Party considers that the other Party has not complied with a provision of this Agreement, the Party may review the terms of this Agreement and take action in accordance with applicable domestic law. A Party shall, when practicable, with a view to finding a mutually satisfactory solution, notify and seek consultations in good faith with the other Party prior to taking any action.

The Cambodia agreement has something similar.

So what does this mean for enforcement in practice? Based on what we have seen in recent months, I assume enforcement will be carried out by the Trump administration unilaterally, with tariffs threatened or imposed if Cambodia or Malaysia take actions that irritate the administration. Will that approach be effective in enforcing any of this?

I've asked a lot of questions. I assume other people have many more questions of their own. We'll see how this all plays out.