Trade will spur deeper ties with Malaysia, says EU envoy

PETALING JAYA: Recent global crises have not weakened the European Union’s commitment to Malaysia and other partners in trade, investment and strategic cooperation, says the EU ambassador to Malaysia.

Rafael Daerr said rising trade tensions and the increasing “weaponisation of dependencies” — where countries use economic or supply-chain reliance as leverage — have instead reinforced the bloc’s resolve to deepen ties with reliable partners.

He said the EU deliberately chose a different path by focusing on supply chain diversification and strengthening cooperation with countries that support fair, rules-based engagement.

“How the EU reacts is clear: we strengthen partnerships, and Malaysia is key in that respect. We engage through consultation and ground our partnerships in international law, trust and transparency,” he told FMT.

Daerr said the EU’s approach prioritised mutual interests and shared gains while maintaining stable and predictable relationships with partners.

“You can expect more, not less, EU engagement in the years ahead,” he said, particularly as negotiations continue on a free trade agreement with Malaysia

He said the recently ratified Malaysia-EU Partnership and Cooperation Agreement, once fully in force, would provide a comprehensive framework to further deepen collaboration;

The EU remains one of Malaysia’s key economic partners, with total trade between Malaysia and the bloc increasing by 4.2% to RM228.04 billion in 2025, compared with RM218.91 billion in 2024.

Opportunities in rare earths

Daerr said the EU offers Malaysia two key opportunities for collaboration in rare earths technology transfer and offtake arrangements.

“EU companies have state-of-the-art expertise in the separation of critical raw materials and rare earth elements – they actually invented it. And the EU also leads in sustainable extraction and recycling technologies – areas that align well with Malaysia’s priorities, given local concerns about the environmental impact of mining,” he said.

On offtake arrangements, the envoy said the EU is the second-largest market for permanent magnets presenting Malaysia with a stable market.