Deputy menteri besar Fadzli Hassan said states like Kelantan, Terengganu and Kedah, which were rich in REE resources, should have been consulted before the deal was signed as it directly affected their control over their natural resources.

He described the lack of consultation as a departure from the spirit of federalism, and called for greater transparency and state involvement in future policy decisions.

“REE is found on land and is the absolute right of the state and people of Kelantan. It is a natural resource that must be utilised for the wellbeing of the people, instead of being determined by outside parties or foreign powers,” he said in a statement.

Fadzli questioned a clause in the agreement stating that Malaysia will not impose export bans or quotas on REE to the US, saying this could limit a state’s ability to regulate investments and protect local interests.

“Are states still free to determine their policies, or are we now bound by promises made by the federal government to a foreign power? This is not about politics, it is about economic sovereignty.”

Malaysia and the US signed a reciprocal trade pact on Oct 26 during the 47th Asean Summit in Kuala Lumpur to expand market access and strengthen cooperation on critical minerals and energy.

Under the deal, Malaysia agreed to refrain from banning or limiting exports of critical minerals or REE to the US, and to work with American firms to boost production capacity.