The Global Scenario and the World Trade Organisation’s Trade Remedies
The world economy’s post-pandemic recovery remains on an upward trajectory, with the new US administration of Joseph Robinette Biden Jr. representing a silver lining to the trade tensions with the PRC. In response to the COVID-19 challenges, Governments worldwide introduced a slew of new trade policy instruments comprising tariff and non-tariff measures. There were 435 measures taken by World Trade Organisation (WTO) members in 2021, ranging from trade in goods to sanitary and phytosanitary measures. Some of the measures were aimed at facilitating trade, while others were meant to curtail trade. These immediate responses by WTO members resulted from severe impact of the pandemic on their economies, prompting some Governments to act to protect their domestic markets.
While these measures are regulated by the WTO, this situation demonstrated how the pandemic influenced the way countries reacted to the health crisis. The need to ensure adequate supplies of food and medical related goods and protect public health against the COVID-19 pandemic, for example, were cited as justification for the imposition of such non-tariff measures. However, more
trade protectionism elements embedded in countries’
economic policies can disrupt the growth of global trade.
On trade remedies, from January to June 2021, there were 153 notifications submitted by WTO members on Anti-Dumping measures, 24 countervailing measures and nine (9) safeguard measures. Nevertheless, there is no indication yet that members resorted to trade remedies, namely anti-dumping or countervailing or safeguard measures to address the economic crisis that has resulted from the COVID-19 pandemic. During the pandemic, from July 2020 to June 2021, the number
of new initiations of anti-dumping investigations and measures applied by Group of Twenty (G20) economies, namely US, India, Canada, the PRC and the European Union (EU), recorded by the WTO, have been relatively high. Iron and steel, machinery and electrical equipment and chemical products dominated the list of sectors under the anti-dumping measures which have been notified and initiated by WTO members. Correspondingly, the measures imposed by the major powers had direct impact on smaller countries, including Malaysia, as the global supply chain has become more dynamic and delicate. Based on WTO data, Malaysia was among the developing member countries most affected by the initiations of anti-dumping and countervailing investigations in the first half 2021.
The Meeting of Rules Committee for 2021 was held twice (April and October) and also convened virtually. At these meetings, issues on trade remedial actions including notifications submitted on trade remedies undertaken by WTO members have been discussed and deliberated extensively.
Malaysia’s Domestic Industry Perspective
After being severely affected by the pandemic for two (2) years, our Domestic Industries have emerged sturdily and aligned themselves with the national recovery plan to further re-boost their businesses and repenetrate the market amid stiff competition. The Government, through Ministry of International Trade and Industry (MITI), continues to nurture and safeguard our industry consisting of various sectors which would allow them to recover from the unfair trade practices, the effects of the world economic downturn and the time needed to adapt to the new post-pandemic economic environment.
A series of consultations have been carried out with domestic industries where MITI provided trade remedies’ advisory, guidance and sharing of information to manufacturers and producers in their specific
sectors. In 2021, the Government completed anti- dumping investigations and imposed affirmative anti- dumping duties on imports of stranded steel wires for prestressing concrete originating or exported from PRC and cold-rolled stainless steel from Indonesia and Viet Nam. The Government also extended the imposition of anti-dumping duties on imports of pre-painted, painted or colour coated steel coils and cold rolled coils for another five (5) years. The imposition of these measures will allow Malaysia’s domestic industries to recover from the injury inflicted by the pandemic and give businesses breathing room to plan for their expansion.
It was also observed that in 2021, there were hikes in terms of number of trade remedy investigations against Malaysia initiated by foreign Governments. Products subject to investigation include iron and steel, solar panel, fabric and textiles, furniture, plastic, rubber-based, glass, food and agriculture products including palm oil, sugar and cocoa butter. In light of the important trade relations with those countries, MITI has assisted and defended the interests of our producers and exporters.
The ministry also assisted them in providing responses as well as participate and cooperate in the investigations.
The persistence of the trade tensions between major economies, as well as the impact of COVID-19 pandemic, may have pertinently generated the trade protectionism sentiments among countries and still cast shadow over the global economy. This has already triggered an increasingly large spill-over effect on global trade and growth. Thus, trade is an important tool in the global effort to combat the COVID-19 pandemic and countries should capitalise on it by enhancing trade and economic cooperation.
The following graphs depicted the fluctuating trend of trade remedy measures undertaken by WTO members.
From 1995 to June 2021, the most affected sectors by trade remedy measures were metal products, followed by chemical products, plastic products, machinery and equipment, textiles and other products.
EXHIBIT 2.11
TRADE REMEDY MEASURES UNDERTAKEN BY WORLD TRADE ORGANISATION MEMBERS
Note: Data for 2021 relates to the January to June period Source: World Trade Organisation Statistics