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Ministry of International Trade and Industry Malaysia Official Blog

Resisting Trade Protectionism WTO’s Top Priority

Posted by admin2 on June 23, 2015 at 12:07 pm
TRADE Ministers from 153 World Trade Organisation (WTO) countries met in Geneva last week to discuss multilateral trade issues. But most will remember this as the year Russia concluded its 18-year marathon negotiations and joined the world organisation.Three other countries – Vanuatu, Samoa and Montenegro – also joined the WTO, bringing its coverage of world trade to 97%.
This is all for the good because greater inclusiveness means more countries will come under the trading guidelines of a common multilateral trading system.

For Malaysia, Russia’s accession would increase stability and openness in its domestic business environment and this will be good for our exporters. Our main exports to the Russian Federation are palm oil, electronics and electrical goods, iron and steel and rubber products.I had the privilege of chairing one of the plenary sessions as well as two working sessions – Trade and Development and the Doha Round of negotiations. I also chaired the Islamic Development Bank’s ministerial consultative meeting on trade matters. These appointments, I think, are recognition by our peers of our active role in advancing the WTO agenda.

The common theme at this 8th Ministerial Conference was on the need to resist protectionism. All 153 countries remain committed to the founding philosophy of the WTO, which is to promote free trade, but recognised that the difficult economic environment of the past few years has severely tested this commitment. Certainly, nations are now more inclined to look inwards and enact measures that tend to restrict trade.

Restrictive measures

This year saw an imposition of 339 new trade restrictive measures, an increase of 53% over the previous year. With world trade slowing down, Governments must resist the temptation to adopt protectionist measures. And check the upward trend in the imposition of new trade restrictions.

I took the opportunity to reiterate Malaysia’s stand to firmly resist protectionism and to refrain from raising barriers to international trade. On the contrary, I told my colleagues, Malaysia had opened its doors further and recently lifted restrictions on foreign equity participation in key service sectors.

I am glad to report that there was unanimous agreement that the WTO should continue to play a key role in discouraging protectionism. Malaysia views the WTO as the global custodian of multilateral trade, and will continue to support efforts to strengthen its ability to fulfill this institutional duty.

But to discharge its duties responsibly and effectively, the WTO itself must change. It must adapt its work to fit changing conditions in world markets.This would mean a review and an update of the rules which were agreed on twenty years ago to reflect the realities of the 21st century.There are two priority issues the WTO must address if it wants to stay relevant.

The first is the need to clarify how regional trade agreements (RTAs) fit into the multilateral trading environment. RTAs are a common feature of the global economy these days. But while they promote access to goods and services in participating countries, they can also be viewed as discriminating against non-participating countries, especially smaller trading nations.

Malaysia has taken the position that RTAs should complement, not substitute, the multilateral trading system, In this context, we support the work the WTO is undertaking to clarify this relationship.

Market access

The second issue I think the WTO should immediately address is the need to give products from least developed countries (LDCs) market access. When the Doha Round of negotiations began, there was a collective commitment “to address the marginalisation of LDCs in international trade and to improving their participation in the multilateral trading system.”
Fact is, not enough is being achieved in this regard.

Central to the Doha Round of negotiations is a commitment to give less developed countries a fair share in the growth of international trade. Suitably financed technical assistance and capacity-building programmes will help. But, as I said, not enough is being done in this regard.The Doha Round is in its 10th year of negotiations. Clearly, the credibility of the WTO is at stake if these talks remain stalled.

The impasse in the Doha Round is not because of technical issues. It is largely political. Some members want the more advanced developed countries and emerging economies to assume heavier obligations and offer better market access. There is also reluctance by some to reap an early harvest on the less contentious issues.

I reiterated that Malaysia is willing to advance pragmatically and implement provisionally agreements that could be reached earlier. This includes the agreement on trade facilitation and the duty free quota free market access offer to the least developed countries.

History advises us to refrain from undue optimism. But the need to move forward is urgent, and as I explained in Geneva, even if we cannot find a comprehensive solution to all issues raised, we should at least try to register some step-by-step progress.

For the LDCs especially, the wait has been long and the burden heavy. Let’s do the doable, and focus on achieving improvements even if they may appear to be short-term ones. As I told my colleagues, we must break the deadlock and identify the low-hanging fruits, as it were, and harvest them in 2012. Let us hope we can coax agreement out of the Doha impasse in the new year.

Datuk Seri Mustapa Mohamed is the International Trade and Industry Minister

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