Trade
PPE and free trade to better tackle COVID-19 in ASEAN
Author: Sithanonxay Suvannaphakdy, ISEAS–Yusof Ishak Institute
The Special ASEAN Summit on 14 April emphasised the need for a collective response from ASEAN to COVID-19 that involves keeping the regional bloc’s markets open to trade. As ASEAN member states deploy all possible instruments to combat the pandemic, trade can serve as a powerful, low-cost tool to improve access to personal protective equipment (PPE) needed by healthcare workers. Following an indicative list of COVID-19 medical supplies published by the World Customs Organization, PPE products include five product groups — gloves, hair covers, face masks, goggles and gowns.
The total number of confirmed cases in ASEAN rose by 59 per cent from 16,749 on 10 April to 26,631 on 19 April, while the total number of deaths rose by 75 per cent from 620 to 1084 over the same period. Health care systems are being overwhelmed by patients seeking testing and care, which has increased demand for PPE. Hospitals in Malaysia have increased their usage of PPE during the COVID-19 period by more than twice the amount used in the pre-COVID-19 period.
The overwhelming demand for PPE by healthcare workers and the rise of bulk buying by the public has also led to price exploitation by sellers. Despite price control measures in Thailand, the price of face masks sold on Facebook was about five times higher than the limit set by the Thai government. On the supply side, some member states that can produce PPE still face shortages as COVID-19 containment measures prevent workers from working in the factories that are producing these products.
Some exporters to member states have also limited their PPE exports. On 12 March, Germany — one of the top five global exporters of PPE products — imposed an export licensing requirement on certain PPE products due to anticipated COVID-19-induced shortages in the country, although it has relaxed its export curb to a certain degree since 20 March. On 17 March, the Indonesian government also imposed an export curb on PPE products, which will last until 30 June.
Due to a lack of PPE supplies, some member states have sought assistance from international organisations and other countries. The World Health Organization has provided PPE supplies to four member states: Cambodia, Laos, Myanmar and the Philippines. China, the United States and Vietnam have also donated PPE supplies to Laos. But as the number of confirmed cases in ASEAN grows, bilateral assistance from international organisations and other countries is unlikely to meet demand for PPE products. An alternative is to source PPE through foreign trade.
In the pre-COVID-19 period, member states not only produced PPE products to trade regionally, but also exported them to the rest of the world. UN trade data for 2018 reveals that at least one member state was listed in the top five global exporters of each type of PPE. This includes Malaysia and Thailand for gloves, and Vietnam for gowns, hair covers, masks and gloves.
The total value of global PPE exports was US$47.5 billion in 2018. The majority of such export was in gloves, masks and gowns. More than 60 per cent of these exports were accounted for by the top five exporters.
ASEAN trade data for 2018 reveals that not every member state produces all the PPE products needed by their healthcare workers. Thailand and Vietnam were net importers of masks, while Cambodia and Indonesia were net importers of both goggles and masks. Specialisation in producing particular PPE products means that an individual member state cannot necessarily produce all needed PPE products by itself. The ability to source PPE from within and outside the region is critical.
But the importation of PPE in ASEAN has been constrained by tariffs and non-tariff measures (NTMs). The ASEAN Tariff Finder database reveals that most member states impose relatively high most-favoured-nations (MFN) tariffs on imported surgical masks from countries which do not have a free trade agreement with ASEAN. The MFN tariff rate on surgical masks, for example, is 10 per cent in Indonesia, Laos and Thailand, 15 per cent in Myanmar and the Philippines, and 20 per cent in Malaysia.
Another type of import barrier is the presence of NTMs. The UNCTAD NTM database reveals that member states impose such measures on imported gas masks, ranging from 3 measures in Cambodia to 16 measures in Malaysia. These measures include technical barriers, price control measures and quantity control measures. The price and quantity control of imported PPE products can translate into higher prices,…
Trade
Fixing fragmentation in the settlement of international trade disputes
Fragmentation in global trade due to the lack of development in multilateral trade rules at the WTO has led to an increase in FTAs. The Appellate Body impasse has further exacerbated fragmentation, requiring a multilateral approach for reform.
Fragmentation in Global Trade
Fragmentation in global trade is not new. With the slow development of multilateral trade rules at the World Trade Organization (WTO), governments have turned to free trade agreements (FTAs). As of 2023, almost 600 bilateral and regional trade agreements have been notified to the WTO, leading to growing fragmentation in trade rules, business activities, and international relations. But until recently, trade dispute settlements have predominantly remained within the WTO.
Challenges with WTO Dispute Settlement
The demise of the Appellate Body increased fragmentation in both the interpretation and enforcement of trade law. A small number of WTO Members created the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a temporary solution, but in its current form, it cannot properly address fragmentation. Since its creation in 2020, the MPIA has only attracted 26 parties, and its rulings have not been consistent with previous decisions made by the Appellate Body, rendering WTO case law increasingly fragmented.
The Path Forward for Global Trade
Maintaining the integrity and predictability of the global trading system while reducing fragmentation requires restoring the WTO’s authority. At the 12th WTO Ministerial Conference in 2022, governments agreed to re-establish a functional dispute settlement system by 2024. Reaching a consensus will be difficult, and negotiations will take time. A critical mass-based, open plurilateral approach provides a viable alternative way to reform the appellate mechanism, as WTO Members are committed to reforming the dispute settlement system.
Source : Fixing fragmentation in the settlement of international trade disputes
Trade
WTO ministerial trading in low expectations and high stakes
The WTO’s 13th Ministerial Conference is set to focus on e-commerce transparency, investment facilitation, and admitting new members. However, progress may be hindered by disputes, especially regarding fisheries subsidies.
The World Trade Organisation’s 13th Ministerial Conference
The World Trade Organisation’s (WTO) 13th Ministerial Conference is set to take place in Abu Dhabi on 26–29 February, with expectations of deals on electronic commerce transparency, investment facilitation for development, and the admission of Timor Leste and the Comoros as WTO members. Despite these positive developments, the expectations are relatively modest compared to promises made at the 12th Ministerial Conference, which included addressing fisheries subsidies and restoring a fully functioning dispute settlement mechanism by 2024.
Challenges in Dispute Settlement and Agricultural Trade Reform
However, challenges remain, especially in the deadlock of dispute settlement since December 2019 due to a US veto on the appointment of Appellate Body judges. Progress in restoring the dispute settlement mechanism has stalled, and discord continues regarding India’s grain stockholding policy as a potential illegal subsidy. Restoring a fully functioning dispute settlement mechanism hinges on addressing US concerns about perceived bias against trade remedies in relation to China’s state subsidies.
Geopolitical Tensions and the Future of Trade Relations
The likelihood of reaching agreements amid geopolitical tensions between Western democracies and China appears slim, with issues surrounding subsidies and global supply chains causing rifts in trade relations. As nations focus on self-reliance within the global value chain, opportunities for trading face obstacles. Advocacy for open markets and addressing protectionist sentiments remains crucial for fostering resilience to external shocks and promoting economic growth.
Source : WTO ministerial trading in low expectations and high stakes
Trade
Getting Vietnam’s economic growth back on track
Vietnam’s economy grew 8% in 2022 but slowed in 2023 due to falling exports and delays in public investments. The economy’s future depends on structural reforms and reducing dependency on foreign investment.
Vietnam’s Economic Roller Coaster
After emerging from COVID-19 with an 8 per cent annual growth rate, Vietnam’s economy took a downturn in the first half of 2023. The drop was attributed to falling exports due to monetary tightening in developed countries and a slow post-pandemic recovery in China.
Trade Performance and Monetary Policy
Exports were down 12 per cent on-year, with the industrial production index showing negative growth early in 2023 but ended with an increase of approximately 1 per cent for the year. Monetary policy was loosened throughout the year, with bank credit growing by 13.5 per cent overall and 1.7 per cent in the last 20 days of 2023.
Challenges and Prospects
Vietnam’s economy suffered from delayed public investments, electricity shortages, and a declining domestic private sector in the last two years. Looking ahead to 2024, economic growth is expected to be in the range of 5.5–6 per cent, but the country faces uncertainties due to geopolitical tensions and global economic conditions.
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