Trade-related and ESG measures must be fair to developing countries - Tengku Zafrul - MIDA | Malaysian Investment Development Authority
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Trade-related and ESG measures must be fair to developing countries – Tengku Zafrul

Trade-related and ESG measures must be fair to developing countries – Tengku Zafrul

28 Apr 2024

Malaysia believes there is a need to revisit commitments to sustainable development, efficient global resources and fair and balanced trade among countries, said the Ministry of Investment, Trade and Industry (MITI).

Its minister Tengku Datuk Seri Zafrul Abdul Aziz said countries must have shared values which will result in trade policies that can contribute to equitable and sustainable development.

“However, this should not be used as non-tariff measures to restrict trade flows.

“The proliferation of trade-related environmental measures such as the threat of environmental, social and governance (ESG) by developed countries is among the most important aspects of international trade,” he said during the meeting of the equitable transition alliance.

The meeting was organised in conjunction with the World Economic Forum held in Riyadh, Saudi Arabia.

Tengku Zafrul said the proliferation of trade-related measures has emerged as potential protectionist tools that could unfairly discourage global production and trade, particularly to the developing countries.

“These measures can manifest as border instruments and compliance with these measures will undoubtedly be complicated and perhaps too costly for most developing country-exporters,” he added.

Tengku Zafrul stressed that leaving the matter unattended could potentially erode developing and least developing countries’ trade competitiveness and investment attractiveness.

Citing a report by the World Trade Organisation, environmental goods and services face an average tariff of 4.3 per cent along with numerous non-tariff measures.

“The cost of compliance, including certification, can be prohibitively expensive, especially for small and medium enterprises from developing nations.

“Such barriers necessitate a collaborative approach where developed countries not only impose these standards but also facilitate the means for compliance through technical and financial support,” he added.

Tengku Zafrul went on to say that in light of the complexities posed by ESG standards as non-tariff barriers and the significant need for capacity building and fair trade policies, a comprehensive approach is essential to ensure both environmental sustainability and economic justice, particularly for developing nations.

“Therefore, Malaysia supports and welcomes discussions on establishing effective multilateral trade rules on trade and sustainable development.

“Our commitment is evident through national policy initiatives such as the New Investment Policy, New Industrial Master Plan 2030, National Energy Transition Roadmap, and the ESG Industry Framework, which all aimed at achieving sustainable economic growth,” he said.

Source: Bernama