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Saturday, June 22, 2024

The global implications of EU tariffs on Chinese EVs


Free Malaysia Today

On June 12, the European Union announced new provisional levies on Chinese electric vehicles (EVs), with the tariff level to be based on estimates of how much state support an EV exporter receives.

The new tariffs follow from a months-long investigation into China’s use of financial subsidies, and they will be imposed on top of the 10% tariff that the EU already has in place. They are “provisional” because they might be revised downward if Chinese producers can offer evidence that the support they receive is less than estimated.

Separately, if the EU can reach an agreement with China to reduce the volume of Chinese EV exports to Europe, the new tariffs may not be implemented.

The new tariffs reflect the EU’s upper-bound estimate of the total subsidy per vehicle that Chinese producers receive from all levels of government throughout their supply chains. The investigators sent requests for cooperation to all Chinese EV producers, and selected three from among those who complied: BYD, Geely, and SAIC. They then pored over those companies’ records and interviewed company insiders as well as industry experts.

Concluding that the rates of subsidies are 17.4% at BYD, 20% at Geely, and 38.1% at SAIC, the investigators set tariffs on each company accordingly. All other EV producers who agreed to cooperate with investigators will face a tariff of 21% (the weighted average of the three), while producers who have not pledged cooperation will be subject to a 38.1% tariff.

The EU’s findings provide insight into the true nature of the US’s 100% “anti-subsidy” tariff on Chinese EVs. The US tariff, announced last month (with no serious investigation), is so much higher than any reasonable estimate of Chinese subsidies that its protectionist intent is obvious.

Even before President Joe Biden’s administration imposed the 100% levy on Chinese EVs, US tariffs on Chinese imports – erected under Donald Trump, but carried over by Biden – were already at levels similar to the infamous US Smoot-Hawley tariffs of the 1930s.

In 2020, a World Trade Organization panel (consisting of experts from countries other than the US and China) ruled that these tariffs are inconsistent with US legal obligations at the WTO. But both the Trump and Biden administrations have chosen to ignore WTO’s rules.

Most governments have said nothing publicly about the US policy, partly because the tariffs have raised the relative competitiveness of their own products in the same market (by dint of reducing Chinese producers’ competitiveness).

Following the Trump tariffs, direct US imports from China declined precipitously, while imports from Mexico, India, Vietnam, and many other countries increased.

Some commentators seem to believe that since China’s cost advantage is so large, a 30% tariff is not enough to curtail Chinese EV exports. But this assumption is mistaken for at least two reasons.

First, because different markets have different standards for safety and other matters, auto producers often must adjust car designs accordingly, and this reduces the number of sales per model in a given market. (For example, Chinese standards emphasise the safety of pedestrians and others outside a vehicle in the event of a collision, whereas the US standard emphasises the safety of the driver and others inside the car.)

Second, any given model needs to reach a certain threshold of sales volume to be profitable. Thus, any tariff that can reduce the expected quantity of sales sufficiently could remove the incentive for exporting to that foreign market altogether.

Some Chinese EV producers might consider locating production in the US, which could be good for US job creation and tax revenues. But since the US government review of inbound foreign investment is perceived to be anti-China by Chinese firms, many producers may simply give up on the US market entirely.

The primary victims of the US tariffs (besides Chinese exporters and American consumers) are producers from smaller countries that now face an elevated risk of larger countries imposing protectionist measures with seeming impunity.

As EVs are an important tool in the world’s transition to a net-zero economy, some subsidies are better than none. A globally efficient subsidy rate for EV production and consumption is higher in the absence of a sufficiently high global carbon tax. The EU and US probably prefer tariffs on foreign goods to subsidies on domestic EV production because both are already burdened by high levels of debt.

The new tariffs will certainly harm Chinese EV manufacturers’ prospects, in terms of both profits and jobs. But they are also bad for European and American households, because they will raise prices (domestic producers will face less competitive pressure) and delay the transition from highly polluting traditional automobiles.

At the same time, the new tariffs will create two opposing forces in the rest of the world. By shutting Chinese EVs out of the US and EU markets, it may drive an increase in Chinese exports elsewhere.

That will benefit consumers in these countries, and ease their transition to cleaner transportation. Among countries with small domestic auto industries, such as Australia and New Zealand, there are no obvious losers.

But for countries with a sizeable auto industry, there will be even greater competitive pressure, and these governments may feel compelled to imitate the US and the EU.

The world would have been much better off if major powers had found a way to negotiate a common pro-climate subsidy scheme for EVs, and a common tax on carbon emissions. Instead, we may get a self-destructive race to the bottom. - FMT

Free Malaysia TodayShang-Jin Wei, a former chief economist at the Asian Development Bank, is professor of finance and economics at Columbia Business School and Columbia University’s School of International and Public Affairs.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

Malaysia’s BRICS move an inevitable sign of global multipolarity


Free Malaysia Today

From Julia Roknifard

The announcement by Prime Minister Anwar Ibrahim that Malaysia will finally make a formal move to seek membership in the largest and most influential geopolitical grouping known as the BRICS may have come as a surprise to some, but for the majority, indeed the global majority, such a move is all but inevitable.

Founded in 2009, BRICS – an acronym for its core members Brazil, Russia, India, China and South Africa – has since welcomed a whole host of other nations, including the United Arab Emirates, Egypt and Iran. A wide range of countries from Saudi Arabia to Kazakhstan and Bangladesh are applying for entry into the grouping.

Membership into BRICS offers something beyond the usual trade ties and market access for Malaysia, though considering the country’s position as a trading nation these are no doubt powerful considerations. This is really about options and choices.

As some have observed, the days of the US-led Western hegemony are coming to an end. The end of the Cold War era has morphed from one of hope and a new global configuration into a neo-imperialist agenda. Over the past 30 years, these Western nations, claiming a high moral ground, have engaged themselves unchecked in endless wars, sanctions and regime change operations.

As a result, the global majority – not an empty term as China and India alone account for a third of the global population – has reacted by seeking to secure themselves against Western pressure.

Combined with Russia which, despite severe sanctions, has seen its economy reclassified by the World Bank as the fourth biggest (overtaking Japan), BRICS is emerging as a dominant global force against previously powerful Western-centric groupings such as the Group of Seven (G7), whose populations and share of the global economy are rapidly shrinking.

Malaysia is keenly aware of these developments and has long since established strong and diversified trade links with countries outside the West. But why join BRICS now? There are several possible reasons that we could deduce from recent events.

The fact that Anwar has been personally vocal on the plight of the Palestinians has invited threats of sanctions with certain Western officials and their representatives in Malaysia threatening sanctions over the alleged trafficking of Iranian and Russian oil and gas products (part of which is ironically bound for Western markets).

There are also claims that Malaysia is being used to “launder” China-manufactured products.

For its part, Malaysia has refused to recognise any unilaterally imposed sanctions, deferring to the United Nations as the only legitimate body which holds the power to impose sanctions.

In a world without a grouping representative of the Global South like BRICS, Malaysia would have found itself isolated, sanctioned and destabilised, as has happened to a great many other countries which chose to defy the West. But in our present reality which includes BRICS, the threat of sanctions grows more empty day by day.

Sanctions which were once the greatest weapon of the West no longer have the bite they used to as alternatives are rapidly being developed to the once touted Society for Worldwide Interbank Financial Telecommunication, or SWIFT, a messaging network through which international payments are initiated. Meanwhile, de-dollarisation is being pursued as countries no-longer place the same trust in the dollar, seeing how it is being wielded as a weapon.

What BRICS means for countries like Malaysia, which seek to forge their own path in geopolitics and international diplomacy, is a guarantee that even if they were cut off from the entire Western financial system, their market access to the country with the largest manufacturing base in the world (China), potentially the largest consumer base in the world (India), and the biggest supplier of commodities and energy (Russia), will remain unhindered.

The geopolitical impact of the BRICS cannot be understated. Even Palestine, which has been denied statehood by a whole host of Western-dominated organisations, has applied for BRICS membership, bringing the issue of Palestinian statehood to the centre of international attention. The Palestinian leadership has even expressed support for the BRICS’s call to start direct negotiations with Israel without the US involvement.

Joining BRICS is no more a political statement than Malaysia’s participation in the China-led Belt and Road Initiative (BRI) or even the US-led Indo-Pacific Economic Framework for Prosperity (IPEF).

Malaysia has always and is likely to always maintain its course on the middle ground of international politics, taking advantage of new trends and developments while looking out for its interests.

BRICS will be yet another feather in Malaysia’s cap and signal to its partners that it will do business with all nations and seeks to be an enemy of none. - FMT

Dr. Julia Roknifard is Assistant Professor School of Politics, History and International Relations (PHIR) University of Nottingham Malaysia. She is an FMT reader.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

6MP: Tangan speaker terikat?



Keadaannya seolah-olah semua mereka yang berkepentingan membayangkan berada di tempat Speaker Dewan Rakyat Johari Abdul ketika ini. Kalau boleh mereka juga mahu membuat keputusan bagi pihaknya berkaitan status enam Ahli Parlimen Bersatu yang dikatakan mengkhianati parti dengan menyokong Perdana Menteri Anwar Ibrahim.

Selepas berbulan-bulan diperdebatkan, dua pemimpin Bersatu bersependapat bahawa Johari tiada pilihan kecuali mengisytiharkan enam kerusi Parlimen — Kuala Kangsar (Iskandar Dzulkarnain Abdul Khalid), Labuan (Suhaili Abdul Rahman), Gua Musang (Mohd Azizi Abu Naim), Jeli (Zahari Kechik), Bukit Gantang (Syed Abu Hussin Syed Abdul Fasal), dan Tanjong Karang (Zulkafperi Hanapi) — kosong untuk PRK diadakan.

Semalam, Bersatu menyerahkan notis pemakluman kekosongan kerusi enam Ahli Parlimennya yang sudah terhenti keahlian mereka serta-merta kepada pejabat speaker Dewan Rakyat dan sudah diterima pejabat Johari Abdul. Mengikut Perkara 49A Perlembagaan Persekutuan perenggan tiga, speaker Dewan Rakyat perlu memastikan berlakunya kekosongan luar jangka dalam tempoh 21 hari selepas notis diterima.

“Beliau (Johari) tiada pilihan kecuali mengisytiharkan enam kerusi Parlimen tersebut kosong dan seterusnya memaklumkan kepada Suruhanjaya Pilihan Raya (SPR) bagi membolehkan pilihan raya kecil diadakan,” kata Naib Presiden Bersatu, Ronald Kiandee, yang menandatangani surat itu selaku ketua whip parti.

Berpandangan serupa, Ahli MPT Bersatu Wan Saiful Wan Jan pula menegaskan Johari perlu berbuat demikian selepas Speaker DUN Kelantan Mohd Amar Nik Abdullah mengumumkan berlaku kekosongan luar jangka di kerusi Nenggiri yang disandang Azizi kelmarin.

“Saya berharap Johari sebagai speaker Dewan Rakyat akan memastikan ada sedikit keseragaman dalam pelaksanaan peraturan-peraturan DUN dan Dewan Rakyat,” kata Wan Saiful sambil menambah kemungkinan tercetus satu krisis perlembagaan yang serius sekiranya duluan daripada keputusan speaker DUN Kelantan itu tidak dituruti.

Pandangan kedua-duanya seperti ‘direstui’ pakar perlembagaan dan undang-undang Profesor Dr Nik Ahmad Kamal Nik Mahmood yang beranggapan ia akan menimbulkan sesuatu yang ‘pelik’ sekiranya keputusan yang akan dibuat Johari berbeza dengan speaker DUN Kelantan.

“Kalau ada dua keputusan berbeza, macam pelik. Seolah-olah peruntukan undang-undang anti lompat parti itu memang tak jelas atau terbuka kepada pelbagai tafsiran sedangkan peruntukannya sama. Pindaan Perlembagaan Negeri Kelantan sama dengan Pindaan Perlembagaan Persekutuan. Peruntukan yang sama digunakan di negeri dan Persekutuan,” katanya dipetik Harian Metro.

Dalam memperkuatkan hujahnya, Wan Saiful tidak hanya berpeluk tubuh. Ahli Parlimen Tasek Gelugor itu mengundang bekas Speaker Dewan Rakyat Azhar Azizan Harun sebagai tetamu audio siar Program Bersama WSWJ yang dikendalikannya dan disiarkan di laman Youtube, Ahad lalu.

Menegaskan speaker tidak mempunyai kuasa untuk mempersoalkan tindakan parti sekiranya notis pengosongan kerusi Parlimen diterima, Azhar berkata: “Bukan hak beliau untuk mempersoalkan perkara itu dan ia juga sealiran dengan peruntukan undang-undang Akta Pertubuhan. Terdapat satu seksyen bahawa tafsiran yang diambil Majlis Kerja Tertinggi (MKT) sesebuah parti mengenai peruntukan perlembagaannya adalah muktamad dan tidak boleh dipersoal di mahkamah pun.

“Dengan rasa hormat kepada speaker (Johari), cadangan saya ialah sememangnya beliau tidak boleh mempersoalkan tafsiran parti dan tindakan parti itu dan apa yang perlu dilakukan ialah mengikut 49A memastikan kekosongan luar jangka sahaja,” katanya.

Sebelum ini, keahlian tujuh wakil rakyat Bersatu — termasuk ADUN Selat Klang Abdul Rashid Asari yang menyatakan sokongan kepada Menteri Besar Selangor Amirudin Shari — gugur serta-merta selepas gagal menjawab surat arahan bertulis MPT Bersatu dalam tempoh 14 hari berakhir 31 Mei untuk menzahirkan ikrar taat setia kepada parti itu.

Kekal konsisten dengan pandangannya, peguam kanan Haniff Khatri Abdulla bagaimanapun menjangkakan Johari akan menolak notis Bersatu itu, antaranya kerana permohonan Bersatu itu bertentangan dengan Akta Perlembagaan (Pindaan) (No.3) 2022 (Akta A1663) atau lebih dikenali sebagai Akta Anti Lompat Parti.

“Pindaan perlembagaan dibuat Bersatu juga tidak memberi kesan besar sehingga menyebabkan enam bekas Ahli Parlimen Bersatu yang menyatakan sokongan kepada perdana menteri terpaksa mengosongkan kerusi masing-masing seperti termaktub dalam Perkara 49A Perlembagaan Persekutuan.

“Bagi saya tindakan speaker menolak permohonan Bersatu nanti tepat kerana dipecat daripada parti tidak dikira sebagai perbuatan melompat parti yang mengakibatkan seseorang Ahli Parlimen tergugur status sebagai wakil rakyat,” katanya kepada Sinar Premium, Jumaat lalu.

Haniff mengandaikan Johari sebagai salah seorang pemimpin Pakatan Harapan (PH) tidak mungkin membuat keputusan yang akan merugikan parti dan menjejaskan kedudukan Anwar sebagai perdana menteri. “Jadi, dari segi politik saya tidak percaya Johari akan membenarkan permohonan Bersatu,” katanya.

Senada dengannya Pengarah Eksekutif Ilham Centre Hisommudin Bakar turut tidak menolak kemungkinan Bersatu membawa kes membabitkan enam bekas ahli Parlimennya ke mahkamah sebagai jalan terakhir untuk mengosongkan kerusi terbabit.

“Bagaimanapun, prosiding kes ini mungkin mengambil masa lama sehingga PRU16, sekali gus menyebabkan keenam-enam ahli Parlimen terbabit terselamat,” tambahnya.

Elok dirujuk temu bual terakhir Johari dengan The Star pada 7 Jun sebelum beliau berlepas ke Tanah Suci untuk mengerjakan haji yang menyatakan beliau akan memerlukan masa untuk meneliti semua perkara dengan cermat, terutama melibatkan undang-undang termasuk Akta Anti Lompat Parti sebelum memutuskan sebarang keputusan terhadap enam Ahli Parlimen Bersatu itu.

“Untuk saya mengambil tindakan, saya mesti berhati-hati, saya mesti mendalami segala-galanya, semua aspek sebab apa juga keputusan yang saya buat bukan sahaja akan memberi kesan kepada ahli parti itu atau Ahli Parlimen tetapi juga negara. Saya mengambil sikap amat berhati-hati serta cermat dan selagi saya tidak yakin dengan keputusan yang saya buat itu, saya tak akan buat dulu.

“Saya amat berhati-hati bukan sahaja undang-undang tetapi moral dan segalanya saya kena pastikan bahawa tindakan saya itu betul dan saya tidak mahu dipersalahkan atau rasa bersalah apabila saya tidak berada di jawatan itu nanti,” katanya.

Jika Wan Saiful bercakap mengenai duluan dengan merujuk kepada keputusan DUN Kelantan mengosongkan kerusi Nenggiri kelmarin, Johari jelas bukanlah speaker yang boleh ‘disekolahkan’ begitu.

Pada 17 Jan 2023, Johari yang baru mengangkat sumpah sebagai speaker ke-11 Dewan Rakyat pada 19 Dis 2022 memutuskan empat bekas ahli Bersatu Sabah — Matbali Musah (Sipitang), Armizan Mohd Ali (Papar), Khairul Firdaus Akbar Khan (Batu Sapi), dan Jonathan Yasin (Ranau) — yang bertanding dan menang semasa PRU15 lalu tidak perlu mengosongkan kerusi Parlimen walaupun mereka keluar parti bagi menyokong Anwar.

Keputusan itu dibuatnya selepas Kiandee yang juga Ahli Parlimen Beluran dalam satu kenyataan pada 29 Dis 2022 berkata Bersatu sudah menghantar notis kepada Johari untuk memastikan berlaku kekosongan ‘luar jangka’ membabitkan empat kerusi Parlimen di Sabah. Ia susulan dakwaan bahawa empat Ahli Parlimen itu melakukan kesalahan melompat parti apabila bertindak keluar Bersatu Sabah dan menjadi ahli langsung dalam GRS yang diketuai Ketua Menteri Hajiji Noor. Bersatu kemudian memanjangkan kes itu ke mahkamah.

Duluan seperti yang mahu ditekankan oleh Wan Saiful sudah pun wujud lebih awal. Lebih daripada itu, Johari mempunyai minda dan pertimbangannya sendiri tanpa beliau boleh dipaksa-paksa untuk mengikut telunjuk sesiapa, tidak terkecuali Wan Saiful dan Kiandee yang mungkin kecewa buat kali kedua selepas sejarah dua tahun lalu itu.

“Speaker Dewan Rakyat ada mengeluarkan kenyataan bahawa beliau akan meneliti secara mendalam kerana ia mempunyai banyak kesan dan implikasi kepada rakyat dan negara. Beliau kena mengkaji secara mendalam sama ada keenam-enam ahli Parlimen terbabit sudah tergugur status sebagai wakil rakyat susulan pemecatan keahlian Bersatu baru-baru ini.

“Jadi kesimpulannya, sukar meramalkan apa keputusan bakal diambil speaker,” kata penganalisis politik Profesor Madya Dr Mazlan Ali. - FMT

Artikel ini adalah pandangan penulis dan tidak semestinya mewakili MMKtT.

Post highlighting that Malaysian MPs earn 10 times national median wage attracts plenty of scorn


WITH majority of ordinary Malaysians feeling the pinch from the cost-of-living crisis, certain groups of people and their eye-watering salaries have come under the spotlight, among them our esteemed MPs.

According to a post on X (formerly Twitter) by Malaysiakini journalist Aidila Razak (@aidilarazak), local MPs earn ten-fold the national median wage. This is compared to their peers across the Causeway who earn just 3.5 times the national median wage.

The reportage, which is part of the news portal’s KiniNewslab series, takes a closer look at the many benefits MPs are privy to, for instance, the many freebies a parliamentarian such as a Dewan Rakyat Speaker is entitled to are listed in useful infographics.

To further illustrate the point, the feature also used cartoons to underline the point that not all is right with the way the system rewards local MPs.

Netizens were asked to take part in a poll to ascertain public sentiment. It asked if citizens agreed with Datuk Seri Anwar Ibrahim’s suggestion that civil servants only take home one pension or whether the pension scheme should be abolished and be replaced with EPF contributions.

The report by Malaysiakini’s special team has attracted plenty of attention. Here is a sample of what are being said.

One hinted at even bigger issues in the other house consisting of appointees.

One asked what was the need for the public to foot MP s firearm licenses while adding that the pension should only be paid at age of 60.

Some pointed out that such benefits are not even available to higher echelons in the private sector.

One netizen however did defend the high salaries and benefits packages saying it was necessary to attract top talent.

With another echoing this sentiment saying it would spur these elected representatives to do their best for the country.

Given the current mood, this reportage certainly shines a less-than-positive light on politicians and their bumper packages.

Whether this will jolt ordinary Malaysians into demanding changes or will they just shrug their collective shoulders remains to be seen. Suffice to say that for the moment, many ordinary Malaysians are far from happy with the state of things. – Focus Malaysia