Malaysia seeks to prove local content to skirt US import duties on solar panels

KUALA LUMPUR: Malaysia will seek to prove that the solar panels it exports are totally sourced locally in a bid to circumvent newly imposed duties on imports into the US.
Two days ago, US President Donald Trump announced that imported solar cells and modules would be imposed tariff of up to 30% as part of his "America First" initiatives. The rate starts with 30% in the first year and diminishes to 15% by year four.
“In order to overcome this we have to prove the local content. If we can prove this I think we can alleviate the 30% tax,” Minister of International Trade and Industry II Datuk Seri Ong Ka Chuan said.
He was speaking at the Asian Strategy & Leadership Institute's 20th Malaysia Strategic Outlook Conference.
Ong said the Trade and Investment Framework Agreement (TIFA) agreement with the United States is a platform for Malaysia to submit our predicament or request to them.
"We want them to consider our presentation so that they will have a different tax structure for us,” he added, in extolling the importance of Malaysia moving forward with free trade agreements (FTA) amid challenges faced, making specific reference to the European Union's move to phase out the use of palm oil by 2021.
Ong said despite the EU's move it is not feasible to suspend a potential trade partnership due to the sheer size of the EU market which comprises of 28 countries.
"Banning palm oil is a challenge. We need to resolve it. We cannot suspend this (FTA) because of this palm oil issue because the EU is a very important market," he said while noting that the issue has to be resolved as it affects over 600,000 small industry players in Malaysia.
We are still trying to convince them. It is a market you cannot ignore ," he added.
Meanwhile, Ong said the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) still faces challenges, one of which is the participation of Canada and Mexico who are mindful of not going against the interest of their neighbour.
"They will be very careful. Whether we can conclude it in a definite time is still a challenge," he explained.
On trade projection for the year, Ong said Malaysia's total trade value could possibly hit RM2 trillion this year, after having hit about RM1.7 trillion in 2017.
He acknowledged however, that it might be challenging for Malaysia to achieve double digit growth for trade this year.