New hope for open markets

At a time of rising protectionism, two moves - the attempted revival of the Trans-Pacific Partnership (TPP) and China's behemoth One Belt, One Road initiative - represent renewed hope for globalisation, open markets and free trade.

It remains to be seen if the TPP trade pact can actually go into force without the participation of the United States, which would have accounted for 60 per cent of the grouping's economic output. President Donald Trump pulled the US out of the TPP in his first week in power.

But many believe it would be insane for the other 11 signatories to walk away from what is widely seen as the "gold standard" of trade agreements - one that took almost a decade to negotiate.

Having affirmed their intention to move forward with the TPP, the 11 ministers involved will now have to come up with a road map by November.

The TPP goes beyond the usual stuff of trade deals: Reducing tariffs and setting high standards in labour and environmental rules, intellectual property protection and other requirements.

What makes it a trade agreement for the 21st century is its focus on facilitating digital trade while also including, for example, provisions for Singapore firms in certain sectors to take larger stakes in foreign companies operating in key sectors abroad.

The TPP could also serve as a benchmark, prompting China to accept higher, more demanding trade standards in its free trade agreement - the Regional Comprehensive Economic Partnership (RCEP) - that is still being negotiated.

That would be a good thing for Singapore and several other TPP signatories such as Australia and New Zealand - also RCEP members.

Another project touted as a boon to trade and economic integration in the region is China's One Belt, One Road - a massive infrastructure initiative linking China with Africa, Asia and Europe through a network of ports, railways, roads and industrial parks.

Proponents of trade connectivity and economic integration are holding the line even as support for globalisation frays in some quarters.

Grace Leong

A version of this article appeared in the print edition of The Straits Times on May 26, 2017, with the headline 'New hope for open markets'. Print Edition | Subscribe