With trade talks between the United States and China hitting the bumps lately, the world took comfort that Japan and the European Union had agreed in principle last month to proceed with a free trade pact to create the globe's biggest open economic area. That, of course, hinges on Europe's Byzantine ratification process. A country or region could throw a spanner in the works, just like Wallonia in Belgium nearly did when it held up a landmark trade pact with Canada. Still, there are enough of other free trade agreements (FTAs), either concluded or in the works, to give hope that the pushback against such pacts, conspicuously led by the Trump administration, will not have a chilling effect. Gratifyingly, negotiations for the Trans-Pacific Partnership 11 and the Regional Comprehensive Economic Partnership are on track, and a number of potential bilateral deals are also being hatched.
Distrust of free trade grew in the US, "even in some of the country's most export-heavy congressional districts", because of the perception that workers are becoming marginalised, as the Wall Street Journal noted. The promise of jobs was a key plank of the export argument, but as globalisation shifted these across the world, the legion of sceptics grew in number.
Here, threats to jobs being held by professionals, managers, executives and technicians (PMETs) are a concern of those who are questioning the impact of the Comprehensive Economic Cooperation Agreement (Ceca) signed by Singapore and India in 2005. An influx of Indian IT workers gaining entry under Ceca has led to fears that this trend is contributing to the plight of local PMETs, who formed 72 per cent of the resident workers made redundant last year. However, a closer look at the information and communications technology sector reveals that demand for workers is exceeding supply, and the acute skills shortage is expected to persist for many years - up to 30,000 short by 2020, according to a study by the Singapore Management University and JP Morgan.
Viewing Ceca broadly, there are sufficient benefits for the Republic to pursue an updating of the pact. That does not imply it should "have an open border without any policy framework to govern and constrain the flow of people into your job market", as Deputy Prime Minister Tharman Shanmugaratnam observed. After all, foreigners already form a third of the workforce in tiny Singapore.
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In general, FTAs are an advantage to a city-state highly dependent on trade (with total trade amounting to almost three times its gross domestic product). And it benefits Singapore's partners too, as there is wide agreement among economists that it is free trade, rather than a zero-sum mercantilist approach, that can boost exports, offer a greater choice of goods and enable nations to focus on areas where they have a comparative advantage.