G-20 Summit

Call to view regional trade pacts as positive developments

The Tanjong Pagar terminal.
The Tanjong Pagar terminal. PHOTO: ST FILE

ANTALYA (Turkey) • Trade deals that are regional or which involve a group of countries, like the Trans-Pacific Partnership (TPP), should be seen as positive developments rather than threats to the global trading system, Prime Minister Lee Hsien Loong said yesterday.

He acknowledged this piecemeal approach is not ideal as the pacts make trade more burdensome for companies, especially small ones. But they are the next best option given how hard it is to reach a multilateral deal, he told leaders at the Group of 20 Summit yesterday.

"Having some competitive dynamics will help to keep the momentum towards liberalisation and free trade and act as a check against protectionist pressures that every country faces," Mr Lee added.

Hence, the freeing up of trade through regional pacts, or plurilateral deals, should be pursued with a conscious strategy.

This, he said, would "facilitate future liberalisation and joining up - to widen the ink blots, merge them, so as to have progressively freer trade and greater prosperity".

Earlier in the session, World Trade Organisation (WTO) director-general Roberto Azevedo hoped trade ministers could reach positive results at next month's Ministerial Conference in Nairobi.

The outcome will be closely watched by a group of 30 small and medium-sized countries, the Global Governance Group (3G). As a member of 3G, Singapore hopes the G-20 will continue to push for meaningful outcomes, Mr Lee said.

He noted the progress of the Doha round, launched in 2001 to reach a global free trade deal, had been disappointing, and that some countries have gone ahead with partial agreements. One such case is the TPP, which came out of a small free trade agreement: the P4 comprising Singapore, Brunei, New Zealand and Chile.

"This P4 grouping, which, on its own economic merits would have been almost nougatine, small, was conceived specifically with a view to it being a nucleus which could be expanded in future to become something significant," he said.

But the TPP, with 12 countries on the Pacific Rim, cannot be the end goal, he added. Mr Lee envisions it as an instrument for realising a Free Trade Area of the Asia-Pacific , especially when paired with two other groupings: the Regional Comprehensive Economic Partnership and Asean Economic Community.

"We all know that a more open trading system will lift growth and benefit our peoples." But, he added: "We are all subject to political pressures at home. We have to make sure our people feel that they are taken care of, and their concerns are acknowledged and addressed.

"We have to strike the right balance which, in itself, requires political courage and leadership and have the political courage to explain and persuade our population that trade benefits all - that we are all not ashamed to be free traders... that if we try to shelter ourselves from competition and progress, we will fail on all counts."

Walter Sim

A version of this article appeared in the print edition of The Straits Times on November 17, 2015, with the headline 'Call to view regional trade pacts as positive developments'. Print Edition | Subscribe