Protectionism will hurt growth, says Japan FM Kono at Asean forum ahead of CPTPP signing

Japanese Foreign Minister Taro Kono at a meeting in Ankara, Turkey, on Dec 28, 2017.
Japanese Foreign Minister Taro Kono at a meeting in Ankara, Turkey, on Dec 28, 2017. PHOTO: REUTERS

TOKYO - Protectionism is not the solution to inclusive growth, Japanese Foreign Minister Taro Kono said on Thursday (March 8), noting the peril towards "not only consumers but also producers and the very jobs it is supposed to protect".

His comments came hours before 11 countries, including Japan and Singapore, are due to sign the revised Trans-Pacific Partnership pact in Chile.

Japan took the lead in brokering the pact, now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and dubbed the TPP-11, after United States President Donald Trump withdrew his country from the deal last year.

"We hope that the TPP-11 will be an important cornerstone for our collective efforts to expand a free, fair and rules-based economic order in the world," he said of the pact that represents 13.5 per cent of the global economy with a market of 500 million people.

Mr Kono was speaking at the first ministerial conference, themed "Inclusive Asean", held under the Organisation for Economic Cooperation and Development's South-east Asia regional programme that is co-chaired by Japan and Indonesia.

Four Asean countries are part of the TPP-11, namely Brunei, Malaysia, Singapore and Vietnam.

The 10-nation bloc is, meanwhile, leading the Regional Comprehensive Economic Partnership pact that also includes Australia, China, India, Japan, New Zealand and South Korea. Japan has vowed to support Asean's intent to seal the deal this year.

"Protectionist measures make producers unable to access the cheapest and best quality inputs," Mr Kono said.

"As a result, producers lose export competitiveness in global markets, making them less able to sustain jobs at home."

Asean has greatly benefited from its integration in global value chains, and these efforts in favour of free trade are "solid steps to enhance connectivity in the region", he said.

To further boost connectivity, Mr Kono also lobbied Asean to adopt quality infrastructure that adheres to such principles as economic efficiency, the contribution to local employment and transfer of technology, as well as openness and transparency.

This will help alleviate the huge demand-supply gap in Asean infrastructure development, he noted.

South-east Asia requires US$210 billion (S$275.9 billion) of infrastructure investment annually from 2016 to 2030 - or 5.7 per cent of the region's economy. But only a quarter of the demand is being met.

 

"However, focusing solely on quantity is not adequate," Mr Kono said. "Substandard infrastructure will not only inhibit inclusive and sustainable development, but it could even become bottlenecks to growth."

In this vein, Mr Kono cheered Singapore's priorities of "resilience" and "innovation" as Asean chair this year, given the challenges facing Asean that could threaten growth and create a gulf in socio-economic development both between and within nations.

Speaking at the same session, Singapore's Senior Minister of State for Foreign Affairs Maliki Osman spelt out the country's priorities for the year.

"As Asean faces an increasingly complex global geopolitical landscape, it is important to keep Asean resilient to challenges such as terrorism, cyber threats and natural disasters, and by promoting and upholding a rules-based regional order," Dr Maliki said.

"Disruptive technology is (also) changing our lives, and there is a need to innovate and adapt to the changing needs of industry."

Among its areas of focus will be to advance e-commerce and develop a network of smart cities across the region, as Asean's digital economy is projected to grow 500 per cent to US$200 billion in 2025.

Against this backdrop, however, Dr Maliki noted the need for investment so that "our people have the right skills for the right jobs, that a new middle class can rise, and that no one is left behind".