Some good may yet come from the slump in global trade, as countries that have exhausted their stimulus measures start to recognise the importance of structural reform, such as trade liberalisation, a leading trade economist said yesterday.
"In response to the economic doldrums, policymakers have recognised the need for structural reform, in particular with respect to trade policy, and I think that bodes very well for the global economy," HSBC senior trade economist Douglas Lippoldt told reporters during a visit to Singapore.
There is also a good chance that the Trans-Pacific Partnership (TPP) - a mega trade deal between 12 states, including Singapore - will be ratified as early as next year, said Mr Lippoldt.
"The North American Free Trade Agreement took a year from the day it was signed to the day it was ratified. That was just three countries, TPP's far more ambitious, but I would like to think optimistically for TPP."
For the TPP to come into force, at least six states representing 85 per cent of GDP (gross domestic product) for the region have to ratify the agreement, so bigger economies like the United States and Japan have to be on board, as well as a number of smaller ones.
GOOD FOR GLOBAL ECONOMY
In response to the economic doldrums, policymakers have recognised the need for structural reform, in particular with respect to trade policy, and I think that bodes very well for the global economy.
HSBC SENIOR TRADE ECONOMIST DOUGLAS LIPPOLDT
Meanwhile, Asean states and six others, including China and India, will hold the final round of negotiations for the Regional Comprehensive Economic Partnership (RCEP) in September, which could mean another huge trade deal being signed by the end of the year, Mr Lippoldt said. But the TPP and RCEP are not the only games in town.
Last December, the World Trade Organisation finalised an expansion to the Information Technology Agreement which rolls out over several years, starting from July this year.
The expanded agreement - to which Singapore is also a party - removes tariffs on 201 next-generation electronics products such as GPS systems, video game consoles, and multi-component semiconductors - in total, some US$1.3 trillion (S$1.8 trillion) worth of trade.
Mr Lippoldt said: "In 1997, we had this boom in electronics trade that followed from the original IT Agreement. Now, we're adding another 201 products. I think we'll see a similar kind of renewal of trade in the electronics sector as a consequence."