SINGAPORE - Given the complex interdependence of economies around the world, abuse and neglect of the multilateral trading system will benefit few, said Speaker of Parliament Tan Chuan-Jin on Tuesday (June 11).
Countries must continue updating this system as new frontiers in trade in services continue to grow, and economies increasingly transition to digital ones, he added in his opening address at a three-day workshop for regional parliamentarians.
Noting that small and open markets such as Singapore have done well due to a rules-based system, he said its deterioration obstructs others who are considering similar trade-based growth.
The current situation fosters an unpredictable business environment and raises inter-state tensions as well, said Mr Tan at the event organised by the S. Rajaratnam School of International Studies (RSIS) and the World Trade Organisation (WTO).
The World Bank slashed global growth prospects for 2019 to 2.9 per cent and that for the Asia-Pacific to 6 per cent, in part due to growing trade tensions.
Yet, he told over 50 regional parliamentarians and officials at the Pan Pacific hotel, "trade is neither inherently good nor bad". It is a tool that must be used with care, and can both generate economic development and create tensions.
For example, an open system allows firms to relocate their production facilities to places where labour costs are relatively low, moving jobs to other countries.
"Coupled with issues such as rising inequality and hindered socioeconomic mobility, for which openness and trade have at times become scapegoats, it is not surprising that anti-trade sentiments and bottom-up calls for protectionism have proliferated around the world," said Mr Tan.
"Moreover, trade has become a source of international conflicts, leading to top-down support for economic decoupling by some governments," he said. "These discontents send a loud and clear signal to lawmakers that going forward, trade must be used more effectively to deliver inclusive growth and sustainable development for all."
Trade cannot be an effective tool if the multilateral trading system is "under siege" from protectionism and obstructed by geopolitical tensions, he said, noting countries' tit-for-tat tariff measures and problems within the WTO as well.
"Barring the appointment of new judges by December 2019, the WTO's dispute settlement mechanism will be largely paralysed, heightening uncertainty for global trade at best and risking a descent into lawlessness at worst," he said.
US President Donald Trump's administration has blocked the appointment of new judges to the WTO's appellate body, potentially leading to a freeze of the dispute-settlement mechanism later this year when the number of standing judges drops below the minimum of three.
With many, if not all, trading nations still looking to the WTO as their first choice in dispute resolution, Mr Tan stressed the need for strong commitment to a multilateral trading system and reforms that ensure the WTO continues to benefit all.
In an opening speech, WTO director-general Roberto Azevedo flagged the importance of the joint work of regional parliamentarians amid these challenging times.
"Tensions remain high between some major trading partners and last year, restrictive measures were imposed by WTO members covering around US$580 billion of trade, over seven times the level of the preceding period," he said.
At the same time, there has been a trade growth decline. High levels of uncertainty also mean trade cannot play its full role in driving GDP growth, he added.
"We're working to respond to the challenges in global trade today, facilitating conversations between members and helping them find solutions. As part of our response, we're also working to support our members in their efforts to reform the WTO," he said.
Ambassador Ong Keng Yong, executive deputy chairman of the RSIS, said trade has helped South-east Asia to consolidate its position in the global community.
"Going forward, our Asean member states will continue to promote trade, strengthen the existing trade agreements we have and look for new ones," he said.
He added that while international trade has slowed in the last year, there remain opportunities for growth and it is increasingly vital to have an efficient and effective WTO in spite of pressure it faces, such as that from large countries.