Globalisation needs its defenders, Finance Minister Heng Swee Keat said yesterday, while calling on countries to embrace broader trade pacts and international mechanisms.
Mega trade deals such as the Regional Comprehensive Economic Partnership (RCEP) can pave the way for even bigger projects, he said in a dialogue at the Singapore Institute of International Affairs' (SIIA) 11th Asean and Asia Forum.
Hours before the sixth round of RCEP ministerial talks were to begin at the Shangri-La Hotel, Mr Heng said of the 16-nation scheme: "I hope that it does not lead to a fragmentation of the world into major trading blocs. The idea is not that. But, based on our own experience with free trade agreements, regional agreements, bilateral agreements are important building blocks for a broader international agreement."
China's One Belt One Road initiative is also significant in its intent and strategic goal, said the minister, who called the pan-Asian development project "a good set of ideas".
"What we should do in the region is to welcome investments from all over the world," he told the 200-strong audience of business professionals, whether from traditional sources such as the United States and Japan, or new and emerging markets, including within Asean.
"There is a risk that a trade war - or trade frictions, rather - if it escalates, can become very, very destabilising for the entire global economy, and certainly for the Asian region," Mr Heng said.
"I do think that the right solution is to make full use of the WTO and solve many of these issues."
RISK OF DESTABILISATION
There is a risk that a trade war - or trade frictions, rather - if it escalates, can become very, very destabilising for the entire global economy, and certainly for the Asian region... I do think that the right solution is to make full use of the WTO and solve many of these issues.
FINANCE MINISTER HENG SWEE KEAT, on trade frictions.
He added, referring to the fraught World Trade Organisation trade talks that were launched in the Qatari capital in 2001: "Our hope must continue to be on the WTO, on the Doha route."
Asked by dialogue moderator and SIIA chairman Simon Tay about how Singapore and Asean could respond if trade relations between the United States and China were to deteriorate, Mr Heng cited the recent reports of fresh US negotiations over the disputed North American Free Trade Agreement with Mexico and Canada.
"I hope that things don't take a turn for the worse. And I must say that I do hope that some agreements can be reached... In fact, the trade dispute is not just between China and the US, but also the US and many other countries," he said
The minister reiterated Singapore leaders' recent public affirmations of a rules-based, multilateral trading system: "I am not saying that it is the perfect system today... but I do think that we can, we must, settle disagreements over a broader forum, and not on a bilateral basis."
He said South-east Asia continued to uphold the importance of regional integration. Building on the pacts made between Asean and other economies, "what we can do next is to really bring together these agreements into the RCEP", he noted.
"The easiest part of trade agreements is on tariffs because everyone understands it," he said, but added that areas such as food safety could also benefit from common standards and reciprocity among member states. "The way forward is to build capacity in our regulatory authority," he said.
Mr Heng repeated an analogy from April and compared both Asean and the wider Asian region to a hawker centre where "each of us specialises in particular areas and the grouping as a whole becomes attractive".
"I feel very strongly that globalisation will need to be defended, and we need to do our best to support that," he said.