SINGAPORE - Plans for regional deals such as the Regional Comprehensive Economic Partnership (RCEP) and China's Belt and Road Initiative (BRI) need great care in their execution, said Finance Minister Heng Swee Keat in a public dialogue on Thursday (Aug 30).
“I feel very strongly that globalisation will need to be defended, and we need to do our best to support that,” he said in a dialogue session at the Singapore Institute of International Affairs (SIIA) think-tank’s 11th Asean & Asia Forum, at the Ritz-Carlton Millennia Singapore.
Mr Heng called on agreements and dispute resolutions to be done through established international channels, reiterating Singapore leaders’ strong advocacy for a rules-based, multilateral trading system.
“I’m glad that the region continues to uphold the importance of regional integration,” he said, adding that, in the wake of the agreements that have been penned between Asean and other economies, “what we can do next is to really bring together these agreements into the RCEP”, which he said “will be a very, very major grouping”.
“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.
“And our hope must continue to be, on the WTO, on the Doha route, trying to build there and see how we can do it,” Mr Heng said, referring to the Doha Development Agenda, or the World Trade Organization (WTO) trade negotiation talks launched in Qatar in 2001.
“But in the process of doing bilateral agreements and regional agreements, we learn how to make structural changes in our economy. We learn how to co-operate better. We learn how to settle disputes. And that build-up of confidence will allow us to do more.”
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 deteriorate, Mr Heng cited the recent news 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 remarked.
Economists agree that tariff and retaliatory measures are not the fix for dissatisfaction over trade surpluses or deficits, said Mr Heng.
“I do think that the right solution is to make full use of the WTO and solve many of these issues, and on a bilateral basis, to really iron out this problem. A trade dispute that escalates into a global trade war will be negative for everyone, including the country that starts it.
“So I think we’ve got to take great care to protect the global trading system, the multilateral, rules-based system that has got proper mechanisms for settling disputes. Now, I’m not saying that it’s 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 compared Asean and the wider Asian region to a hawker centre with an array of food stalls and said that the goal is to have a situation where “each of us specialises in particular areas and the grouping as a whole becomes attractive”.
“The question is, at the end of it, where are the competitive advantages of different nations. And I think we all need to work together to address common challenges.”
As for non-tariff measures to facilitate regional trade, Mr Heng said that certain areas could benefit from common standards and reciprocity among member states, especially if policymakers begin where there is greater interest “and, when it works, you can do more”.
“The easiest part of trade agreements is on tariffs, because everyone understands it,” he said. Taking food safety as an example of non-tariff trade concerns, he said: “You do have countries with different standards of regulating food, you have different degrees of compliance and so on . . . The way forward is to build capacity in our regulatory authority.”
Mr Heng also said the BRI is “a good project - it is a good set of ideas”, but “what really needs a lot of care is the execution", lest unrelated projects be billed as part of the BRI.
"But in terms of the intent of the project and its strategic goal that can be achieved, I think it is significant,” he said.
“And what we should do in the region is to welcome investments from all over the world,” he added - whether it is from “traditional sources” like the United States and Japan, or new and emerging economies, including intra-Asean investment. “That’s how Singapore itself has grown over the last 53 years.”