SINGAPORE - As small and open economies, Singapore and New Zealand will be significantly impacted by the ongoing trade war between the United States and China.
But their efforts to promote greater economic collaboration models the benefits of free and open trading relationships and a rules-based international order, and hopefully encourages other nations to seek out similar arrangements.
These were the common sentiments shared by Prime Minister Lee Hsien Long and his counterpart Jacinda Ardern, at a press conference during the New Zealand PM's first official visit to Singapore.
The leaders on Friday (May 17) signed a joint declaration to establish the Singapore-New Zealand Enhanced Partnership, which will step up collaboration in four areas: trade and economics; defence and security; science, technology and innovation; and people-to-people links.
An upgraded bilateral free trade agreement was also inked to facilitate greater trade flows.
Asked how the enhanced partnership could mitigate slowing economic growth, PM Lee said he hopes it will help grow bilateral trade. Singapore and New Zealand's trade last year was $4.1 billion, a 12.1 per cent increase from 2017.
PM Lee acknowledged that both nations are small and the portion of bilateral trade relative to overall international trade is "quite small". The contribution will be very useful, but "modest".
"But I think more important than the quantitative contribution will be that the Enhanced Partnership shows that we are cooperating and we are promoting economic integration and trade at a time when these basic concepts are being questioned, and in fact, under threat," Mr Lee said.
He hopes this will encourage other countries to follow suit.
"I know many countries are looking for ways forward to ensure that they do not give up the hard-won gains in terms of the prosperity, the mutual interdependence, and therefore mutual gains from the trade. And this is one step in the right direction," Mr Lee added.
Agreeing, Ms Ardern said that as countries impacted by global trade tensions, it is "now more important than ever, that we continue to model and demonstrate the benefits of free and open trading relationships" and a rules-based order.
"And I hope that by continuing to modernise our free trade agreements... we can demonstrate that we can keep pace, that we can make sure that our businesses benefit from countries that have been agile and making sure that their free trade agreements are mirroring the changing environment that they're working in," she noted.
The upgraded Agreement between New Zealand and Singapore on a Closer Economic Partnership (ANZSCEP) builds upon the original one, by improving the trade rules to bring it in line with the newer free trade agreements to which Singapore and New Zealand are parties to, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
The ANZSCEP took effect in 2001.
The upgraded agreement reduces barriers to trade, such as making it easier for companies to qualify for duty-free treatment in sectors such as electronics and processed food.
It also addresses modern trade issues such as e-commerce.
With the upgraded ANZSCEP, companies will be able to access data freely and not be required to locate computing facilities in a market as a prerequisite to doing business there.