PM Lee Hsien Loong warns of political, security concerns becoming a disguised form of trade protectionism

Commonwealth leaders pose for a family photograph with Britain's Queen Elizabeth during the formal opening of the Commonwealth Heads of Government Meeting in the ballroom at Buckingham Palace in London, Britain, on April 19, 2018.
Commonwealth leaders pose for a family photograph with Britain's Queen Elizabeth during the formal opening of the Commonwealth Heads of Government Meeting in the ballroom at Buckingham Palace in London, Britain, on April 19, 2018.PHOTO: REUTERS
Prime Minister Lee Hsien Loong and British Prime Minister Theresa May (right) at the Commonwealth Heads of Government Meeting in Lancaster House in London, Britain, on April 19, 2018.
Prime Minister Lee Hsien Loong and British Prime Minister Theresa May (right) at the Commonwealth Heads of Government Meeting in Lancaster House in London, Britain, on April 19, 2018. PHOTO: EPA-EFE

LONDON - While countries need to address the political and security concerns that come with the freeing up of investment flows, these should not become a disguised form of protectionism, Prime Minister Lee Hsien Loong said on Thursday (April 19).

He warned that restricting investments unduly will not only damage the multi-lateral system of trade and investments, it will also cause strategic and great power rivalry.

Such competition can be destabilising and dangerous to the world, he added.

Mr Lee was speaking on free trade and threats to the global trading order at the Commonwealth Heads of Government Meeting (Chogm).

He urged the leaders of the 52 other Commonwealth member nations to promote trade in the network even as he praised the talks being held at the meeting.

Such discussions are timely as "the political mood in many countries has become hostile to free trade, and specifically to the open and rules-based multi-lateral trading system," he said.

These are issues of concern to Mr Lee who wrote about them in the Washington Post's Opinion section on Wednesday (April 18) as trade tensions between China and the United States escalate, stoking fears of a trade war.

The issues are also a key theme at the biennial gathering, with British Prime Minister Theresa May making a pitch this year for greater trade in the Commonwealth as Britain prepares to exit the European Union under Brexit.

On Thursday, Mr Lee said of the spectre of a trade war: "This is of grave concern to many Commonwealth countries, including Singapore. We all share a common interest in upholding the multi-lateral trading system."

Such a system sets uniform rules and balances the benefits and concerns of different countries, while unilateral trade restrictions that do not comply with World Trade Organisation (WTO) rules will lead to tit-for-tat responses, he cautioned.

 
 
 

In this climate, Commonwealth member nations should make the most of the similarities in regulatory systems, operating language, business environment and economic outlook to promote free trade and liberal investment flows, he said.

The combined gross domestic product, or GDP, of the Commonwealth is estimated at US$10.4 trillion (S$13.6 trillion) last year. It is predicted to reach US$13 trillion in 2020 .

Some, however, have raised doubts as the voluntary organisation is not a trade bloc.

But Mr Lee said there was already a system of "imperial preferences" among Commonwealth countries even before the WTO was established in 1995, and to this day, trade and investment links between member countries benefit from this.

Describing this as an early precursor regional trading arrangements such as the recently concluded Comprehensive and Progressive Agreement on Trans-Pacific Partnership, he encouraged Commonwealth countries to also maintain liberal investment flows, even as they address national interests and security concerns.

He cited high-technology industries, telecommunications and industries that hold strategic assets as sectors that raise political and security concerns.

"These concerns have to be addressed,'' he said, "but they should not become a disguised form of protectionism. A balance has to be struck."

"Overall, governments should welcome each other's businesses to participate in our economies. Because unduly restricting investments, as a result of mutual suspicions, can itself engender more distrust and rivalry, and result in more investment restrictions," he added.