Singapore thinks that trade wars are "a very bad idea", said Foreign Minister Vivian Balakrishnan yesterday, in remarks on the unfolding tit-for-tat tariffs being imposed by the United States and China targeting each other.
"We need to avoid measures that ultimately will inflict pain on ourselves, will lead other countries to retaliate, and undo the formula for peace and prosperity that has worked for 70 years," he said at the 49th meeting of the Trilateral Commission, a policy discussion forum of business, government, academic and civil society leaders from Europe, North America and the Asia-Pacific.
In his keynote speech to over 200 global leaders, he made the case for free trade and economic integration even as he acknowledged that globalisation had its winners and losers.
Dr Balakrishnan said many countries had benefited from the rules-based, open and inclusive world order co-created and underwritten by the US after WWII.
China is actually the biggest winner, said the minister, citing how its GDP per capita also rose from US$90 in 1960 to over US$8,000 in 2016.
"But those of us who are campaigning for free trade have been somewhat guilty of overstating the case. The net impact is positive, but the political fact is there are winners and losers," said the minister.
He argued that the inequality was also because globalisation was happening at the same time as the technological and digital revolution.
"While globalisation and technology have benefited everyone, they have not benefited everyone equally," said the minister.
The onus is on governments to rethink their economic and social institutions, so they can enable all their citizens to succeed, he said.
Multilateral institutions like the International Monetary Fund and World Bank also need to accommodate the shift in the global economy towards Asia, he added.
"We would all be better off if we had multilateral institutions where everyone participated and felt a sense of fairness, and which could be reformed to reflect new realities.
"Rules, if they have to be rewritten, should be rewritten in a consensual, multilateral way," he said.
But unfortunately, "some see economic multilateralism as a zero-sum game and have begun to doubt if (everyone) can still benefit from economic integration," he said.
"Even the foremost advocate has lost some self-confidence and is looking to... withdraw from competition," he said, referring to America's recent turn towards protectionism under President Donald Trump. "The prevailing political climate has made it unfashionable to pursue a trade liberalisation agenda, but we believe we need to stay the course," he added.
