[BEIJING] Despite a move toward greater self-sufficiency, trade will still exist because no country can be completely self-sufficient, said Prime Minister Lawrence Wong on Wednesday (June 25).
Trade may not grow as much as it used to, and patterns of trade will change and evolve, with different supply chains and configurations, he told an audience at the World Economic Forum’s (WEF) Annual Meeting of the New Champions – also known as the Summer Davos – in Tianjin.
But trade remains relevant, he said, even as he acknowledged that technology and sustainability will become new drivers of growth and “power the economy of the future”.
PM Wong made these points during a dialogue session with WEF President and chief executive officer Borge Brende.
The Singapore prime minister emphasised the continued importance of multilateralism as he gave an example of what he described as “flexible multilateralism”.
The World Trade Organization (WTO) has brought about free trade and a rules-based trading system that has benefitted many, but its rules have lagged behind the realities of today’s economy, particularly in digital trade, said PM Wong.
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However, rather than “jettison the rules”, Singapore, Australia and Japan co-convened the Joint Statement Initiative (JSI) on e-commerce. After five years of negotiations, 71 members have agreed on the first set of global rules on digital trading.
The JSI is proof that “it is possible to update, evolve and improve the multilateral system and global institutions that we have today”, he said.
“(Flexible multilateralism) is not about an ad-hoc array of different rules, but starting first, laying the building blocks, and eventually others can join in, and we can steer progress in the right direction,” he said.
Brende later asked whether “this kind of more plurilateral” agreement, as well as bilateral and regional trade agreements, could mean that trade is complicated and “we end up with a big spaghetti bowl”, referencing a phenomenon where multiple agreements supplant multilateral agreements.
PM Wong agreed that the concern exists, but countered: “What is the alternative? Do nothing? It cannot be do nothing, and hope that some day, along the way, something new emerges out of nowhere.”
He believes that if like-minded countries put in place basic building blocks and remain open and inclusive, they can “multilateralise” these efforts in time to come.
Brende also asked whether Singapore has “changed its approach”, from doing more trade agreements under multilateral systems such as the WTO to more bilateral and “mega-regional” ones.
PM Wong responded that Singapore started with many bilateral free trade agreements (FTAs) that built up to “a more robust multilateral system”.
Amid rising trade barriers, Singapore’s response would still be to work at reforming and updating the WTO, but engage with like-minded countries to strengthen trade and investment links in parallel, he said.
On Brende’s remark that Singapore received “a relatively good deal” with just 10 per cent tariffs in the US’ trade war, PM Wong noted that on the basis on the city-state’s FTA and trade balance with the US, it “should have a zero tariff”.
Singapore is engaging the US, but the latter is unlikely to lower tariffs below their 10 per cent baseline, he noted.
“That’s why I’ve said that we are in a new era where there will be more barriers to trade, and we have to accept these realities. Not that we think it’s a good idea, but these are the realities that we have to work with,” the prime minister said.
“Meanwhile, countries that would like to promote and advance the agenda for free trade should come together and work in different formats, different platforms, whether regional or plurilateral platforms, to advance the agenda for free trade. And Singapore will be the first to lead the charge on this.”
On Wednesday, PM Wong also attended the WEF’s opening plenary and met separately with Senegal Prime Minister Ousmane Sonko and Vietnam Prime Minister Pham Minh Chinh. He is due to return to Beijing on Wednesday evening where he will meet Singaporeans at a reception.
