SINGAPORE – Countries in Asia “cannot be looking for the spoils of war” and should redouble efforts to integrate their economies, leveraging on each other’s comparative advantage, Trade and Industry Minister Chan Chun Sing said on Thursday (Nov 22).
Citing Asia’s relevance in a new, emerging global order as one of the key challenges that countries need to confront, he said in a keynote address at a regional conference: “Asia will need to strengthen (its) efforts to create relevance… regardless of what is happening between the United States and China.”
Appearing to refer to reports that suggest South-east Asia could gain from US-China trade tensions, with potential changes to the global supply chain bringing more business to the region, Mr Chan said Asia cannot be “looking for the spoils of war”.
Instead, it has to create relevance by redoubling efforts to integrate its economies, leverage each other’s relative comparative advantage, and bring out the best in each other, he added.
Mr Chan was speaking at Asia Trade In The New Global Order, an event organised by Asia House, a Britain-based centre of expertise on the region.
Although some countries in Asia may feel that they have no choice but to pick sides in the global order, no one wants to see the world being “Balkanised” into different trading blocs, said Mr Chan, referring to a division of countries into smaller, hostile states or groups as happened in the Balkan region.
Stressing the importance of agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and Regional Comprehensive Economic Partnership, he added: “All these efforts speak to the same urgent need for us to integrate our economies, rather than to choose sides or to fragment our regional and global production and value chains.”
One area in which greater integration for global economies can take place is in the growing digital economy.
“Asia, together with like-minded partners in Europe, America and elsewhere, must come together to evolve the WTO (World Trade Organisation) system, beyond taking care of the traditional, conventional goods and services sector, to look at what are the new rules we require to enable the digital economy to grow, flourish and integrate,” he said.
He outlined two other challenges: How the US and China relate to each other, as well as the way in which the European Union and Britain will decide on their priorities.
He noted that the way US and China relate to each other will determine the global geopolitical backdrop against which all trade and economies exist.
He highlighted, however, that current trade tensions are but “a symptom that reflects more fundamental contradictions within their economies and societies”.
The US for example, has internal challenges such as redistributing an unequal spread of benefits from globalisation, while China will need to reconcile its state-led capitalism with the need for market discipline, among other issues.
As the US and China come to a crossroads, they will need to “seriously consider how they manage their domestic challenges” in order to bring bilateral relations to a positive footing, he said, adding that a failure to address internal challenges can lead to local backlash and global consequences.
Turning to Europe, Mr Chan said that while a lot of attention has been put on Brexit, a more important question is what role the EU and Britain wish to play on the global stage in the future – and whether this is one of integration or isolation.
He expressed hope that the EU-Singapore free trade agreement (FTA) will be approved by European Parliament, saying: “We hope that we will never lose sight of the fact that these FTAs, IPAs (Investment Protection Agreements) are not just about lowering barriers to trade but, more significantly, about the EU’s statement to the rest of the world on how it wants to integrate and connect.”
The Asia House conference, which was previously held in Hong Kong and Dubai, sees leading figures in global trade and investment discuss emerging trends in the trading landscape.
Thursday’s event involves three panel discussions, on the shifting trade landscape, creating a digital ecosystem, and the politics of China’s Belt and Road Initiative respectively.
Chief economist of the WTO Robert Koopman, director-general of the multilateral trade policy development of the ministry of commerce of Vietnam Luong Huong Thai and Economic Development Board assistant managing director Kiren Kumar are among panellists at the event.
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