Each of Singapore’s FTAs a careful judgement call, says PM Lee
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SINGAPORE – Singapore’s free trade agreement (FTA) strategy is not about signing as many deals as possible, but about forging substantive trade pacts that benefit the Republic’s companies, said Prime Minister Lee Hsien Loong on Tuesday (Jan 23).
“We’re not just trying to get as many deals as possible, otherwise we’ll collect up lots of little stamps, and we’ll have an album full and not much to show for it,” Mr Lee told reporters from Singapore, as he wrapped up a three-day official visit to Sri Lanka during which both countries signed an FTA.
Mr Lee was responding to a question on Singapore’s strategy in forging FTAs and whether it should focus on bilateral or multilateral trade deals.
Ideally, it would be best to enter into the World Trade organisation (WTO) type of multilateral trade agreements, where the terms and conditions would apply to all countries involved, said Mr Lee.
“Unfortunately the WTO is not making very good progress, political whims are against it. The United States position is quite sceptical of the WTO, to put it very mildly. And even without the US position, it’s very difficult to make an agreement in the WTO, because they got 160, 170 countries participating now, countries and economies,” said Mr Lee.
“And there is not a sufficient convergence of interests for all 170 to say okay, let’s go ahead. So, for 20 something years now, we’ve not had a good deal in the WTO. Minor steps forward, but no substantive deal.”
Given the situation, and concern among some countries about the lack of progress in trade liberalisation, “different schemes” have emerged, including bilateral and regional FTAs, said Mr Lee.
He noted that the Association of South-east Asian Nations (Asean), for instance, not only has an FTA among its 10 members, but also FTAs with its regional partners.
Singapore also has 13 bilateral FTAs and a string of other regional FTAs.
“So it’s very untidy, but we have to live with its untidiness,” he said.
“In each case we have to judge – is it something hard to do, is it something worth doing, should we put the effort in, and if we do it, will it make a difference to our companies to give us greater access or greater assurance or more security?” he added.
“Just in case the whole big framework falls apart, will I have enough of a safety net to keep me going? And that’s what we’re trying to do, you have to make a judgement in each case.”
Earlier on Tuesday, Mr Lee had witnessed the signing of a bilateral trade agreement between Singapore and Sri Lanka – the first for the South Asian nation – which will allow companies in the two countries greater access into each other’s markets covering sectors such as e-commerce and telecommunications.
Once the FTA comes into force, key benefits will include the elimination or lowering of tariffs that would bring annual savings of about S$10 million to Singapore exporters.
However, leading up to the FTA signing, the Sri Lankan government said that it would table two Bills in Parliament to counter unfair trade practices such as dumping and sudden surges in imports in an attempt to allay some concerns among the country’s companies and business groups that the trade pact could bring about tougher competition.
When asked whether there are concerns that the Bills might cause the Sri Lankan government to make a u-turn on some of the terms of the FTA, Mr Lee said that when Singapore signed and ratified such a deal, it is treated as a binding international agreement.
“In any international agreement, there’s some process during the course of it. There are differences which arise on the interpretation, the implementation,” he noted.
“There are some ways to work out a dispute settlement and I’m sure that must be so in this case as well. We’ve done other trade agreements too and sometimes issues arise and we have to deal with that. So, I don’t expect the Sri Lanka one to be particularly difficult for either side.”
Responding on protectionist pressures faced by the Sri Lanka government, Mr Lee said that in any country, there exists such pressures “to preserve the status quo”.
Saying that it depends on the governments to persuade their people that FTA is a good thing and to move forward with trade liberalisation, Mr Lee added: “It takes political conviction and is not easy to do. Sometimes it moves forward, sometimes it moves backwards.
“And if you look at the policy debates in America now, particularly with this administration, you see the pressures which come up and what consequences can follow.”
Mr Lee’s visit to Sri Lanka is at the invitation of President Maithripala Sirisena.
In their meeting on Tuesday, both leaders discussed strengthening bilateral relations and exchanged views on key regional and international developments.
“They noted the warm friendship between the two countries, including the close historical and cultural ties, and encouraged greater people-to-people linkages,” said a joint statement by the two countries.
The statement added that both leaders also underscored the importance of strengthening trade and investment cooperation, and expressed confidence that the new-inked FTA and increased dialogue between the businesses will further deepen bilateral economic ties.
“Prime Minister Lee thanked President Sirisena for the warm and generous hospitality accorded to him and his delegation during the Official Visit, and extended an invitation to President Sirisena to make a State Visit to Singapore.”
(TODAY Online – Singapore)
