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THE withdrawal of the US from the Trans-Pacific Partnership (TPP) mega free trade deal is a "setback" but it doesn't have to be the ultimate outcome for the global trade liberalising agenda.
Trade Minister Lim Hng Kiang made this point in parliament on Monday as the House discussed the fate of the TPP and the impact on Singapore's economy now that the US is no longer in the picture.
He was responding to questions posed by three members of parliament (MP) - Ang Wei Neng (Jurong GRC), Pritam Singh (Aljunied GRC), and nominated MP Randolph Tan.
Mr Lim made it clear that the TPP agreement - signed by all 12 members in February 2016 after seven long years of negotiations - cannot come into effect in its current form without the US.
Apart from the US, the other TPP nations are Singapore, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Vietnam.
Collectively, they have an annual gross domestic product of nearly US$28 trillion that represents roughly 40 per cent of global GDP and about a third of world trade.
One of US President Donald Trump's first acts after his inauguration on Jan 20 was to sign an executive order to remove the US from the TPP, effectively killing off any hopes of ratifying the deal. The new US administration has indicated it will instead push for bilateral trade agreements in the future.
Article 30.5 of the TPP requires at least six countries, representing 85 per cent of the bloc's combined GDP, to ratify the agreement. The US, the world's largest economy, must be one of the six for this to happen.
With the TPP now in a state of limbo, Mr Lim informed the House of three scenarios that could emerge.
The first is for the remaining 11 members to press on with their respective plans to ratify the agreement, and hope that the US will change its mind and rejoin before the February 2018 ratification deadline.
The second is to pursue bilateral trade deals with one another instead, while the third is to go ahead with a so-called "TPP 11", which would be the original deal but tweaked to exclude the US.
"Each TPP partner will now have to carefully study the new balance of benefits without the US's participation, and consider the value of an agreement among the remaining 11 partners," said Mr Lim.
As far as Singapore is concerned, the impact of not having the TPP at all is not likely to be very significant, given that Singapore already has a bilateral free trade agreement (FTA) with the US in place. It also has FTAs with all the other TPP countries except Canada and Mexico.
"What we forgo are incremental benefits that we would have achieved over and above the benefits that we already have, through bilateral free trade agreements with the other nine of the countries in the TPP group," he said.
Singapore will remain actively engaged in other initiatives that promote regional integration, such as the 16-nation Regional Comprehensive Economic Partnership (RCEP) and the Asean Economic Community (AEC).
Singapore is a member of both the RCEP and AEC. The former is a China-led trade deal that involves all ten Asean members and its six dialogue partners - China, India, Australia, New Zealand, South Korea and Japan.
The minister added that Singapore will also continue to work with like-minded partners at the World Trade Organization as advocates of a rules-based multilateral trading system.
Singapore's existing network of 21 FTAs also speak to the "deep ties" with key trading partners and this will help the country stay connected as the environment evolves.
"We will also actively pursue other forms of economic cooperation initiatives, including industrial parks and other projects in the region, to create more opportunities for our companies to collaborate and grow," said Mr Lim.
Earlier in his speech, he stressed that Singapore's external linkages can make the country more resilient against the growing threat of protectionism, having built up its regional and global connectivity with multiple regions around the world.
"We have also developed an efficient, stable, pro-business environment, with effective and consistent business and investment frameworks. This allows us to tap on the growth opportunities in Asia and elsewhere, for mutual benefit with like-minded partners," Mr Lim said.
"Amid the current rise of anti-trade sentiments, Singapore will stay the course to remain open and connected, to be an attractive global city that welcomes the best companies, talent and investments."