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Singapore must watch for winners and losers in the pursuit of free trade: Heng
SINGAPORE needs to be conscious of how free trade can sieve out winners and losers, and ensure that people are not left behind amid the pursuit of free trade, said Minister for Finance Heng Swee Keat.
Speaking at the Asean Conference on Thursday, Mr Heng was commenting on the impact of trade wars, amid simmering trade tensions between major trade partners that include the US and China.
"Free trade will give us a bigger piece of cake, but some people may end up with nothing to eat even though the cake is bigger," said Mr Heng.
"If you look at the reactions in many parts of the world, where people are against free trade, it is that the losers felt very aggrieved that the system has not served them well. This is something which all countries, including Singapore, must be very conscious of, and we have to ensure that our people benefit from free trade, because it (creates) a far bigger pie than if we were to close our economy."
But this means countries around the world would need to restructure their economies. Mr Heng recalled that when China became a member of the World Trade Organization, the country emphasised both reform and liberalisation. "I think that encapsulates many of the things that we need to do. When we open up, we have to reform," said Mr Heng.
"Every country must want to improve its economy, and must want to create a better standard of living for their people. When all the economies are doing that, the pressure to change will be very significant."
Mr Heng said trade friction escalating to a trade war will ultimately be very disruptive to the global economy, and "self-defeating".
"It is serious if it escalates further ... You have the immediate consequences of trade wars, and more seriously in the long-term, we undermine this multilateral framework. The multilateral framework has been put together over many years to ensure that we have rule-based systems for which countries big and small will participate in the global economy, and bring benefits to our people," said Mr Heng.
"I hope that good sense will prevail ... the lesson we need to take out of it is that we must not take for granted that everyone will benefit from trade, and we must put in our best effort to help."