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Singapore's trade strategy to serve it well into 21st century
SINGAPORE'S trade strategy has evolved over the last three decades and it is well positioned to stay relevant to the business realities of the 21st century.
"When we started negotiating free trade agreements (FTAs) in the 1990s, bilateral agreements were not considered orthodox," said Luke Goh, the Deputy Secretary for Trade at the Ministry of Trade and Industry.
Mr Goh, who is responsible for Singapore's trade and external economic relations, noted that Singapore was one of the first countries in the world to pursue bilateral FTAs, at a time when this was not in vogue.
"At that time, some questioned if FTAs would undermine free trade embodied by the World Trade Organization as the FTA commitments applied only to signatories, rather than a more general liberalisation and opening up of markets. We took the view that FTAs complemented rather than detracted from multilateralism," he added.
Giving his take, Singapore Tourism Board chief executive Keith Tan made the point that the Republic's trade strategy is premised on the fundamental principle that free trade undergirds the country's economic growth and prosperity.
"As a small and open economy, it is manifestly in our interest to ensure an open and rules-based international trading environment for goods and services to flow freely," he said.
Free trade supporter
This is why Singapore is a firm supporter of the multilateral trading system centred on the WTO, where it actively participates in efforts to formulate rules to promote free trade.
These rules, said Mr Tan, ensure a level-playing field for all economies, big or small, and promote deeper integration between trade partners.
With the world moving into an increasingly digital future, Mr Tan, who was Singapore's chief negotiator for the European Union-Singapore FTA (EUSFTA) from 2010 to 2013, said that MTI has worked on ambitious new agreements to bring value to Singapore companies and the community.
He cited two examples - the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and Singapore's Digital Economy Agreements (DEAs) - that have helped set rules and standards for new areas such as e-commerce and cross-border data flows.
"These rules reflect the realities of doing business in a digitally-enabled world. We are confident that they will facilitate and attract research and development activities, grow innovative businesses and create high-value employment opportunities," said Mr Tan.
Looking ahead, Mr Goh noted that multilateral negotiations will remain the foundation for global free trade.
"With FTAs, we can more quickly seek out new areas and aspire towards higher standards with like-minded and willing members. Singapore's FTAs have served as high-standard pathfinders and building blocks for larger plurilateral and regional agreements," he said.
Mr Goh cited the EUSFTA as being a "good example" of a high-standard, pathfinder FTA that serves as a building block towards an eventual FTA between the EU and ASEAN.
"Agreements like the EUSFTA engender confidence and a greater understanding of the benefits, and make it easier for other countries to join in to jointly develop plurilateral networks," he said.
The two officials were also asked about their biggest takeaways from the extremely lengthy and complex negotiation process to bring the EUSFTA to fruition.
Mr Goh said the EUSFTA's negotiations and ratification process stood out among all of Singapore's other FTA negotiations, largely due to the EU's unique structure.
"As a country which imports virtually everything that we need including raw materials, Singapore's stakeholders, businesses and citizens generally understand the importance of open trade and its benefits," he said.
This, however, was not always the case in Europe with its large common market where some constituents felt that certain sectors were better off without having to compete with foreign imports, he said.
"We were fortunate that in areas such as agriculture and automobiles, which tend to be highly sensitive in most countries' negotiations, Singapore is not a net exporter and does not tend to generate resistance," said Mr Goh.
Mr Tan recalled how some of the difficulties boiled down to having different mindsets and how different sectors were treated.
"For the EU, maintaining protections for some of their most cherished food and wine products as 'geographical indications' was politically important," he said.
"Singapore does not have that sort of mindset. But we worked hard to understand their thinking, and found ways to accommodate their interests without compromising the interests of consumers in Singapore."
On the flip side, the Europeans - who typically do not have a problem with securing potable water - found it hard to understand why the Singapore government maintained a certain position on the procurement of water.
"We had to educate them on our own history with water and why water has remained an existential issue for Singapore, and hence why we needed certain safeguards that we negotiated in the FTA," said Mr Tan.
With the EUSFTA now a year old with so much more that it can achieve, both officials outlined their visions for the agreement as it continues to grow in stature and importance.
"The basic measure of a good FTA is whether it opens up new business and job opportunities for our companies and workers. Such a boost to Singapore companies' overseas businesses in turn grows local employment and career prospects," said Mr Goh.
"At the same time, we also look to increased investment from EU companies as the FTA reduces trade barriers and encourage companies to internationalise. If the EUSFTA does these for our companies and workers, it would have accomplished what it was designed to do, and I would be very proud of what we have achieved."
Mr Tan expressed his wish that the EUSFTA can remain the "gold standard" for what can be achieved with a "progressive, like-minded and highly engaged" trading partner like the EU.
"I hope it can also remain as a standard for openness and connectivity between Europe and Asia. Finally, I hope that more and more companies will utilise and take full advantage of the EUSFTA, to bring benefits to the economies and consumers of the EU and Singapore," he said.