'Inward-looking policies' will do great harm: Iswaran on free trade agreements

FREE trade agreements (FTAs) were in the spotlight on Thursday, as 600 business leaders gathered for the Singapore Business Federation's (SBF) FTA Day 2020. The half-day virtual event saw business and government leaders converge on the importance of preserving trade connectivity and resilient supply chains, while advancing in the digital economy.

In a media interview for the event, Minister S Iswaran warned that Singapore's future depends critically on the Republic's response to the challenging economic environment. Mr Iswaran is both the Minister-in-charge of Trade Relations, and the Minister for Communications and Information.

"Retreating into inward-looking policies might give us a short-term sense of righteousness, in the case of some. But in the long term, it will do great harm to the potential for growth opportunities and the raising of living standards for all our people," said Mr Iswaran.

This requires political will, courage and conviction on the part of citizens and governments - especially amid tough economic conditions, when it is more difficult to talk about free trade, he added.

According to the SBF, businesses present at FTA Day 2020 were supportive of preserving trade connectivity to spur recovery and growth. They spoke to Mr Iswaran on the sidelines of the event, urging for Singapore to remain open and connected, said the SBF.

In panel sessions held that morning, business leaders also discussed global trends in trade connectivity, including the disruptive impact of Covid-19 on supply chains, and whether the FTAs in place had prepared Singapore for the immediate impact of border restrictions induced by the pandemic.

"FTAs were not designed for a pandemic," said Jeffrey Tan, head of corporate development and technologies at YCH Group. "When the pandemic hit, we realised that FTAs were a good basis, but they couldn't move goods across the border."

Ng Bee Kim, director-general of trade at the Ministry of Trade and Industry, held a different perspective, and offered an example. "We have an FTA with India. PSA, because of the preferential access in maritime committed by India, was able to establish itself in India and make good connections with the local companies there.

"During the pandemic, because of these strong commercial in-market relations, PSA was able to call on its suppliers. This enabled us to import food and materials for masks in the early months of the pandemic. I think if it weren't for this FTA, we wouldn't have that commercial relationship. FTAs are not just about actual market access, but about how that leads to relationship building, and trust," she added.

Singapore signed the Comprehensive Economic Cooperation Agreement (CECA) with India in 2005, about five years after the Republic's first bilateral FTA was signed with New Zealand in 2000. To date, Singapore has negotiated an extensive network of 25 FTAs, with economies that account for over 85 per cent of global gross domestic product, as cited in official figures.

Over time, the contents of these agreements have shifted to reflect changing business needs. Besides lowering tariff barriers for goods and services, they also include provisions such as for intellectual property rights, e-commerce and data flows. Of particular note are the new digital economy agreements which Singapore has been pursuing in recent years. To date, it has signed such agreements with Chile, New Zealand and Australia, and is in talks with South Korea.

According to Mr Iswaran, Singapore benefits not only from individual FTAs, but from a "network effect" by having a portfolio of diverse FTAs in place, with Singapore as a node.

"That is why we have, at last count, about 900 regional headquarters here. They're here not because of just Singapore and what we have to offer as a market, but also because they see the value of Singapore's connectivity," he said. "That in turn creates new types of job possibilities, because it's no longer just about local jobs, but regional and international jobs," he added.

While FTAs have been around for at least two decades, they can be daunting for some businesses to navigate. Last year, the SBF launched the GlobalConnect@SBF initiative, which offers advisory services for businesses seeking to internationalise. This includes advice on how to interpret and take advantage of FTAs for businesses' chosen markets.

Businesses can also engage FTA consultants with funding support under the Market Readiness Assistance grant, administered by Enterprise Singapore.