Speech by DPM and Coordinating Minister for National Security, Teo Chee Hean, at the FutureChina Global Forum and Singapore Regional Business Forum on 27 August 2018 at the Ritz Carlton Hotel, Singapore.
“Building a Stronger ASEAN-China Partnership for a more Open, Inter-connected, Peaceful and Prosperous Region”
Mr Lee Yi Shyan, Chairman of Business China,
Mr Teo Siong Seng, Chairman of Singapore Business Federation,
Ladies and Gentlemen,
A great pleasure to see many familiar faces in the audience, and also to welcome our friends from around the world. I am told we have 45 countries represented, so a very warm welcome to all of you.
ASEAN has just turned 50 last year. This year, Singapore is honoured to be ASEAN Chair, and we are glad to host the 50th ASEAN Economic Ministers’ Meeting this week.
Singapore has also coordinated ASEAN-China relations for the past three years. Today’s Forum is timely as we commemorate the 15th Anniversary of the ASEAN-China Strategic Partnership and explore new economic opportunities between ASEAN and China.
But before we do so, it is useful to look at developments over the past year that have shaped the wider regional and global environment, and these have had an impact on ASEAN and China.
On the security front, US President Donald Trump and North Korean Leader Kim Jong Un held a historic summit in Singapore in June. This Summit came after a period of heightened tensions, and has helped to stabilise the situation in the Korean Peninsula. Singapore, like many countries, hopes that there will be lasting peace which will benefit the Koreans and provide a conducive environment for sustained peace and stability in our region. But the road to denuclearisation and peace is not likely to be straightforward, and will require trust, goodwill, and sincerity from all Parties.
On the trade front, concerns are growing over the escalation of trade tensions between the US and China. Rising trade barriers will disrupt value chains and business models, affecting many industries, countries and workers. This must be one of the subjects on the minds of our business people here today.
There are no winners in such trade conflicts. Some sectors or countries could derive gains due to the diversion of trade or industrial production. But these will be short term. In the long term, all countries, including those in ASEAN, will be negatively affected if global trade and economies are disrupted and grow more slowly. If trade conflicts spill over into wider tensions, the implications will be even greater.
As the world remains in flux, I would like to put forward three core principles that can guide us to navigate these global challenges, manage our relations with other countries, and enhance international cooperation.
First, Commitment to an Interconnected Multilateral System.
The world is now too inter-connected for us to retreat into isolationism. We live in an increasingly multi-polar world. Economic output, trade, and the capacity to maintain peace and security are more widely-spread and inter-twined. The problems we need to solve are beyond the ability of any one country to address.
We have to work together. We need to strengthen the multilateral system, improve it where we need to, and not side-line it. This requires all countries to forge global consensus and stay committed to international treaties such as the UN Convention on the Law of the Sea, the Paris Agreement on Climate Change, and the World Trade Organisation Agreements.
Countries also need to find new ways to work together to tackle emerging transnational challenges such as sustainable global development, cyber security, transnational crime, and counter-terrorism.
Second, Commitment to Open and Free Trade.
Over the past seven decades – seventy years since the Second World War - countries have steadily opened up their economies and enjoyed the co-prosperity of free trade. Countries that isolated themselves have fallen behind.
With free trade, developing countries benefitted from access to new markets, and investments which brought technology that created many skilled jobs. Developed countries, on the other hand, found new markets for their products and services, as developing countries prospered and global demand increased. Economies, large and small, were able to make use of their comparative advantages to create jobs, access resources and markets overseas, and expand their economic horizons.
A multilateral trading system has catalysed economic development, uplifted countries and regions, and narrowed economic disparities. This has also reduced the potential for conflict and promoted peace. We need to continue to strengthen the multilateral system and ensure that trade remains free and fair.
Third, Commitment to International Law.
International law helps to provide all countries with a predictable international environment and framework to conduct relations and resolve differences should they arise. This is especially crucial for small countries such as Singapore.
For example, all countries benefit from the multilateral regime for controlling the spread of nuclear weapons, passage rights for international shipping provided for under UNCLOS through international waters and the various maritime zones, and the rights for overflight under ICAO regulations, and the WTO Agreements. Adherence to international law takes us beyond the era where any country can assert its will unilaterally over others.
Commitment to international law is important not just for the conduct of state policy, but also for businesses. Clear rules and norms create a more predictable and conducive environment for companies to make investment decisions and build capabilities for their future.
These three time-tested principles have brought peace and stability, ensured a level-playing field for all countries, and allowed countries to develop and prosper. They are key principles that guide the interactions among countries, and underpin ASEAN’s relationships with all our partners.
Strengthening ASEAN-China Cooperation
How can we navigate the global challenges and strengthen ASEAN-China cooperation? I would like to focus on three key areas, based on these three principles I have just outlined:
First, Strengthening Our Commitment to an Inter-Connected World.
ASEAN and China have always been inter-connected and inter-dependent, due to our geographical proximity and historical ties. Since dialogue relations were established in 1991, we have further broadened and deepened our mutually-beneficial cooperation in many areas, including trade and investment, and people-to-people relations.
Economic cooperation is a key pillar of ASEAN-China ties. China has been ASEAN’s top trading partner for eight consecutive years, while ASEAN was China’s third largest trading partner for the past seven years.1
China was ASEAN’s third largest source of Foreign Direct Investment last year. ASEAN as a whole was also China’s largest source of foreign investment. Notably, Singapore has been China’s largest source of foreign investment since 2013.
Building on these strong linkages, ASEAN and China can further enhance regional integration and connectivity in new areas such as infrastructure for the future and in the emerging digital domain.
According to the Asian Development Bank, ASEAN will need investments of about US$ 210 billion per year till 2030 to meet the needs for modern infrastructure. ASEAN is currently implementing the Master Plan on ASEAN Connectivity 2025 and this presents many investment opportunities for companies.
ASEAN welcomes the involvement of our dialogue partners in our Master Plan. China’s Belt and Road Initiative for instance, can play a significant role. The Kunming-Singapore Rail Link, which aims to link Kunming in China’s Yunnan Province to continental Southeast Asia, with Singapore as its southernmost tip, can further enhance the trade, investment and people-to-people links between ASEAN and China.
Singapore is also working with China to develop the China-Singapore (Chongqing) Connectivity Initiative Southern Transport Corridor (or “CCI-STC”). The CCI-STC is a multi-modal transport corridor which links Chongqing to Guangxi by rail, and from Guangxi to Singapore, Southeast Asia and beyond by sea. And northwards, Chongqing reaches out to places such as Lanzhou in Gansu. This new direct, reliable, secure and shorter link connects the provinces in Western China to the sea, reduces the time to transport goods from Chongqing to Singapore from three weeks to one week, and saves 1300 km compared to traditional routes. Goods from ASEAN can also reach new markets in Western China and Central Asia more quickly using this corridor. The CCI-STC is an open platform and our partners welcome more users to expand this network.
Digital connectivity has gained importance given the ongoing digital and technological revolution.
2018 has been designated the ASEAN-China Year of Innovation. There is strong potential for ASEAN-China cooperation in innovation, including in the areas of Fintech, e-Commerce and Smart Cities.
As ASEAN Chair this year, Singapore is working with Member States and our Dialogue Partners to bring together 26 ASEAN cities into an ASEAN Smart Cities Network. I encourage Chinese and ASEAN-based companies to reach out to these 26 pilot cities to discuss potential collaboration, and deploy digital solutions in multiple smart cities across ASEAN.
Second, Reaffirming our Commitment to Open and Free Trade.
ASEAN and China are strong advocates of an open and inclusive trading system. In 2002, China became our first dialogue partner to conclude an FTA with ASEAN. The ASEAN-China Free Trade Area (or “ACFTA”) covers an economic region of 2 billion consumers, and is the largest FTA in the world in terms of population.
ASEAN and China are now working to upgrade the ACFTA, which will provide improved preferential access in services and investment. The Upgrade will help businesses save costs, reduce administrative requirements and build capabilities in new areas such as e-Commerce.
ASEAN and China are also working closely together with our partners to achieve substantial conclusion of the Regional Comprehensive Economic Partnership (or “RCEP”) negotiations.
The RCEP is an unprecedented opportunity. It strives to bring together six existing FTA partners of ASEAN, including the three biggest economies in Asia – China, India and Japan, into a single comprehensive agreement. Together, the 16 RCEP Parties account for almost half of the world population, and more than 30% of global output in 2016. The RCEP has immense potential to support job generation, drive sustainable growth and improve living standards of our people.
The 11-member Comprehensive and Progressive Trans-Pacific Partnership, or “CPTPP” includes four ASEAN countries and four ASEAN Dialogue Partners2. This is the largest regional trade agreement to date3 in terms of GDP, and brings both sides of the Asia-Pacific together. We welcome the early entry into force of this high-quality agreement which provides a common set of enforceable rules to enhance trade and investments in our region.4
When in force, the ACFTA, the RCEP, and the CPTPP will send a strong message of our region’s commitment to trade liberalisation and growing the rules-based trade architecture. These agreements are also key building blocks to an eventual Free Trade Area of the Asia-Pacific.
Third, Upholding Our Commitment to a Rules-Based International Order.
ASEAN and China have both declared our commitment to international law and upholding a rules-based framework.
ASEAN is now working towards harmonising our trade and investment laws to achieve a fully-integrated ASEAN Economic Community. Besides strengthening ASEAN as a rules-based organisation, this will boost investor confidence and increase ASEAN’s attractiveness as an investment destination. Should differences in commercial contracts arise, there are also commercial dispute resolution mechanisms5 which ASEAN and our Dialogue Partners can use to bring projects back on track.
At the regional level, the constructive management of the South China Sea issue has contributed to a positive trajectory in ASEAN-China relations. Singapore is not a claimant state, and we do not take sides on the merits of the respective territorial claims. However, we do have an interest in the freedom of navigation and overflight, peace and stability in the region, and peaceful resolution of disputes in accordance with international law, including UNCLOS.
Singapore has worked closely with China and our ASEAN partners in our capacity as coordinator for ASEAN-China relations over the past three years. In 2016, ASEAN and China adopted a Code for Unplanned Encounters at Sea in the South China Sea. We have also recently agreed on a Single Draft Negotiating Text, as the basis for future negotiations on the Code of Conduct in the SCS. This is a significant milestone and demonstrates China’s and ASEAN’s commitment to resolve differences in an amicable and peaceful manner. This will strengthen ASEAN-China relations, and help create the right conditions for continued growth in ASEAN-China cooperation.
But there is still a lot of work to reach the eventual Code of Conduct. Meanwhile, all parties must strive to enhance mutual trust and confidence, strengthen practical cooperation, and refrain from actions that could undermine the process as well as peace and stability in our region.
ASEAN and China are looking forward to do more together. At the upcoming 21st ASEAN-China Summit in November later this year, our Leaders will adopt the ASEAN-China Strategic Partnership 2030 statement, which will chart a broad and comprehensive guide for ASEAN-China cooperation into the future.
Ladies and Gentlemen, ASEAN and China now have an opportunity to build on our strong partnership to take our relations to the next level. We need to strengthen our commitment to integration and connectivity, reaffirm our commitment to open and free trade, and uphold our commitment to a rules-based international order.
Over the next few days, I encourage everyone to make full use of the many opportunities to network and forge new partnerships.
I thank Business China and the Singapore Business Federation for jointly organising this Forum, and our speakers, agencies and companies, and all of you present today, for your strong support and participation. I wish you a fruitful and productive Forum. Thank you very much.
. . . . .
 The total trade volume between ASEAN and China was USD 436.8 billion in 2017. Total merchandise trade accounted for 17.1 per cent of ASEAN’s total trade in 2017.
 The four ASEAN countries in the CPTPP are Brunei, Malaysia, Singapore and Vietnam. The four ASEAN Dialogue Partners in the CPTPP are Australia, Canada, Japan and New Zealand. The other three members of the CPTPP are Chile, Mexico and Peru.
 Collectively, the 11 countries represent 13.5% of global GDP, US$10 trillion of world trade and comprise a population of 500 million.
 These include rules in the areas of e-Commerce, innovative industries, and provisions to help small and medium-sized enterprises.
 ASEAN’s internal agreements can be settled in accordance with the 2004 Enhanced Dispute Settlement Mechanism, while ASEAN’s external agreements with Dialogue Partners each have their own Dispute Settlement Mechanisms. Disputes that do not concern any ASEAN instrument are to be resolved in accordance with the 1976 Treaty on Amity and Cooperation in Southeast Asia, or the TAC. China was the first Dialogue Partner to accede to the TAC in 2003.
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