DPM Gan Kim Yong at the 30th Nikkei International Forum on the Future of Asia

Good morning, ladies and gentlemen. First, let me thank Nikkei for inviting me to this Forum. When I addressed this Forum last year, I spoke about the uncertainties in the world order. Today, these uncertainties have indeed deepened significantly, amidst a more volatile, more arbitrary, more protectionist global environment.

Undoubtedly, the greatest uncertainty confronting us today is what will happen at the end of the 90-day pause on the US’ ‘reciprocal tariffs’.

This is not only holding businesses back from making important decisions on long-term plans, but also discouraging them from near-term hiring and investing.

The pullback in economic activity will weaken global growth, and we cannot rule out the possibility of a recession.

This is why Singapore has set up a tripartite taskforce comprising the Singapore Government, the employers and unions, so that we can strengthen our collective sensemaking of these changes in the macro environment, mitigate the immediate impact on businesses and workers, and support them to develop new capabilities, new markets and new supply chains in the longer term.

Beyond the economic fallout, Asia will also have to confront three fundamental challenges.

First, how can Asia maintain strategic autonomy amidst intensifying US-China contestation?The US-China relationship is one of the most consequential in the world. While we welcome the de-escalation of brinksmanship between the US and China for 90 days, both sides will still have a long way to go to resolve their long list of outstanding issues, including market access for US firms, heavy state subsidies for Chinese firms and non-tariff barriers that US exports face.

Without an enduring resolution on these issues, there is always the risk that the tensions between the US and China will escalate again, and spread beyond trade to other areas, such as investments, supply chains and critical technology.

While both powers claim that they do not wish to force countries to take sides, each seeks to draw others closer to their respective orbits. This affects many countries in Asia, who have deep trade and investment relationships with both powers. It is important therefore that we continue to maintain our strategic autonomy, and act in a principled and consistent way on the basis of our own national interests.

Second, how can we preserve the rules-based, multilateral trading system that underpins Asia’s economic growth and development?

For small and medium-sized economies in Asia that are trade-dependent, the centricity of a rules-based, multilateral trading order – based on predictable tariff terms with clear and shared frameworks for non-tariff measures – is critically important.

In particular, the ‘most favoured nation’ (MFN) principle underpinning the WTO, safeguards a level playing field for economies big and small.

If members decide to trade only on their own terms, and impose tariffs as and when they wish, larger economies will always possess stronger levers. And on the other hand, smaller economies that have less bargaining power risk being marginalised and left behind.

This is why recent moves by some countries to impose and remove tariffs at will are concerning.

WTO Director-General Ngozi had also urged members negotiating with the US bilaterally to aim to be as WTO-consistent as possible, especially with regard to the MFN rules.

Amidst a potential weakening of the multilateral trading system, we must do all we can to reinforce a shared rules-based order, so that global trade can continue to be conducted on free, fair and non-discriminatory basis.

The third question, is how do we address global threats and protect the global commons?

Climate change, for example, is one such clear, existential challenge.

Asia is at the epicentre of the battle against climate change.

If global temperatures continue to rise at the current rate, the Asian Development Bank estimates that Asia could see losses of up to 40% of its GDP by the year 2100.

By 2030, three quarters of Southeast Asian cities could face regular flooding, potentially displacing tens of millions of people. Extreme weather will disrupt food supplies and unleash public health crises.

There is urgency to galvanise global action not only for climate mitigation measures, but also to accelerate the green transition.

It is therefore disconcerting that the collective commitment to treaties, such as the UN Framework Convention on Climate Change and the Paris Agreement, are waning.

Similarly, if the commitment to international institutions such as the WTO, WHO, IMF and the World Bank weakens, it will also impair our ability to address other global issues, such as global pandemics as well as financial crises.

These challenges I have outlined underscore the importance for Asia to find common cause, strengthen our mutual collaboration, so that we can mount a united, collective response. Let me share three ways we can do this:

First, form agile partnerships with like-minded partners;

Second, double down on regional integration; and

Third, press ahead with reforms of global institutions, and in particular, the WTO.

First, we must come together to form agile partnerships that will allow like-minded nations to cooperate and move ahead.

I had spoken on the importance of such partnerships last year, and highlighted the significance of the WTO Joint Statement Initiative (JSI) on E-commerce.

Japan, Singapore and Australia are co-convenors of the JSI on E-commerce. This JSI currently involves 91 Members that collectively account for over 90% of the global trade.

We had sought to formally incorporate the JSI within the WTO framework earlier this February.

However, we were not successful in doing so; nevertheless, we are exploring options to implement the Agreement in the interim while we continue to push ahead for its incorporation into the WTO framework.

This is one example of “flexible multilateralism”, where we allow like-minded partners to move ahead on important issues of mutual interest, such as e-commerce, while leaving the door open for others to join as and when they are ready.

We can also forge new alliances by building on existing economic groupings and plurilateral agreements.

ASEAN, for example, is exploring how to deepen our economic relations with the Gulf Cooperation Council (GCC), including the possibility of an FTA between ASEAN and the GCC. We should also study how to deepen trade and investment between the GCC and the Regional Comprehensive Economic Partnership (RCEP).

The CPTPP is also exploring initiatives to broaden our economic partnerships with ASEAN and the EU. Such initiatives could take the form of dialogues in the first instance, and expand to potential areas of cooperation such as trade facilitation or supply chain resilience.

These new alliances will facilitate effective and timely collaboration on key trade policies, and signal our commitment to a rules-based trading system.

Second, we must double down on regional integration by further enhancing our trade, as well as digital and physical connectivity.

Against an increasingly fragmented and contested global trade environment, it is comforting that many of us in Asia are party to various bilateral, regional and plurilateral agreements and partnerships.

However, we must not rest on our laurels; instead, we should recognise the challenges of the current turmoil and raise the ambition of each of these mutually reinforcing partnerships.

Within ASEAN, we have just concluded the negotiations on the upgrade of the ASEAN Trade in Goods Agreement (ATIGA) earlier this week.

Besides further liberalisation of tariff lines among ASEAN members, the ATIGA upgrade will also enhance commitments on non-tariff measures, as well as improve facilitation and transparency on areas such as customs practices.

ASEAN is also working with our external partners to upgrade our FTAs with them, and ensure that these FTAs remain relevant and effective.

The ASEAN-Australia-New Zealand FTA Upgrade has recently come into force, and we have also concluded negotiations on the ASEAN-China FTA.

We hope to do the same with Japan by upgrading the ASEAN-Japan Comprehensive Economic Partnership to tap into growth areas, such as the green and digital economy.

Likewise, we are working with our fellow members within the RCEP to explore how to deepen, strengthen and broaden the scope and coverage of the RCEP Agreement.

As the largest free trade area in the world covering about 30% of the world’s GDP, the RCEP offers businesses access to markets in the region and opportunities to strengthen resilience in their supply chains.

In addition to deepening our trade connectivity, there is also potential for Asia to drive deeper digital integration.

This is the purpose of the ASEAN Digital Economy Framework Agreement (DEFA).

By aligning digital rules and standards and promoting inter-operability of digital systems such as digital identities and payment systems, we hope that the DEFA will enhance cross-border digital trade.

This could potentially double the size of the digital economy within Southeast Asia to US$2 trillion by 2030.

Cross-border payment systems and connectivity is one of the key enablers of this digital economy.

Together with some of our ASEAN neighbours, such as Malaysia, Thailand as well as the Philippines, Singapore is now working with India to develop a multilateral real-time payment network under Project Nexus to link multiple domestic fast payment systems at scale.

I hope that more countries in Asia will join us on this Project, so that we can grow it into a global public payments utility connecting ASEAN to the world and the world to ASEAN.

Beyond goods and services, the cross-border flow of electrons is another growth opportunity that Asia can explore together.

We are making plans to develop an integrated ASEAN Power Grid (APG), one of the key enablers of our region’s low-carbon transition. The APG will facilitate the flow of renewable energy across borders and reduce reliance on coal and other fossil fuels.

This will also open up opportunities for the green economy.

In this regard, we welcome the interest and support of the World Bank and Asian Development Bank in mobilising financing to support the APG project.

ASEAN countries have committed to decisively accelerate the realisation of the APG by 2045.

Japan has been a longstanding supporter of ASEAN’s clean energy transition efforts, and I look forward to its continued support, including for the APG, through initiatives such as the ASEAN-Japan Energy Efficiency Partnership, Cleaner Energy Future Initiative for ASEAN, and the Asia Zero Emissions Community.

Third, we must press ahead with reforms of our global institutions, such as the WTO.

The WTO is not perfect, but remains an important foundation on which we can build a better global, rules-based trade architecture.

About three-quarters of global trade today continue to be conducted under the WTO’s MFN rules.

The WTO’s frameworks on Sanitary and Phytosanitary measures, Technical Barriers to Trade, and Trade-Related Aspects of Intellectual Property Rights continue to be valuable to all members, including the US.

Therefore, while the system is not perfect, we must not abandon it. Instead, we should reform it and make it better.

It is in Asia’s interest to step forward and work with other like-minded partners to modernise the WTO.

I mentioned earlier about the JSI on E-Commerce. We need to enable such plurilateral agreements to move forward within the WTO framework. Such flexible modalities allow WTO rules to keep up with the dynamic global trading environment and stay relevant.

We also need to reform the existing consensus-based decision-making process, so that it is deployed responsibly and does not end up a recipe for gridlock.

We must also update the WTO rulebook to address issues such as state subsidies and industrial policies, as well as to respond to the emerging challenges of the digital revolution and the fight against climate change.

This way, we can ensure the WTO remains effective and relevant, and serve as the bedrock of the global rules-based, multilateral trading order.

Between Singapore and Japan, we can leverage our like-mindedness, our convergence of strategic outlook, and our many existing and new platforms for cooperation, to advance our common agenda of strengthening and reforming the multilateral institutions.

Next year, Singapore and Japan will commemorate our 60th year of diplomatic links.

We should take this opportunity to explore new areas of collaboration, such as digital trade, supply chain resilience as well as green technology.

Beyond economics, we also welcome Japan to play a bigger role in regional peace and stability in Southeast Asia. Singapore stands ready to work with Japan as a trusted and reliable partner, and we hope to step up our economic and security cooperation in time to come.

Ladies and gentlemen, against the challenges of maintaining strategic autonomy, preserving the rules-based, multilateral trading order, and protecting the global commons, Asia must come together to forge new alliances, deepen regional integration and build a stronger WTO.

Let us work together to create a future that is open, inclusive, and prosperous for all of us.

Thank you very much. 

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