A New Era of Global Trade: Challenges and Preparations for Singapore
The world is changing in ways that will disadvantage small, open economies like Singapore. Recent events, particularly in the United States, leave no doubt about this shift.
The End of Rules-Based Globalization
The era of rules-based globalization and free trade is over. We are entering a new phase characterized by arbitrariness, protectionism, and increased danger.
The US Departure from the WTO Framework
For decades, the US championed free trade and led efforts to build a multilateral trading system based on clear rules and norms. The WTO system brought unprecedented stability and prosperity. However, the current US approach signifies an abandonment of this system.
- This is not reform; it is a complete rejection of the WTO framework.
- The new approach of reciprocal tariffs on a country-by-country basis undermines the established global trade structure.
- The US has placed Singapore in the lowest base tier with a tariff of 10%.
Consequences of Protectionist Policies
If other countries adopt the same approach, abandoning the WTO and trading only on their own preferred terms, it will spell trouble for all nations, especially small ones like Singapore.
- We risk being squeezed out, marginalized, and left behind.
- We can also expect a strong global response to America's tariffs.
- The likelihood of a full-blown global trade war is growing.
The impact of higher tariffs and the uncertainty of future actions will weigh heavily on the global economy. International trade and investments will suffer, and global growth will slow. Singapore, heavily reliant on trade, will be particularly affected.
Lessons from the Past
The last time the world experienced something like this was in the 1930s. Trade wars escalated into armed conflict and eventually the Second World War.
Navigating a Dangerous World
Global institutions are getting weaker, and international norms are eroding. More and more countries will act based on narrow self-interest, using force or pressure to get their way.
- We will stay vigilant.
- We will build up our capabilities.
- We will strengthen our network of partnerships with likeminded countries.
We are more ready than many other countries with our reserves, our cohesion, and our resolve.
Preparing for Future Shocks
We must brace ourselves for more shocks to come. The global calm and stability we once knew will not return anytime soon. We cannot expect that the rules that protected small states will still hold.
It is important that we all be mentally prepared and not caught off guard. The risks are real, and the stakes are high.
A Resolute and United Singapore
The road ahead will be harder, but if we stay resolute and united, Singapore will continue to hold its own in this troubled world.
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