Asia will remain a “beacon of growth opportunities” despite escalating global trade tensions, according to Singapore’s Deputy Prime Minister Gan Kim Yong.
“Even if some of us in Asia may not be directly affected, the impact of rising tariffs and trade wars could cause major disruptions to supply chains, slow down trade and investment flows and significantly set back the growth of global economy,” Gan said at CNBC’s CONVERGE LIVE in Singapore on Wednesday.
He added “many of us in Asia watched with anxiety President Donald Trump’s tariffs on the U.S.’ three largest trading partners, and its plans for more, including reciprocal tariffs to match the duties on U.S. exports.”
The U.S. recently imposed a 25% tariff on all goods from Canada and Mexico — only to exempt some of them days later, along with an accumulative 20% levy on all Chinese goods in less than two months.
Globally, Trump was expected to introduce a 25% tariff on steel and aluminum products, effective from Wednesday.
Gan’s speech comes after the U.S. increased tariffs, then reversed course on Canada’s steel and aluminum exports early Wednesday, following Ontario’s reversal of reciprocal energy tariffs on the U.S. today.
The deputy prime minister said that there is “good reason” to remain optimistic on Asia, pointing out that Asia’s economy is projected to expand from around 50% of the world’s GDP today to about 60% by 2030.
Southeast Asia, where Singapore is located, is projected to become the fourth largest economy in the world by 2030 too, he noted.
Free trade in Asia
Asia then, must be positioned as an “open, integrated and innovative area for trade.”
Gan noted that Southeast Asia has the ASEAN Trade in Goods Agreement, or ATIGA, which has been effective since 2010.
He pointed out the agreement has seen six of the 10 ASEAN members, including Singapore, eliminating import duties on almost all tariff lines, and the remaining four have reduced their import duties to between 0% and 5% on about 99% of their tariff lines.
Gan also said the ATIGA is in the process of being upgraded to reduce barriers, incorporate sustainable trade processes and address new aspects of trade, such as the digital and green economy, as well as supply chain resilience.
“Singapore is deeply vested and invested in the growth of Asia. We believe that Singapore will do well when our region does well.”
Gan Kim Yong
Singapore Deputy Prime Minister
“This will not only boost intra-ASEAN trade, but also help businesses build stronger supply chains within ASEAN, to mitigate the risks from external shocks and protectionist measures,” he added.
For the wider Asian region, Gan said there are also other trade agreements in place, such as ASEAN establishing six ASEAN Plus Free Trade Area agreements, including with Australia, New Zealand, China and India.
This is also in addition to the Regional Comprehensive Economic Partnership, which Gan described as the “largest free trade agreement in the world.” The RCEP consists of the 10 ASEAN countries, as well as Australia, Japan, South Korea, China and New Zealand.
Gan highlighted that on average, tariffs on 92% of products have been eliminated within the RCEP.
“Taken together, these overlapping agreements, whether ATIGA, ASEAN Plus or RCEP, reflect our collective commitment to uphold an open, inclusive and rules-based multilateral trading system,” he said.
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