ECONOMIC DOWNTURN (Hostile trading environment)

Mr J.B. Jeyaretnam asked the Acting Minister for Trade and Industry if he will elaborate on the "increasingly hostile trading environment" which he is reported to have listed as one of the reasons for Singapore's economic downturn in his talk in London at the end of January 1986.

The Acting Minister for Trade and Industry (BG Lee Hsien Loong): Mr Speaker, Sir, between 1975 and 1984, Singapore's total exports grew, on average, 15% per year. In 1985, however, exports fell by 2.3%. Given the critical role of exports in our economic growth - they are 1r times our GDP - this decline has undoubtedly contributed to Singapore's economic downturn.

Our exports have been affected by the increasingly hostile trading environment. Protectionist sentiments in the developed countries, especially the United States, are growing stronger, and protectionist measures are becoming more prevalent. The US Congress is considering more than 300 trade bills, aimed at restricting international trade and protecting domestic industries. One of these, the Jenkins Bill, sought to limit imports of textiles. It was actually passed by Congress. The President fortunately has vetoed the bill, but Congress may still try to override the veto.

Meanwhile, the US is already using existing legislation to restrict imports. Singapore exporters have been harassed by a number of anti-dumping actions and countervailing duty (CVD) actions. CVD action has been taken against exports of textiles, refrigerator compressors, and steel wire rods to the United States. Australia also has pursued anti-dumping cases against our exports of steel tubes, filing cabinets, even correcting fluids and organic dyes. Usually the allegations of unfair trade practices are disproved, and we are proven innocent. But meanwhile our exports are disrupted, and our traders lose their market share.

Our exports are also subjected to other limitations, such as quota restrictions on exports of refrigerators and television sets, and non-tariff barriers like regulations on packaging, health, safety and environmental protection.

In addition, our exports have also been affected by the developed countries' withdrawal of GSP benefits from Singapore. In 1985, for example, New Zealand graduated Singapore from its GSP scheme. The US has also removed GSP status from some of our products, whose exports have reached a certain ceiling. If Singapore is deprived of GSP benefits, it will affect at least 30% of our non-oil domestic exports.

The effect of these protectionist measures goes way beyond the products which are directly affected. They have created an environment where preserving existing exports is already difficult, and promoting new exports is even tougher. The measures have also led to MNCs shifting their investments away from Singapore, and towards the developed countries, where markets are protected. There is therefore no doubt that the international trading environment has become inhospitable and will grow increasingly hostile.

Mr Jeyaretnam: Mr Speaker, Sir, the Minister has pinpointed two countries - the United States and Australia. May I ask him whether the countries within ASEAN, our neighbours, have implemented measures that adversely affect our exports?

BG Lee Hsien Loong: Mr Speaker, Sir, I did not pinpoint two countries. I cited two examples of countries which have discriminated against our exports. Many others in Europe have also done so, and I think Members who have been following the press will remember that we have had some trade difficulties with Malaysia last year.

Mr Jeyaretnam: Would the Acting Minister say whether any representations have been made by the Government to these governments in ASEAN which have taken measures against our exports?

BG Lee Hsien Loong: Mr Speaker, Sir, the Member for Anson is zealous for our interest, for once. Of course, representations are made. Last year we took up a case with the Malaysian government because we considered an action which they had implemented to be outside the rules of GATT. As a result, the Malaysian government amended their rules. Should subsequent actions occur and difficulties arise, which can happen even between the best of neighbours, further appropriate measures will, of course, be implemented by MTI.