TALKS ON GENERAL AGREEMENT ON TARIFFS AND TRADE

Mr Chia Shi Teck asked the Minister for Trade and Industry (a) what are the probable negative consequences for Singapore if the talks on the General Agreement on Tariffs and Trade fail to reach a successful conclusion on l5th December l993; and (b) what are the Government's contingency plans.

The Minister for Trade and Industry (Mr S. Dhanabalan): Mr Speaker, Sir, the Uruguay Round negotiations are not going smoothly. As the deadline of 15th December approaches, there is a special effort underway to resolve the more contentious points. It is therefore likely that the major players will come to some compromise at the last minute. The compromise may result in a smaller package than what is presently being negotiated. A smaller package is better than a complete failure provided that the areas that are excised from the final agreement do not tilt the balance of interests between the developed and developing countries.

Sir, it s not possible to predict with certainty the outcome of a failure. Certain dangers are clear. The present GATT regime has been eroded by protective measures taken by countries such as arbitrary Anti-Dumping measures, voluntary export restraints, and other unilateral actions. Failure to conclude the Round is likely to accelerate this trend and protectionist sentiments may become dominant in countries which are having difficulty competing against imports. Protectionist measures taken by one country may lead to counter protectionist measures by others. Free trade would come under strong threat, negating the achievements made by GATT in the past decades.

A spiralling series of protectionist moves with consequent reduction in international trade cannot go on forever. At some point, countries will realise, after paying the price, that a multi-lateral trading system with free flow of goods and services is the only option for economic growth. While we await such a change, we must continue to be nimble, adapt to new circumstances, and use our resources to make ourselves more competitive. We must seek new opportunities and niches in a more protectionist regional and international market.

To the extent that we can, we should work with countries that have a common interest, to come together and form economic groupings targeted at trade liberalisation. We have started this process within ASEAN under the AFTA Scheme. Economic linkages in groupings like APEC are also growing in significance. We should continue to explore various forms of tie-ups and linkages to expand business opportunities when the time is right. Such groupings cannot replace a global trading system like GATT. But they can give us some respite until we move to an open global free trade system.

In essence, we will continue to maintain our free trade policy and encourage our neighbours to do so. We shall continue to introduce policies and invest in those areas that will keep Singapore competitive. We will also join economic groupings that aim at promoting free flow of trade and investment.

Mr Chia Shi Teck (Nominated Member): Sir, because we are a free port, ie, we practise free trade, is it difficult for us to negotiate bilateral arrangements as we have nothing more to offer when protectionist blocs start coming up?

Mr Dhanabalan: Sir, even if we have a series of duties, our market is not that significant that we can expect to negotiate substantial benefits for ourselves on a bilateral basis. But I think we must concentrate on working with countries which do realise the advantage of a free global system and try and help them in GATT, or if GATT fails, in other negotiations, to come together to create a more liberal system.

Sir, it is a bit too early to talk and elaborate on what will happen if GATT fails because there are fairly good indications that it will succeed. As I said, it might be a smaller package than originally envisaged, but still it is better than a complete failure.