WEF2020: Remarks by PM Lee Hsien Loong during Leading a New Multilateralism dialogue

Roula Khalaf (Editor, The Financial Times): Singapore has found itself in the middle. How have you navigated the conflicting pressures?

PM Lee Hsien Loong:  First of all, we have to maintain support for open policy within Singapore because if you do not have support within the Singapore population then you may have principles and ideas but it cannot work. We have got to get Singaporeans to understand that and an open system where everybody plays by the same rules of the game and we subject ourselves to the same rules. It is a great help to a small country like Singapore because without that, if I am arm wrestling one on one, Singapore versus whoever the other side is, chances are the other party is bigger than us. That is item number one.

Item number two – we work very hard to support the WTO, it is not an easy organisation to make to function well but we do our part to try and move it along in places where we can make progress. For example, when you are talking about electronic trading, there is a Joint Statement Initiative (JSI) on e-trading, which is currently being negotiated amongst willing parties, that means not all the members but a good number of them. We hope that we can nudge this forward.

Thirdly, we work together with regional groupings starting with ASEAN, which is in Southeast Asia to promote closer economic integration amongst them. Because free trade in general with the whole world, you need that, but within the region you have some more identifiable shared interests. We can work together on that and we work intensively within ASEAN – 10 members – and gradually we make progress. It is not easy. We are not as ambitious as the EU has been, but we are making some modest progress.

Then we look for new groupings. We pursued the TPP, nearly got to the finish line then America said he did not want to join so the rest of us proceeded. We became the Comprehensive and Progressive TPP, and it now exists and is not a bad thing. It covers a substantial number of economies, developed and developing, including Singapore, Japan, Latin American and Australasian countries. I think that is a plus. We are now talking about an Asian grouping – RCEP – which is supposed to include, China, Japan, Korea, as well as ASEAN countries and originally also India. But India, as Sunil (Chairman, Bharti Enterprises) will know, at the last meeting said they think this one does not meet their interests and their political support levels and they will not be able to participate, although we are still hopefully that they will come in one day.

Khalaf: There has been an impact from the trade war on Singapore.

PM Lee:  Our exports are down, confidence in the region is down. Our growth last year was less than one per cent and it is partly because of this Sturm und Drang and atmospherics in the world economy and the uncertainty and doubt on which way we are going. Are we heading in the right direction? Will there be further big bumps in the night? I think that is holding back business confidence and investments, it is bound to. If I was a businessman, I would be very watchful too.

Khalaf:  Absolutely and you started off by talking about how do you protect yourself domestically. Is there anything that you are doing differently? Is the focus on developing a more vibrant tech sector, for instance, a direct consequence of the trade war?

PM Lee:  We are doing two things. One, on one hand, we want to be in the areas where things are growing, like tech, and where in an uncertain world, if you have a capability, despite the uncertainties, people will find that they want to do business with you and put their business in Singapore. We are promoting tech, we are promoting the start-ups. We have the established tech companies do more things in Singapore. The FANGs, for example, they are mostly in Singapore and they are setting up engineering teams, they are setting up data centres, and their networks are based in Singapore. That is one big part of it.

But the other part of it is to help the sections of the economy, who are not doing so well out of globalisation, cope with this environment. That means both companies, as well as people. Workers who are uncertain about their jobs, about their futures about employability, you may say, on average, your chances of being retrenched are not very high but they only have to read one story of a hundred people retrenched and few hundred thousand (people) can be very agitated by this. We have to develop the support scheme so that we will give you the training, we will help you have the employability skills, and if you do lose a job, to help you transition into a new job, possibly in a different career altogether. We put a lot of emphasis on this. We call it SkillsFuture. It is a catchy title but it is a lot of hard work.

Khalaf:  Reskilling.

PM Lee:  Reskilling and upgrading existing skills because even if you are in the same job, let us say you are a coder. What you learn five years ago, is already five years out of date. The young person graduating from school today know certain things, which you do not. Unless you learn it pretty soon, he or she may take your job. That becomes not just a problem for you but on a scale, it is a social and political problem.

Khalaf:  Prime Minister, I want to come back to you. Part of what is new in the global system is the need to address the climate emergency. I think there was a turning point over the past year. You have described it as one of the gravest challenges facing humankind but how does a global system under so much strain, fight such an existential threat?

PM Lee:  That is a problem because it is existential and yet it slow. The frog is being boiled very, very gradually and politicians elected by this generation, answerable for this generation’s welfare and prosperity, have to explain to people that we have to do certain things and make very drastic adjustments so that our grandchildren will have a future. It is a powerful argument but it is an abstract. It is very difficult to do that just talking about the science of it. You want to bring it down to terms that people can understand, related it to things that are happening, whether it is bushfires, hurricanes, floods, and things that we can do to change our lives, habits and customs – use less electricity, travel less, maybe fly around less, and when you do fly, do so less extravagantly and make a difference, and cumulatively, make enough of a difference to head off a disaster.

It is not easy to do internationally, even on a national basis, it is a challenge. But in Singapore, what we have tried to do, is to bring it down to what is most immediate to us, which is that we are a small island, low-lying. If sea levels rise one or two meters, we are not quite going to be underwater but we are going to be quite close to the water.

Khalaf:  People get it.

PM Lee:  I think people understand that. I showed them a map showing the parts of Singapore which are going to be very close to the water line, and people looked at the red inundation very carefully. But it was not a joke. It was a serious message because it means that I have got to spend money consistently, significant sums over already long period of time, and I can make a difference for Singapore.

But to do that internationally, I think that needs statesmanship and cooperation.

Khalaf:  In terms of trade, at least, I do not see how that translates into solutions at the WTO or the Americans filling the jobs that are not being filled?

PM Lee:  If businesses took an enlightened view of their future, and lobbied their own governments for freer trade policies, I think that would make a transformative difference. But very often, businesses play up the market but do not disturb my industry, and that does not add up to the right pressures on the government.

Khalaf:  Do we have any American CEOs in the audience?

PM Lee:  I think the configuration has changed because we started off after the war with US having a very big chunk of the world’s GDP, 40 per cent or more, and now they are down to 20 (per cent), probably less. There is no other country, which is that big share of the GDP, so the configuration is inherently a more balanced one. If you are going to have leadership, there has to be a certain consensus worked up amongst the major players as to how they are going to make the system work in everybody's interest. G7 started off with that kind of an objective, then it became the G20 after the financial crisis. G20, actually, is about 30 something members, plus other guests so it is even more than that. But the key few would be the US, China, European Union, perhaps Japan and perhaps one or two others. I would say, ideally, including the other economies, which are big, but are not yet major participants in the multilateral system, like India, South Africa, Brazil, and to be able to collectively work out an accommodation for their future. It is very hard to do, every one of these countries has their own domestic political concerns. If you think that the US is not doing the right thing, because the US administration has the wrong policy and it changes, it may be the next government may be elected with similar values and reflecting similar pressures. So you still have to deal with those political pressures, but at least in such a group, you have a finite number of participants. Whereas in WTO, of you bring everybody together – 164 countries – and if I work on the basis of consensus of 164 countries, it takes a very, very long time and cannot be done.

Khalaf:  The Canadians have been talking about the idea of the coalition of willing…

PM Lee:  I suppose the idea of the Joint Statement Initiative (JSI), which WTO has been doing, is along these lines. Not everybody joins in, but good number do, and let us proceed on that basis. Then you make some rules to deal with those who did not join it. Either they are not important enough and you are prepared to MFN (most-favoured-nation) and give them the benefits, or you cannot afford free riders and you say, “If you are in this circle, you participate. If you are not, then you are friends without benefits.” It is not ideal, but that is the way forward because even before this US administration, the Doha Round started in 2001 after 9/11 – it is 19 years and it has not come to a conclusion.

So in the multinational system, the difficulties have been there for some time. We have not worked out the right mechanism to reflect a new balance in a global economy as Sunil says. New participants are now being a bigger part of the economy, but not a commensurate influence. I would say we speak candidly, not the commensurate change in their mindsets to participate in the international system, with a view towards making the whole system prosper, as opposed to just what are my traditional interests and how do I safeguard them.

Khalaf:  Do you think that there is enough connection with the EU because the EU is setting standards for instance. I just do not hear as much from Asian economies in terms of just connecting more to the EU because that is in many ways, a way forward.

PM Lee:  The connection is very important, the volume of trade is very significant. I think the EU does have ambitions to make its rules apply to the world, such as the GDPR. I am not sure the world is ready to be domesticated to EU rules but you have a role to play in contributing to intellectual debate and to solving the problem. But I do not think that the world will become like the EU.

Khalaf:  What is wrong with the EU?

PM Lee:  It is very good, it is just very difficult to make it happen.