Wednesday, 18 November 2020

PM Lee Hsien Loong on Future of Trade at the Bloomberg New Economy Forum 2020

PM Lee hopes US President-elect Biden will build constructive ties with China
This means both countries may compete but ultimately do not want to collide, he says
By Linette Lai, Political Correspondent, The Straits Times, 18 Nov 2020

Asia - and especially China - is an important part of the world for America, said Prime Minister Lee Hsien Loong yesterday, expressing his hope that US President-elect Joe Biden will develop a framework for an overall constructive relationship with Beijing.

This means a relationship in which both powers remain in competition with issues to resolve, but ultimately do not want to collide and will work to develop areas of common interests while constraining the areas of disagreement, he said at the Bloomberg New Economy Forum, which is being held virtually.

Within this framework, topics such as trade, security, climate change, nuclear non-proliferation and the issue of North Korea can be dealt with, he added.

He also expressed the hope that the World Trade Organisation, under the Biden administration, will no longer be "deliberately pushed to one side" in the way it has been under the Trump administration.

Countries may quarrel over many things, but they should try to "insulate" trade because trade disputes hurt all parties involved, he said.

"The more countries avoid doing that, the more it will be credible when they say we believe in multilateral trade, and they believe in win-win development and cooperation with our neighbours."

Asked if President Donald Trump has done "permanent damage" to the way the United States is viewed in the region, PM Lee said there will be some long-term impact on how America is viewed, as well as how it views itself. Although the shift in perspective did not start with Mr Trump, it has become more evident in the last four years, he added.

"When you talk about putting America first and making America great again, it is a more narrow definition of where America's interests lie than has hitherto been the way US administrations have seen things," PM Lee said.

Previous administrations took a broad interest in the region's stability and the well-being of the country's partners, he noted. It tended its alliances, fostering an orderly environment and subjecting itself to the same rules.

"It will take some time for America to come back to such a position, and for others to be convinced that it is taking such a position," PM Lee said. "It may never come back all the way, certainly in the short term and certainly in terms of its relationship with China."

But he also noted Mr Biden knows Chinese President Xi Jinping very well. "That personal engagement at the top is important," he said, when asked how Mr Biden might deal with China on issues like human rights.

Equally important is how each country sees the other and the intentions of the other, he added.

The Chinese, for their part, do not want a collision with America. But at the same time, PM Lee said, "I am not sure that they are prepared to give a lot of ground."

China is likely to hold the view that its growing affluence and power have resulted in a win-win situation for the world, he said. "Things have gotten better, yet many countries do feel that things do need to be adjusted. That adjustment will be very difficult to make."

On Mr Biden's pledge to convene a global summit of democracies in the first year of his presidency, PM Lee said most countries want to work with the US but few would be willing to join a coalition that excludes players like China.

All countries should be involved in working out adjustments to the world order, he said. In the process, alliances will form and cooperation will take place, he added. "But to try and make a line-up, Cold War-style, I do not think that is on the cards."

On whether the US will rejoin the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade agreement, PM Lee replied that this is not likely to happen any time soon.

"The stars are not aligned," he said. "I still think that it makes sense for the US, but it has to make domestic political sense as well. That will take time and a different alignment of the economic situation as well as the political configuration in the US."

As for whether Mr Biden could reach out to Asia when he becomes president, PM Lee said that it is a possibility, but Asia will be just one of the Biden administration's many priorities.

He also said the domestic forces represented by Mr Trump persist, and will have to be dealt with.

"I hope that it will be a new direction for America, but do not forget that Mr Trump collected more votes than Barack Obama," he said, referencing the former US president.

PM Lee added of Mr Trump: "He has not disappeared, nor the pressures which he represented - they have not disappeared from America's body politic either."

At the same time, China has come to realise that having an America that is "at sixes and sevens" is not much to their advantage, the Prime Minister said.

"It is better to have somebody there who may not fully agree with you, but understands his interest in a broad way and whom you can deal with," he said. "With Biden, maybe they will decide that they want a new try. I hope so. It is not easy to do this."

Singapore will not be 'last in queue' for Covid-19 vaccine, says PM Lee
By Justin Ong, The Straits Times, 18 Nov 2020

Singapore has made arrangements with multiple Covid-19 vaccine makers to ensure it "will not be last in the queue" once doses are available, said Prime Minister Lee Hsien Loong.

He also observed that Asian countries have had greater success than their Western counterparts in getting their people to comply with pandemic measures, in an interview with Bloomberg News aired yesterday for its New Economy Forum.

Asked by Bloomberg editor-in-chief John Micklethwait if smaller countries have to worry about obtaining a vaccine amid worldwide demand, PM Lee said it was a reality that larger countries would "get some of their way" in ensuring they top the waiting list.

"It is a pity because the WHO (World Health Organisation) makes a very valid point that the best way to get Covid-19 under control is to have a rational scheme of priorities to distribute the vaccine to the places where it will make the most difference to the outbreak," he said. "But to optimise that, on a global scale (of) around 200 countries, I think is going to be very hard."

Singapore has formed a committee to prioritise those who should receive the vaccine before others when it is rolled out by the companies which it is engaged in talks with.

They include pharmaceutical giant Pfizer - which has announced its vaccine as 90 per cent effective - and the joint effort by scientists at Singapore's Duke-NUS Medical School and US firm Arcturus Therapeutics, which expects to ship its initial batch in the first three months of next year.

PM Lee said he is confident a number of vaccine candidates would pass muster, and that these would, in a few years' time, be extensively available and much more affordable.

"But I do not think you would have finished protecting the world's population within the next year," he said. "Furthermore, you are not sure what risks and problems may arise. We have to learn as we feel our way forward."

PM Lee was also quizzed on why Asia has reined in the pandemic better than others, with Mr Micklethwait contrasting hundreds of deaths per million people in the United States, Britain and Germany with single-digit figures in Singapore and China.

PM Lee said populations in Asia cooperated with wearing masks or practising safe distancing, compared with the Europeans or Americans "where after some time you are fed up and tired of being locked down, and there is a push back... You want to go out and let your hair down and have a drink and have a rave".

But he also acknowledged that Singapore has been lucky. "We have quite an elderly population, so if there had been many community cases, I think we would have had a large number of casualties and deaths too."

With the vast majority of cases circulating instead in the migrant worker dormitories, Singapore has worked to confine the spread, give medical treatment to the workers, and keep them and the general population safe, said the Prime Minister.

He said the challenge for Singapore now is to find a way to re-open its borders to business and tourism flows, while managing the inevitable import and introduction of the coronavirus into the population.

"If you are a country like China, you can decide to close all your entry points practically and be in splendid isolation for quite some time without much difficulty," said PM Lee. "But for Singapore, that is going to be very tough."

Singapore will likely see Budget deficit next year
By Linette Lai, Political Correspondent, The Straits Times, 18 Nov 2020

Singapore is unlikely to see a Budget surplus next February, given the ongoing economic crisis, and even a balanced Budget will be very hard to achieve, said Prime Minister Lee Hsien Loong.

In fact, it may take some time for Singapore to return to "prudence and balanced Budgets", he added.

"You have to spend money on Covid and the economy is down. Just from a countercyclical point of view, you do not want to have a negative fiscal impulse," PM Lee said yesterday. "You must keep the economy on an even keel and people as far as possible in jobs, or if not in jobs, some help is rendered so that they are able to get past this difficult period."

He was responding to Bloomberg News editor-in-chief John Micklethwait, who had asked if the Government will run a Budget deficit for some time, given that Singapore has drawn $52 billion from its reserves to see the country through the crisis.

"I hope that we will be able to come back to prudence and balanced Budgets, but it may take a while," PM Lee said.

The mindset that Singaporeans have to earn their keep, and that reserves are not bottomless, has to be deeply ingrained in the population, he added.

"It is not easy because the opposition will say, 'Well, how much do you have? Let me have a look. Why not take a little bit more? We are not broke yet.'"

At present, some sectors of the economy, such as aviation, tourism and entertainment, are in suspended animation, he added.

"It is better for me to take care of them and keep these sectors in suspended animation, than to risk reviving them before we are ready to deal with the consequences, and then we have another major Covid outbreak."

Singapore has to deal with the immediate and medium-term public health and economic requirements, he said.

"But one day this too will pass, and when it does, we must make sure that we can get back to the habit of balancing our Budgets."

Asked about leadership succession, PM Lee also reiterated his pledge to see Singapore through the pandemic before stepping down as prime minister.

The country is in the middle of an existential crisis, he said.

"It is my responsibility to see us through this crisis before I hand it over in good shape into good hands," he said. "I hope that will be before too long."

The path ahead for US-China ties: PM Lee
Prime Minister Lee Hsien Loong spoke about the likely impact of a Biden administration and other forces on the future course of Sino-American ties in an interview yesterday with Bloomberg News editor-in-chief John Micklethwait. Here are edited excerpts of the interview for the Bloomberg 2020 New Economy Forum.
The Straits Times, 18 Nov 2020

Micklethwait: The last time we spoke, you talked very eloquently about Singapore's role in Asia, about the rising power of China and about some of the difficulties of being an ally of America in this particular region. And I wondered from all those perspectives, what should President-elect Joe Biden... do in terms of a policy towards the region and towards China in particular?

PM Lee: I think his first priorities will be domestic. He has got many urgent things to deal with, starting with Covid-19. Asia is a very important part of the world for America, and China particularly. I hope that he will be able to focus his mind on developing a framework for an overall constructive relationship with China. That means one where you are going to be competing, where there will be issues to deal with, but where you do not want to collide and will try very hard to develop the areas of common interest and constrain the areas of disagreement.

Within that framework, deal with trade, security, climate change, non-proliferation, North Korea - all the many issues which the two biggest powers in the world have to focus on. Among those will also be issues... of concern to all the rest of us in Asia, who are watching carefully to see how things will develop. Because the last four years have been quite a tumultuous ride.

Micklethwait: Do you think that (United States President Donald) Trump has done permanent damage or changed the way that America is viewed in the region?

PM Lee: I think that there will be some long-term impact on perspectives on America, and on how America views itself. It did not start with Trump, but over the last four years there has been a clearer shift. When you talk about putting America first and making America great again, it is a more narrow definition of where America's interests lie than has hitherto been the way US administrations have seen things.

Previous administrations have seen America as having a broad interest in the stability of the region and the well-being of its partners, in the tending of its alliances with allies, in fostering an overall environment where many countries can prosper in an orderly scheme, and America is part of that scheme and subjects itself to the same rules.

It will take some time for America to come back to such a position, and for others to be convinced that it is taking such a position. It may never come back all the way, certainly in the short term and certainly in terms of its relationship with China.

Once you impose punitive tariffs, once you put them on, whatever their merits, no successor government can just say those were the wrong things to do and I take them away. You have to deal with it, but you are dealing from a new starting point.

There are many other steps which are even more sharp in that way. On technology, the definition of how you see the other party - whether it is a competitor, whether it is a challenger, whether it is a strategic threat, whether it is a mortal enemy - these are statements which have consequences.

Micklethwait: One of the things that people have talked about Biden doing is having a kind of coalition of democracies that would bring in people like yourself, Indonesia, Japan, South Korea. Is that part of the framework that you could imagine working?

PM Lee: We all want to work together with the US. We all want to work together with other vibrant economies. We would like to cooperate within the region. I think not very many countries would like to join a coalition against those who have been excluded, chief of whom would be China. Not just Singapore and not just in Asia, I think even in Europe there will be countries who want to do business with China. For example, the EU is trying to conclude an investment agreement with China.

It is quite understandable, and I think it is better. You want everybody in the discussion when trying to work out adjustments to the world order. In that process, you are going to have people form alliances, they will cooperate with one another, they will try and find common cause. But to try and make a line-up, Cold War style, I do not think that is on the cards.

Micklethwait: Do you regard the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) as dead? Is that gone or do you think that it is possible to revive?

PM Lee: The CPTPP is very much alive. There were 12 at the party... one fell out, and now there are 11. The 11 carried on with the party. It was to the great credit of Mr (Shinzo) Abe, who was then Prime Minister of Japan, that he held it together and brought everybody back on and we concluded the CPTPP.

America is not part of it. We hope that one day America will come back to it. I do not think realistically that is going to happen any time soon. The stars are not aligned.

The Democrats, I do not think their base is very keen on this. The Obama administration, which Biden was part of, was keen on this. Hillary Clinton, who was Secretary of State, fully supported it. But when she became Hillary Clinton the candidate, she had to repudiate it. It is the reality of American politics. I still think that it makes sense for the US, but it has to make domestic political sense as well. That will take time and a different alignment of the economic situation as well as the political configuration in the US.

Micklethwait: On that particular point, do you think that there is a possibility that Biden generally could end up being somewhat tougher in terms of everyday things than Trump was? To the extent that Biden is more likely to complain with China about human rights. And you have also got this side of the Democratic Party for whom things like labour rights, environmental rights matter enormously? In some ways, despite being predictable, he could be tougher?

PM Lee: It is possible. He knows (Chinese President) Xi Jinping very well because they spent many hours together with Xi, who visited the US, and he (Biden) visited China too. They have engaged one another. That personal engagement at the top is important.

Equally important is how each country sees the other and the intentions of the other, and whether they see the possibility of being able to work together to mitigate the inevitable contradictions which are going to arise between them.

It is not always easy but it is possible. It has historically happened with many administrations, who will make very fierce statements on the campaign trail. Once you become the administration, you have to deal with realities, and you have to pivot. Bill Clinton did that. He is the one who (as a candidate) talked about coddling dictators from Baghdad to Beijing, but (as President) he did business with China.

I hope that something like that can happen with the next administration, but I think it is harder because the consensus to see China as a strategic threat is almost becoming received wisdom and unquestionable in the US, in Washington. It will be very difficult for any administration, whether it is Biden or, on the other side, Trump, to disregard that and then just proceed as if the last few years had not taken place.

Micklethwait: What about on the other side? Do you think the Chinese are prepared to do bargains about this? It takes two to tango.

PM Lee: Yes, it does. This is a bilateral relationship. I do not think the Chinese want a collision. I think they know they are not ready for a collision. But I am not sure that they are prepared to give a lot of ground, and their principal consideration will be a domestic one, rather than the international balance.

Intellectually, and in an abstract sense, they will agree when you tell them that they used to be 4 per cent of the world's trade and are now 13 per cent or so. The rules which are settled when you were 4 per cent have to be updated now that you are 13 per cent. You have to make certain changes. Changes to the overall balance of contributions to the overall system, and also changes to deal with particular grievances and issues which have arisen on specific problems, whether it is trade or whether it is security issues.

In the abstract, I think they will agree to, if not to a shift, at least a change in the trajectory. In practice, when push comes to shove and you have to negotiate a new dispensation, I think there are hard bargains. It is not clear that between the two sides, they will be able to move to a new position.

I can understand the difficulty, because we are where we are, as a result of 30 to 40 years of liberalisation and reform and opening up. In the process, China has gotten more affluent, more powerful.

The partners of China have also benefited from China's emergence as an economy, its connection to the world, its production of manufactured goods, its consumption of everything from aeroplanes to movies and financial services.

The Chinese narrative would be: It has been win-win, we should all rejoice, why does anything need to be improved? Actually, things have gotten better, yet many countries do feel that things do need to be adjusted. That adjustment will be very difficult to make.

Micklethwait: From your perspective as a democracy, how important is what is happening in Hong Kong, where you are seeing the pro-democratic people resign. Most people would read it as being a clampdown on freedoms in Hong Kong.

PM Lee: We watch carefully and with some concern what is happening in Hong Kong and responses in Hong Kong. That something was going to happen, was very much on the cards and could not have been avoided, because the demonstrations and expressions of defiance could not have carried on indefinitely. Certainly not to the end of "one country, two systems" in 2047.

The question was how it could be headed off. The Chinese government have settled on this formulation where they have made the legislation in China, in the National People's Congress, and the administration in Hong Kong has followed through and carried out those new rules.

We hope that it could be done in a way which would deal with a problem but not shake confidence, and maintain the Hong Kong system intact, so that it can be valuable to China and can be part of the prosperity in the region. There is a lot of concern in Hong Kong, and you can see the way actions have reactions and further anxieties arise. I hope it can settle down to a new norm. It will not go back to where it was, but something which is sustainable, which will enable the Hong Kong people to live stably and have the economy working and have a greater degree of the freedoms and access to information and expression than pertains on the other side of "one country, two systems".

Micklethwait: Jumping back to trade. We began with TPP, but there is also the RCEP (Regional Comprehensive Economic Partnership)... Do you regard that remotely as a comparative thing to TPP?

PM Lee: It is a different animal, for a different purpose. The TPP had a relatively small number of economies... It went for very deep agreement requiring substantial commitments from these participants, and covered areas which are very difficult to cover, like intellectual property. There was even content on exchange rates and things like that.

The RCEP is a different configuration. It is Asian, it includes all of the major Asian economies except India, which unfortunately has decided not to be part of the grouping. It covers one-third of the global population and one-third of the world's GDP (gross domestic product).

But it does not go as deep. Nevertheless, it is a significant step towards reducing trade barriers and facilitating trade between these economies. It is also a significant statement that in Asia, whatever happens in the broader world, we would like to promote regional integration and that we do believe in a model of cooperation and win-win trade rather than go it alone and beggar thy neighbour. In these troubled times, it is worth quite a lot.

Micklethwait: One thing which worries me about RCEP is if you look at, for instance, China's treatment of Australian exporters at the moment. It is punishing Australian exports for political reasons. Most people will look at that and say that is an infringement of what a trade bloc is about. But under this format, there are no tools for dealing with this. Do you think that is something that may come in the future?

PM Lee: The way to deal with those kinds of issues is the WTO (World Trade Organisation)... the WTO does have rules - what restrictions you can impose, how you have to justify them, how to adjudicate them and appeal the adjudication.

I hope with a Biden administration, the WTO will no longer be deliberately pushed to one side, as has been the explicit policy of the Trump administration.

Micklethwait: Singapore has been one of the great successes of global trade. When you look at the world at the moment, there is a possibility of division into two Internets, there is a possibility in the division into regional blocs with maybe things like RCEP becoming a sort of more regional variety... Do you worry about a global world becoming a much more regional one?

PM Lee: Regional blocs are a possibility, but I do not think it will split up all together. Because the trans-Pacific trade links and trans-Atlantic trade links are too substantial to be cut off, and to divide us into two worlds or three worlds.

The risk of bifurcation of technology is there. In fact, it is not just a risk, it has already happened because in China, you cannot get Google or Facebook or Twitter. They have their own equivalents.

There are legitimate reasons why you may be concerned about the provenance and ownership and control of the technology for vital parts of your information infrastructure, like the 5G system.

Micklethwait: You have finessed Huawei quite elegantly as I remembered it by giving them some access to Singapore.

PM Lee: No, we did what we thought made sense for us. We have stringent security requirements and we stated them upfront. We invited the operators to bid. We did not rule anybody out. The operators made their own calculations, and they decided whom they would partner with. It is up to them.

Our attitude is whoever's system I buy, and it is not going to be my system, because I do not have a Singapore 5G system, there could be vulnerabilities, there could be deliberate vulnerabilities, and there certainly will be intruders trying to come in even if there are no deliberate vulnerabilities. Some intruders are bound to come in. Therefore, absolute security is not to be had. We have to be practical about it. We will do what we can, and we will use the systems for the risks and purposes which suit them.

If I really have something which I absolutely cannot risk compromising or losing information about, then I have to find some other solution. If I say I want absolute security, that is not to be had in this world.

Micklethwait: Do you think (Covid-19) gives Biden an opportunity to reach out to areas like Asia... of bringing your region back to America?

PM Lee: I hope so. The chance is there, but he has many priorities and Asia is but one of them. In Europe, he has many priorities too - trade as well as Nato. With Russia, he has issues to settle, and in the Middle East. I think he has a full plate. I hope that it will be a new direction for America, but do not forget that Mr Trump collected more votes than Barack Obama. He has not disappeared, nor the pressures which he represented, they have not disappeared from America's body politic either.

Micklethwait: Conversely, to the Chinese, does this also offer an opportunity? If you look at these big challenges like Covid-19, climate change, these are things that happen to all humanity. They offer a potential bridge to open up a better relationship with America.

PM Lee: I hope so. When Mr Trump was elected, some Chinese commentators, perhaps overly confident of their ascendance, thought that they saw a strategic opportunity - that America would now not have a coherent position in the world, and therefore they had the field open to them, and that they could expand their influence in the world.

I think that they have since discovered that it is not really that much to their advantage to have America at sixes and sevens, and unable to have a coherent foreign policy vis-a-vis China and the rest of the world. It is better to have somebody there who may not fully agree with you, but understands his interest in a broad way and whom you can deal with.

With Biden, maybe they will decide that they want a new try. I hope so. It is not easy to do this. You remember when Mr Obama first came in and Hillary Clinton was his Secretary of State. She met (Russian Foreign Minister) Sergey Lavrov and said perezagruzka (reset). It did not succeed in resetting relations, because both sides' principal considerations are domestic ones. The driving forces, the compulsions, their priorities, are domestic ones. If you want the outside world to be at peace, that is unlikely to drive your domestic policy or cause you to adjust your domestic attitudes to lead to a stable international order. That is why you end up with miscalculations and all kinds of unexpected developments in the world.

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