The US-Singapore Free Trade Agreement has contributed to a tripling of bilateral trade since 2004. - ST
SINGAPORE: Singapore is not expected to be hit by trade tariffs from the United States, but still stands to be indirectly impacted as it is a small and open economy, said Foreign Minister Vivian Balakrishnan.
Speaking in Parliament on Feb 4, Dr Balakrishnan noted how the US-Singapore Free Trade Agreement (FTA) has contributed to a tripling of bilateral trade since 2004, allowing the US to consistently maintain a trade surplus with Singapore.
“I do not anticipate us being on the hit list for direct tariffs, because... the United States has a surplus as far as the trade balance with us is concerned,” said Dr Balakrishnan.
But Singapore still needs to be careful and prepared for how turbulent the economic situation can be, he said.
“The fact that we are a small, open economy, and that trade constitutes more than three times our GDP, means if there is any friction, if there is any degradation of economic integration, global supply chains and world trade, we will be impacted indirectly,” said Dr Balakrishnan.
The minister was responding to Nominated MP Neil Parekh, who had asked about Singapore-US bilateral ties following the takeover of President Trump from President Joe Biden on Jan 20, as well as about the impact of tariffs imposed by the US on some countries.
US tariffs on 10 per cent of Chinese imports came into effect on Feb 4, as Trump on Feb 3 suspended his threat of 25 per cent tariffs on Mexico and Canada at the last minute.
China has since retaliated, with its Finance Ministry saying on Feb 4 that it would impose levies of 15 per cent for US coal and LNG and 10 per cent for crude oil, farm equipment and some autos. The new tariffs on US exports will start on Feb 10, the ministry said.
Dr Balakrishnan said the fundamentals of the substantive, multi-faceted and long-standing relationship between the US and Singapore have been nurtured across both Democratic and Republican administrations over the past 60 years.
Singapore looks forward to working closely with Trump to further bilateral ties and deepen regional cooperation, said Dr Balakrishnan.
The US is currently Singapore’s top trading partner in services, its second largest trading partner in goods and its largest foreign investor, he said.
Dr Balakrishnan also pointed out how the US has invested more in Singapore than it has invested in China, India, Japan and Korea combined, which has given rise to the presence of more than 6,000 United States firms here.
“Meanwhile, Singapore is the third largest Asian investor in the United States, and there are some 200 Singapore companies in 40 states,” he said.
“And together, our bilateral trade and investments between the US and Singapore generate over 350,000 jobs in the US.”
Stressing how the US’s presence in the region has helped to provide security, stability and economic opportunities in the Asia Pacific, Dr Balakrishnan noted how for the past eight years, the United States has been Asean’s second largest trading partner.
It is also the bloc’s largest source of foreign direct investment and has supported its economic initiatives. This, he said, includes capacity building in areas like digital trade, trade facilitation and the development of micro, small and medium enterprises.
But the world is at an inflection point now, where the liberal world order that prevailed after the Second World War is being eroded because it has lost domestic political support in many parts of the world, warned Dr Balakrishnan.
There is a significant lack of strategic trust between China and the US, he said, noting how the world is now seeing a decoupling of the global economy as a result.
The minister pointed out how the relationship between the US and its own allies and neighbours in its own hemisphere is also evolving.
The challenge is how Singapore and the region should respond, and Dr Balakrishnan stressed that there needs to be engagement with the multiple poles of power that are emerging.
“That means engaging with the United States, engaging with China, India, the EU, Africa, South America,” he said.
“And you will notice our intensive, promising and economic engagement across the world.” - The Straits Times/ANN