Reform WTO but don't abandon rules-based system: DPM Gan

Trade rules must evolve to build a stronger and more resilient global economy, he says

- Benjamin Lim Correspondent

The World Trade Organisation (WTO) needs reform, and the rules of global trade and economy must evolve to build a stronger and more resilient global economy, said Deputy Prime Minister Gan Kim Yong.

Speaking at the FutureChina Global Forum organised by Business China, at the Sands Expo and Convention Centre on Sept 19, he noted that the trade war between the US and China has placed unprecedented strain on the global system and exposed the limitations of the WTO.

This means that the organisation's old system of the 1990s no longer works in today's economic climate, said DPM Gan, who is also Minister for Trade and Industry.

"The WTO has struggled to negotiate new agreements; its dispute settlement mechanism is paralysed; and core principles like the 'most favoured nation' treatment are at risk of being eroded," he said.

With the US and China both heading towards unilateralism, their contestation has led to a sharp rise in protectionist measures in the form of tariffs, import quotas, export restrictions and investment screening requirements.

Should the fragile trade truce break and more countries resort to power-based approaches, there will be a greater risk of fragmented supply chains, rising uncertainty and weaker growth, DPM Gan cautioned.

But he stressed that while the WTO has not been effective in alleviating trade tensions, abandoning a rules-based system would be far worse for the global economy.

Therefore, the WTO should adopt a pragmatic approach that supports flexible multilateralism, to remain relevant and preserve its role as a global anchor for rules, said DPM Gan.

He said Singapore must resist the drift towards unilateralism and power-based politics.

He cited four areas in which the rules-based system will need to evolve to enhance cooperation among countries and meet the demands of the future economy: