Thank you for coming here this afternoon. I would like to make a statement on US tariffs. As all of you know, US has announced a series of tariff measures, including a baseline 10% tariff on all countries, as well as reciprocal tariffs on countries with which US has the largest trade deficits. Singapore, like many countries, are also subject to the 10% baseline tariff.

 

We are naturally disappointed, that despite our strong and long-standing economic and commercial relationship with the US under the US-Singapore Free Trade Agreement (FTA), we are also subject to the same 10% baseline tariff. The US-Singapore FTA has been a very important FTA for both countries, and has benefited the US significantly. The US exports to Singapore enjoy zero tariffs for more than two decades. They have also enjoyed a significant, substantial trade surplus with Singapore, amounting to US$30 billion. So, I think this is something that is important, and we are, of course, naturally disappointed.

 

Under the FTA, we have recourse. We are able to take counter measures and also seek dispute resolution. However, we have decided not to do so because imposing retaliatory import duties will just add costs to our imports from the US, and this will affect our consumers and businesses. What we are going to do is that we will reach out and engage our US counterparts and better understand their concerns, see how we can work together constructively to address some of these concerns, so that we have a long-lasting partnership.

 

This 10% baseline tariff on Singapore will have a significant impact on our economy. Our households and our businesses will have to be prepared for rough waters ahead of us, and they will significantly impact our businesses as well as households. At the moment, we are re-assessing our economic forecast, and we will need to make adjustments in time to come, but it is still early days, because some of the information is still not fully available, so we will need to take time to re-assess, adjust, to see whether we need to recalibrate our economic forecast.

 

What is also important is that during the recent Budget, as well as last year's Budget, we provided significant help for our households and our businesses, and we will continue to monitor the situation and if necessary, we will introduce more measures to help our households and businesses.

 

Our bigger concern is the broader scope of impact that this series of tariffs may bring about in time to come, because we can see that some countries are already announcing retaliatory tariffs, and if this tit-for-tat tariff measures continue, it may escalate into a situation where you will end up with a global trade war. This will have a significant impact on the global economy, because it will affect trade flows. You will create choke points for supply chains and also undermine the confidence of consumers and businesses. Investments will also slow down. So I think all these eventually will significantly slow down the global economy. This will also, in turn, affect Singapore's economic outlook in the medium to long term. So I think this is something we need to continue to watch and monitor.

 

From Singapore's perspective, we will have to double down on our efforts to continue to keep our economy open, continue to uphold this open, fair, free trade among like-minded countries. We already have 27 free trade agreements. So we continue to want to work with our partners, seek out opportunities for our businesses in this region and beyond, to see how we can continue to allow our economy to grow, and strengthen our position as a hub for trading, shipping and doing business in this region. We are working with our various partners, particularly, say for example, within ASEAN, we have been making progress on the negotiation on ASEAN Trade-In-Goods Agreement, and we are close to a conclusion of our negotiations on this agreement. This is an important part of our efforts to open up more markets, more opportunities for collaboration among our businesses.

 

We are also working with other trading partners, different groupings, different avenues, such as CPTPP, as well as RCEP. We are also working on MERCOSUR as well as the Pacific Alliance groups to see how we can also strengthen our economic and trade ties with these different regions. So I think this will help us to open up more avenues for our businesses to explore and to expand. At the same time, we will also continue to work with like-minded partners to strengthen the World Trade Organization, because it is very important for us to make sure that we continue to strengthen and preserve the multilateral system to the extent possible, because this will provide the basis for collaboration for international trade under a rules-based. So I think going forward, it will be choppy waters, but we will continue to monitor the situation, and we will extend additional help where necessary to support our businesses and our households.

 

Thank you very much.

 

 

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Q&A

ST: So when you say you are not going to take the dispute resolution path in the FTA, [yet you’re] still saying you are going to engage the US, what does that mean?

DPM/Min(T&I): What I meant was that we are going to engage the US to understand where are the areas of concern. There may be misperceptions or different understanding of the situation between the US and Singapore, our bilateral relationship. There may be room for us to clarify, explain, [and] hopefully with that, we will be able to resolve some of these issues.

ST: And when you say, you will help businesses who are affected, what exactly do you mean by that? What form can it take?

DPM/Min(T&I): It is still early days. We need to assess the impact on the businesses, before we can target our measures to help them.

Say, for example, they may be able to look for alternative markets, look for new markets where they can export their products to, which may not be subject to these tariffs. We may need to help them explore and open up access to these new markets.

We may also be able to work with them on, say, digital economy agreements or green economy agreements, which are new areas of growth, which will then help these businesses tap on these new areas of expansion which give them another avenue to grow their business.

So it is multi-faceted. We may also be able to provide support for training, for innovation, for investment in R&D, to develop new products, new services, and new markets.

CNA: Is Singapore considering a collective response with ASEAN members to tackle these tariffs?

DPM/Min(T&I): Thank you. I think it is natural that we will be consulting our various trading partners. ASEAN is a natural partner to have a conversation with our fellow ministers to see what we can do, how we can come together, to even further deepen our integration within ASEAN.

As I mentioned, we are in the final stages of negotiation on the ASEAN Trade-in-Goods Agreement, and we hope to be able to finish it soon. And these are areas that we can discuss how we can grow our ASEAN economy together.

Another area that is of great interest to ASEAN ministers is on the digital economy. We do have a Digital Economy Framework Agreement that is under negotiation. This is a little bit early, at an early stage. It will take some time for us to conclude the negotiations. But we are optimistic that the digital economy will provide a new engine of growth for many of the ASEAN economies.

So I think these are areas that we will be discussing, how we can also help support one another, particularly when there is a supply chain disruption. Some of these tariffs may cause supplies to be interrupted. Some countries, some members need to look for alternative supplies. So these will be areas that we will be discussing with our fellow ASEAN ministers.

ZB: So in the FTA, it mentions that neither party may increase an existing custom duty. So will Singapore ask, and did the US provide any formal justification for this extra tariff? And as you mentioned, there will be no retaliatory tariffs from Singapore. Will Singapore see any other formal consultation under the FTA?

DPM/Min(T&I): Thank you very much. As I mentioned earlier, we will reach out to our counterparts in the US to discuss with them, to better understand their concerns, specific concerns, if there are any, and if there are opportunities for us to discuss how we can minimise the impact of the tariffs on Singapore.

So, I think it is still early days, because they have just announced it today. The next step is for us to really engage them, better understand where they are coming from. If there are areas that we can clarify, that will be allow us to solve some of the misunderstanding.

These are areas that will take time to discuss and engage. It may not necessarily come under the FTA provisions, because bilateral consultation happens all the time, and we meet each other regularly and discuss a variety of issues, bilateral issues, as well as multilateral issues.

Through this regular engagement, we will have the opportunity to clarify some of their concerns and [share] some of our concerns. Hopefully, that will allow us to have a better understanding of each other. Given the longstanding relationship between US and Singapore, we have this avenue for us to have an open dialogue and discussion from both sides.

 

Channel 8 News:

我们有提到要跟美国的洽谈。这有时间表吗 - 是接下来几天或几个月?

我们最终的目的是什么 - 是希望美国可以取消这个关税吗？

 

DPM/Min(T&I):

我们现在要具体的谈，可能为时还早，因为今天才刚刚公布了消息。接下来我们最重要的是要和美国的官方接洽，希望能和他们开诚布公地谈一谈我们两国之间的贸易和经济合作，尤其因为美国和新加坡的关系与其他国家有些不一样。美国与新加坡有着trade surplus，就是说，美国出口到新加坡多过新加坡出口到美国。这样的情况与许多其他国家不一样。 因此，我们希望能与他们探讨能如何加强彼此之间的合作。也不一定关系到这关税之上，因为还有其他的多空间可以合作，可以加强两国之间的关系， 继续促进和提高两国之间的贸易和经济合作。我们的双方会谈应该会广泛且开放， 不一定会局限在莫一个课题上。这样，我们谈的空间会比较大，合作的可能性也比较大。

 

Mothership:

There’s been some chatter that Singapore has had the 10% tariff and it seems better than other countries but as we know, Singapore is a trade hub. Therefore, this may impact Singapore more than what it seems at first glance. Could you perhaps explain for the man on the street, why this may impact Singapore more than just the 10% direct tariff?

 

DPM/Min(T&I):

First, I wouldn’t say Singapore has a better deal than other countries because I think no country would like to have import duties imposed on their exports. At the same time, I think trade is an integrated system. If you affect the trade from one country, eventually one way or another, it will flow to other countries. Let me just explain how it will affect Singapore in the medium to long term.

 

The immediate impact is of course, the 10% tariff that’s imposed on Singapore exports to the US. But, once you have duties imposed on other countries’ exports to the US, these countries may begin to slow down their production, they may begin to slow down their trade, and once they start to do that, investments to these countries will slow down. Similarly, once the whole global situation responds to this and investments globally slow down, trade globally slows down, exports and imports will slow down. That will lead to a global economy slow down.

 

Singapore being an open economy, we actually depend on the global economy to grow. Therefore, once the global economy slows down, the Singapore economy will not be spared. We will be also affected and our economy, over time, will also slow down in response to the global slow down.

 

It's a long answer but I hope I explained how the chain reaction will happen and eventually no one will benefit from this exercise. In the end, it’ll be a lose-lose outcome. It also means that things will be more costly because when you have tariffs on products , tariffs will just add cost and overall, someone will have to pay for these additional tariffs. So, goods and services will then become more expensive and that will affect Singapore.

 

Bloomberg:

I’d like to ask if potentially would you expect a revision on the GDP outlook, potentially towards a lower end of the growth range? Secondly, whether you suppose the situation is dire enough to potentially delay any election announcement?

 

DPM/Min(T&I):

I think first let’s just focus on the Ministry of Trade and Industry issue – the other is a separate question that you’d want to ask the Prime Minister. I think the key really is that the projection of the economic forecast was based on earlier data. We have also included potential volatility and uncertainty going forward as a responsible way to do a forecast. Today, we will then need to reassess the situation given the changes in the tariff situation imposed by the US.

 

And to a very large extent, it also depends on the reaction of the rest of the countries. So it is not just US versus Singapore, it is not just the 10%, as I mentioned earlier just now in response to Mothership’s question, it will also trigger action, reactions from other countries. Other countries may begin to impose retaliatory tariffs, and this will escalate into a tit-for-tat, more and more escalation and tariff measures, and eventually end up with a trade war. And if that happens, then the impact on the Singapore economy is a lot more significant.

 

So I think, it is important for us to take time to assess, and to watch, monitor what are the reactions from the other countries before we are able to determine quite precisely what our projection is going to be.

 

As I mentioned earlier, we are just taking one more look at our projection, I am not saying that we will definitely revise it downwards, but I think the situation has turned out to be worse than what we have expected in the beginning when we did our projections. And therefore it is necessary for us to revisit our assumptions to make sure that we have a very robust forecasting model. So I think in due course we will share more details when we have done and completed our reassessment.

 

CNA TV:

Minister Gan, you mentioned that the US may have misunderstood or there may be a need to clarify certain aspects of the US-Singapore relationship, what are some of these areas, and have they been open to engagement?

DPM/Min(T&I):

We have not yet gone into details. As I mentioned, they have just announced it today, and the basis for the tariffs is also very broad, and encompasses several items. It is important for us to understand exactly which particular reason/basis is used for this 10%, and how do they calculate the impact of Singapore’s exports to the US. So I think these are important questions that we do not have the answers [to] today, because I think the description given by the US authorities is quite broad, but necessarily so, because they did not go into specific country by country, just broad categories. So I think it is important for us, not to jump to conclusions, to keep an open mind, and to engage and reach out and to seek clarification, to see whether there are areas and scope for us to move forward and further strengthen collaboration between the US and Singapore.

BT:

DPM, can I ask, in your engagements with US counterparts, did you try to get an extension beyond the April 5 deadline and also, whether the growth downgrade will be reflected in, as soon as this month’s flash GDP?

DPM/Min(T&I):

It is very hard for me to tell you whether it is going to be reflected in this month’s flash GDP data, because the flash GDP is primarily based on historical data, whether it's January or some of the February data. But it is a forecast that I was talking about, not a flash GDP indication. And so the forecast will depend on whether we are able to complete our assessment. If we are not able to complete our assessment, then we will just make a qualification to explain that we are still in the process of doing our assessment, and we will share the forecast when it is completed. I think it's important for us to do so very carefully rather than to jump to conclusions. And then you may mislead the market and the businesses. So better to do a careful job.

BT :

Is there an extension being given?

DPM/Min(T&I):

These are open questions. I think it is important for us to focus on engaging the US and to also continue to work with our partners, trading partners to see, to explore opportunities for collaboration and partnership. So I think there are many things that we need to do, and some of these questions will be part and parcel of our engagements going forward.

Reuters: What are some sectors that you are most concerned about in relation to the tariffs and why?

DPM/Min(T&I): I think the 10% tariff is across the board and so, every sector is affected. So, we don’t take it lightly. Our biggest concern is medium to long term. When we see the rest of the countries beginning to react and start to introduce retaliatory measures, and it is also possible that the US may also impose additional measures. We have to watch the developments very carefully. If many of these measures continue, this tit-for-tat escalation of tariff measures, I think eventually it may lead to trade war and that is our biggest concern. So it is not any specific sector but the global impact of this trend of tariffs upon tariffs which ends up as a global trade war. I think if it ends up with a global trade war, I think this will benefit no one. I think we will be facing a very challenging environment, operating environment going forward.

CNBC: Do you have any specific dates that you plan to go and engage with your US counterparts and how confident are you that you will be able to secure either an exemption or resolution with the US on this trade dispute?

DPM/Min(T&I): I think it is still early days because we will need to reach out to them. I am sure many people are also lining up to speak to the US, and so are we. So I think we are going to work together to see how we can engage them at different levels – we will be engaging at the ministerial level, official level, our ambassadors in the US will also be engaging them and businessmen will also be engaging their private sector through opportunities to reach some of their leaders. The engagements are going to be broad based, at multiple levels and the idea is to share with them our perspective and also understand what their concerns are, so that we can address specific concerns if there are any. If there are no specific concerns, then it is more difficult to argue or negotiate for a roll-back or exemption, because there is no-basis to do so. If there are specific concerns, I think we can then discuss how can we address their concerns and once we are able to address their concerns, whether there is room for adjustment to the tariffs. I think this is something that we will need to discuss and explore when we begin to engage them on these tariffs. As I said, today is the first day so it is very difficult to try to pre-empt what the outcome will be like.

Channel 8 News: 副总理，可能会有一些新加坡人，一般民众，他们也会不知道这会不会影响到他们。你对他们有什么话说呢？

DPM/Min(T&I): 我想最重要的对新加坡的居民来说，对新加坡人说呢，是这一次的关税对我们的经济当然会有影响。那么，如果这一轮的关税和对抗关税如果一直不断地加深下去的话呢，可能会造成全球性的贸易战。如果全球性的贸易战爆发的话呢，可能会导致全球经济的缓慢下来。这会对我们的经济是会有相当大的影响。所以我们很希望能够和美国继续洽谈当如何能够深进彼此之间的了解，再一次开放新的合作领域。同时呢，我们也会继续观察事态 的变迁，如果有必要的话，我们会提出更多的措施帮助新加坡人。所以请他们不必担心，但是，他们也是要有心理准备因为在接下来的几个月，短期到中期之间，我相信在经济上也会遇到相当的阻碍。