By Ho Lian-Yi

THE big meeting of world leaders has prompted chicken rice seller Alan Ng to create a special dish.

The 33-year-old whipped it up to welcome US President Barack Obama to Singapore for the Asia-Pacific Economic Cooperation (Apec) meet.

It's called Obama Chicken Rice - and is distinguished by his combination of soy sauce rice, soup and chicken.

It has 13 ingredients, including yam, mushroom, dried prawns, and dark soy sauce.

He even ordered 1,000 pieces of dark packaging just for the occasion.

"Of all the people coming, I only love Obama, so I came up with Obama Chicken Rice," he said.

The stallholder at Whampoa Drive, Blk 91, admitted he doesn't know much about Apec itself or why it is important.

But he wants to learn.

So, what has free trade (an Apec concern) got to do with his chicken rice?

More than you might think.

Some economists interviewed explain:

QUESTION: How does free trade affect a chicken rice seller?

ANSWER: "You are selling to the domestic market, but the chicken is not produced in Singapore," explains Standard Chartered economist Alvin Liew.

He added: "If you just take chickens in Singapore, it would be very expensive, because there is not enough to go around."

He pointed out that a lot of frozen chicken comes from Brazil. But if trade is cut, or tariffs go up,and everyone starts competing for Malaysia's supply, the price of chicken will keep going up.

Q: But why do we need so many governments coming together? Isn't it enough to just setup an agreement with other countries, like Brazil?

ANSWER: It is more efficient to get many heads together to establish fair and common ground rules, explained Mr Vishnu Varathan, economist at research house Forecast Ltd.

He said: "Bilateral deals maybe better in the specifics we get into. We may get something more tangible out of it, like a Free Trade Agreement being signed. A good thing about Apec is what you get is at a very high and very macro level.

"Even if you can't get a consensus, you get more of  a convergence in policy outlook, policy thoughts, and rules in international trade upon which any international arrangement should be based.

"And even if you can't achieve the targets now, it's a good place to set targets."

Q: But why should  I care if trade between other countries like the US and China are more free?

ANSWER: Singapore's economy is all about trade and goods and services.More trade between the US and China also benefits us.

Said CIMB-GK economist Song Seng Wun: "We're kind of like a transit station where people come and gather and talk and hopefully work and close deals and make more deals.

"And along the way there are opportunities for people to set up shops, to serve and house people coming through."

As a hub, Singapore companies maybe the ones moving the goods,and its financial institutions financing the deals.

So freer trade between other countries can create more opportunities for Singapore. These all create jobs here.

Even if a foreigner is hired, he still has to eat and live in Singapore - which leads to more plates of chicken rice being sold.

Q: But doesn't lowering barriers also allow people from other countries to come in and setup shop, and sell their Thai chicken and compete with Singaporeans?

ANSWER: Protectionism is not a long-term measure. Said Mr Liew: "You can protect an industry but up to what point? If you keep artificially propping an industry that is not efficient, you will breed more inefficiencies."

Competitiveness may be eroded to the point where an industry is no longer able to stand on its own. It is better to move to niche areas, diversify, and move up the value chain.

Q:But times are difficult now.

ANSWER: "When times are bad, at a trade level, there is the protectionist tendency to take care of your own. It would work for each individual nation. But at a consolidated level, everyone is worse off," said Mr Vishnu.

At the darkest moment in a recession, it is easier for nations to converge, because everyone is in the same boat. But when everyone starts recovering at a different pace, it gets trickier to workout solutions.

Q: Well, if free trade is such a good idea,why do governments take so long to open up their doors?

ANSWER: "There will always be special interests or favoured industries within each country that would benefit from some form of protection from foreign competition," said Singapore Management University economics professor Davin Chor.

Added Professor Chor: "But what is good for one industry is unlikely to be good for the country as a whole. For example, the average consumer's welfare would be lower if he or she had to pay higher prices for imports as a result of import protection.

"Unfortunately, special interests or favoured sectors often have more influence and capacity to lobby for protection, which complicates the task of trying to reduce trade barriers between nations."

lianyi@sph.com.sg

This article was first published in The New Paper.