US unlikely to ratify TPP in Obama's term: PM

America's reputation as a credible partner on the line if it fails to deliver on its promise of ratifying the 12-nation FTA, he tells Time magazine

IT is increasingly likely that the Trans-Pacific Partnership (TPP) - a mega free trade deal involving Singapore and 11 nations - won't be ratified by the time US President Barack Obama steps down next January.

Giving his latest take on the impasse, Singapore Prime Minister Lee Hsien Loong said that the TPP "probably will not be" settled within the next three months, and this would be a "casualty" and a "very big setback" for America.

Asked about the consequences should the TPP not be ratified, Mr Lee said that America's standing with many countries around the world would go down. "Your opponents as well as your friends will say you talked about the strategic rebalance, about developing your relationships. You can move aircraft carriers around, but what are the aircraft carriers in support of? It has to be deeper economic and broad relationships."

He made these points in a recent interview with Time magazine editor-at-large Ian Bremmer at the Istana. The Prime Minister's Office released the full transcript to the local media on Wednesday.

The 12 TPP nations are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam. Collectively, they account for 40 per cent of the global economy.

The fact that the US managed to conclude the negotiations for the TPP shows that America is serious and prepared to deepen its relationship with the Asia-Pacific region, said Mr Lee.

He warned, however, that the reputation of the US as a credible partner was on the line if it failed to deliver on its promise of ratifying the TPP. He also noted that Mr Obama did not push the deal very hard domestically and expend the political capital until quite late on.

"Let's say you cannot deliver on the TPP. After you've gotten Vietnam and Japan to join, after Japanese Prime Minister Shinzo Abe has made very difficult arrangements on agriculture, cars, sugar and dairy. Now you say, 'I walk away, that I do not believe in this deal.' How can anybody believe in you anymore?" he said.

Apart from trade, there are also strategic issues to consider. Mr Lee cited the example of North Korea, an unpredictable country that is developing nuclear capabilities and missiles.

"You don't want the South Koreans or the Japanese to do that. What is the restraint on them? It is the credibility (of the US) as an ally and as a deterrent. I don't think failing to rectify the TPP will strengthen that at all, or help Mr Abe, who has gone out on a limb to support this and is in the process of ratifying it right now."

In the wide-ranging interview, Mr Lee felt that there was no reason to believe that America was on a downhill slope for the next 15-20 years, despite its economic difficulties and the fractious nature of its politics.

"It's not to say that the Chinese do not have their own problems or that America does not have a lot of resilience, creative energy and entrepreneurship. You have the science, you have the technology in Silicon Valley and you have the ability to attract brains from all over the world. You can bounce back."

Mr Lee noted that the US had many friends and partners in Asia, and there was goodwill towards the US all over the region. The ASEAN member states, for instance, are "very happy" to see the US being present and active in this part of the world.

"It means prosperity, it gives options and it fosters stability. So for you to say it's not an important interest and it does not matter to the US anymore for the next 10 years, I think that's not accurate. (US Democratic presidential candidate) Hillary (Clinton) knows that. Hillary as secretary of state worked very hard for South-east Asia," said Mr Lee.

Turning to the bilateral relationship between the US and China, he highlighted the lack of strategic trust between the world's two largest economies.

"You are fundamentally in different positions which are not easily reconciled. But there is an absence of strategic trust in the sense that the Chinese are convinced that you are trying to slow their growth and you are convinced that the Chinese may do something unpredictable. It does not mean that they want to fight you but they may push in a direction which is not in your interest, including in the South China Sea."

Asked for his take on whether Singapore would ever have a universal basic income, Mr Lee said that the country could not afford to implement such a scheme.

"Nobody has done it. Even the Swiss voted against it. Silicon Valley thinks it will solve the problem, but it is a vast expense and we do not know what the social consequences will be of doing that," he said.

"We progress step by step. We will build up our social safety nets, but we also have to make sure they are sustainable and affordable. It will mean more spending. More revenues will have to be raised, and people will have to understand and accept that. It's not just spending on the low income, but also for the retirees, and on medical care which is related to ageing. All of which will cost more, and somewhat more of the burden will have to be carried by the state."

 

This article was first published on October 27, 2016.
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