Anti-trade talk bad news - if put into practice

The impact of a Trump presidency on Singapore will depend on how much of his election rhetoric translates into actual policies.

Companies and analysts say Mr Donald Trump's aggressively anti- trade rhetoric could spell bad news for Singapore when taken at face value. However, it remains to be seen whether he will follow through with it.

The President-elect and businessman has outlined an isolationist agenda, casting doubt over the future of United States foreign policy and trade relations.

While campaigning, for instance, he claimed that countries such as Singapore, China, India and Mexico were stealing jobs from Americans and vowed to stop the "job-killing" Trans-Pacific Partnership (TPP).

The TPP is a free-trade pact signed by 12 countries - including Singapore - that together account for 40 per cent of world trade.

"The critical unknown is whether a Trump presidency pursues the policies of Trump the candidate, in particular, his anti-trade, anti-China and anti-Mexico policies," said M&G Investments multi-asset portfolio manager Eric Lonergan.

"Reason suggests that Congress and financial markets will regulate his ability to act. It is equally possible that these campaign rally cries are abandoned with the responsibility of power. But the real concern is that he will do what he says."

Read also: Asia on edge over how Donald Trump will act in office

The US was Singapore's third- largest trading partner last year, with total bilateral trade of over $75 billion.

"Singapore, as a small, open economy, is a price taker in the global economy. We will have to adapt and work with the new administration," said ANZ economist Ng Weiwen.

But he warned that Singapore will be hit hard if the Trump administration ramps up protectionist measures, and that the TPP "is unlikely to materialise in the near term".

"This would be a missed opportunity for Asia, particularly Singapore, and add to the waning pace of trade liberalisation seen globally."

Still, there could be a silver lining, said CIMB Private Bank economist Song Seng Wun.

"If the US becomes more protectionist, other treaties like the Regional Comprehensive Economic Partnership (RCEP) could get a new lease of life," he noted.

The RCEP involves the 10 members of ASEAN and six partner countries (Australia, New Zealand, China, Japan, South Korea and India), but excludes the US.

A statement from the Singapore Business Federation (SBF) urged Mr Trump's administration to "focus on the longer-term benefits and the strategic value that the TPP can bring to the US".

"Opposing the TPP undermines the ethos of credibility, free trade and investment - values which are strongly advocated by the US and Singapore," it added.

Read also: Policies US President-Elect Donald Trump has said he might execute

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The SBF also noted that Singapore enjoys strong and longstanding economic and business ties with the US, underpinned by the US-Singapore Free Trade Agreement and the Strategic Framework Agreement.

"Our bilateral co-operation with the US is broad and deep, spanning a wide scope and over a long period. Both sides have derived mutual benefits from this strong relationship," it stated.

"US companies have been in Asia for a long time because it is in their interests to do so.

There is growth and money to be made here.

"President-elect Trump is a businessman. He will understand where to put the smart money.

We are therefore confident that US corporates will remain strongly engaged in the region. We are friends and we will continue to do good deals."

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chiaym@sph.com.sg

This article was first published on November 10, 2016.
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