Speaking at a conference on 20 April, ambassador-at-large for Singapore’s Ministry of Foreign Affairs, Tommy Koh, charged that the West’s rising protectionism in the West has become a threat to Asia’s prosperity,
“I worry about the rise of protectionism and economic nationalism in the U.S. and in Europe. I see this as a direct threat to the prosperity and prospects of Asia. Asia has been able to make enormous progress because of the liberal economic order that the U.S., U.K. and other countries created at the end of the Second World War. And this liberal world order seems to be in jeopardy.” – Professor Tommy Koh, Credit Suisse Global Megatrends Conference 2017
He did not budge even when the U.S. Ambassador David Mulford pointed out that “there is no shortage of protectionism in Asia, and that “it is a major part of the Asian economic approach.”
“It is not fair for you to say there is protectionism everywhere, including Asia, so what’s the big deal about the U.S. turning protectionist. The trend in Asia is in the other direction. We are opening up the economies, liberalizing, integrating with one another,” Prof Koh said.
He added: “The trend in America and Europe is a worry, because you are going in the other way. There is a significant difference between the dominant trend in Asia — which is towards opening up the economy, liberalizing, integrating — and the trend in the West.”
The U.S. under President Donald Trump’s administration had pulled out of the multinational trade pact, Trans-Pacific Partnership (TPP). Trump claimed that the pact was a “disaster” that would hurt United States’ economy and said that he preferred bilateral trade deals. Mr Mulford defended Trump’s preference at the conference.
“I think smaller countries that are competitive, aggressive confident could do very well in bilateral trade negotiations and don’t always have to be involved in a large package that makes it harder to negotiate a variety of different things rather than a one-on-one situation.” – Ambassador Mulford
Prof Koh however remained unconvinced and went on to attack the new American administration’s stance on global trade saying, “you’ve been there before and I’m surprised that memories are so short in America and Americans are flirting with protectionism a second time.”
He referred to the Smoot-Hawley Tariff Act of 1930, which caused an increase in import duties by as much as 50%. Investopedia describes the Smoot-Hawley Tariff Act as such:
“The Smoot-Hawley Tariff Act goal was to increase U.S. farmer protection against agricultural imports. Once other sectors caught wind of these changes, a large outcry to incrase tariffs in all sectors of the economy followed. The increase in this tariff added economic strain to countries during the Great Depression. Economists of the time signed a petition to urge President Hoover to not pass the act, but it was signed and passed anyway. In a sign of disapproval towards this act, other countries retaliated and also increased their tariffs. As a result, banks in foreign countries began to fail and international trade declined drastically, resulting in a world trade decline of 66% between 1929 and 1934.”