Singapore Says U.S. Understands Its Position on WTO Privileges

(Bloomberg) --

Singapore says it has an understanding with the U.S. that the city state doesn't take advantage of privileges that come with “developing country” status in the World Trade Organization.

In response to a tweet last week from U.S. President Donald Trump accusing countries of abusing that status, and ordering his top trade negotiator to take action, Singapore's Minister for Trade & Industry Chan Chun Sing said his government had never taken advantage of such benefits.

“They're not asking us to change the developing-country status,” Chan said in an interview Thursday. “They are asking whether we will forgo the SDT privileges, which we have never availed ourselves to in the first place, so it's a non-issue.”

He was referring to the WTO's “special and differential treatment” provisions. WTO privileges for developing economies include longer transition periods for implementing trade agreements, and protection against emergency import restrictions imposed by developed nations.

“We have always said that any privileges should be based on the circumstances rather than a uni-dimensional assessment of a country's status, like GDP or GDP per capita,” he said.

Chan said a recent letter from U.S. Trade Representative Robert Lighthizer showed the U.S. understood Singapore retained the label but didn't use the benefits. He didn't offer more details of the letter.

Trade tensions have weighed on the economic outlook for export-reliant Singapore and other regional economies, but Chan told Bloomberg Television's Haslinda Amin he's “quietly confident” about the city-state's outlook. Despite “short-term gyrations” in output, the government doesn't currently expect a recession, he said.

“At this point in time I don't think that we are looking at a recession just yet,” Chan said. “The government will be ready to step in and help our companies and business adjust.”

Singapore's economy has shown some cracks after enjoying relative resilience earlier this year. The economy suffered its worst quarterly contraction in almost seven years during the three months ending in June, raising the prospect of a possible recession. The government this month is set to revise its 1.5%-2.5% forecast range for 2019 economic growth.

Read More: Trade War Spurs Recession Risk in Ex-Tiger Economy Singapore

Chan sees Singapore's labor market holding steady for now despite the global headwinds. Information, communications and other service jobs are holding up, while the manufacturing sector has slowed and could show some spillover effects, he said.

The government's focus is on the long term, including helping workers gain new skills to spur mobility between sectors and attract skilled talent. In that vein, the Economic Development Board and Enterprise Singapore this week announced a pilot program to facilitate foreign-worker passes in high-skilled technology roles, while pushing to upgrade local workers' skills.

Chan said the government is prepared to extend the program “beyond the deep tech ecosystem, to other areas.” Companies had been calling for help in facilitating hiring of foreign workers, charging that existing conditions were too tight.

“We will always constantly push ourselves to tighten our belt” on lower- and mid-skilled workers in order to be “more manpower-lean,” Chan said. “But when it comes to global top-tier talent, nobody has enough.”

Chan noted that Singapore still has a strong pipeline of incoming investment -- including deals with the likes of Exxon Mobil Corp. and GlaxoSmithKline Plc -- as big companies seek a “safe harbor for talent and their intellectual property protection. I think Singapore provides just such a base for that in the region.”

Here are more comments from the interview:

• “In a world where there might be a bifurcation or fragmentation of global trade, our job is to make sure that Singapore businesses can continue to access opportunities across the entire globe. This is why we are continuing to sign as many free trade agreements as possible”
• On the U.S.-China trade war: "They are quarreling but they are not quarreling with us,” Chan said. "Our aim is to be able to deal with all sides. If we are able to deal with all sides then we will be able to mitigate the impact of some of these shifts and there might be new opportunities as well"

--With assistance from Melissa Cheok and Anand Menon.

To contact the reporters on this story: Michelle Jamrisko in Singapore at mjamrisko@bloomberg.net;Haslinda Amin in Singapore at hamin1@bloomberg.net;Yongchang Chin in Singapore at ychin22@bloomberg.net

To contact the editors responsible for this story: Joyce Koh at jkoh38@bloomberg.net, ;Nasreen Seria at nseria@bloomberg.net, Michael S. Arnold

©2019 Bloomberg L.P.