Transcript of Minister for Foreign Affairs Dr Vivian Balakrishnan's Remarks at the American Chamber of Commerce's Balestier Series Event on 2 September 2022 at Shangri-La Hotel Singapore

Good afternoon. I should address first, Jonathan Kaplan. We are very glad that we have a United States Ambassador back in post. It has been a stretch. Of course, our AmCham CEO, Dr Hsien-Hsien Lei, and many of you, whom I might have met and are familiar with. Today's event, as Dr Lei has mentioned, is named after Joseph Balestier. He was around (as Consul in Singapore) for 15 years. I think it is 1836, more than 170 years ago. Mr Balestier’s wife presented the Revere Bell to the Church of St Andrew in Singapore. I believe it is the only Revere Bell located outside the US today. It is something worth a pilgrimage for. It is also a symbol of the long-standing and enduring friendship, and indeed, partnership between our two countries.

Let me start first with a quick snapshot of economic ties. The US remains Singapore's top foreign investor. The cumulative stock of FDI from the US to Singapore stands at S$528 billion. If you ask about the trend line, and the increase just in the last year or so, I think you are talking about double digit percentages. The point is that the US is the top investor in Singapore, and (investment is) growing. The US has more invested in Southeast Asia than it has invested in India, China, and Japan combined. The bulk of that is in Singapore. I used to recite this every time I saw President Trump. The other point I used to make to President Trump, repeatedly, was to say that the US has a trade surplus against Singapore. I think it currently runs in excess of US$21 billion. The first time I said it to him, he said, it cannot be. I said, this is off your own website. The next time I said it to him, he said, you (Singapore) must be the only one.

The larger point was that we are not so much looking at this in terms of bilateral trade surpluses or deficits. In fact, we are looking at this as a global system of trade liberalisation and the flow of investments that create interdependence, and has been a formula for peace and prosperity for many decades. A key beneficiary of this post-World War Two economic system has been Singapore. But so was Taiwan, and so was (South) Korea. The other act of magnificent generosity of the US, which was the main victor of the Second World War, was to rebuild the vanquished. That is why you saw in the last eight decades the growth and reconstruction of Japan and Germany, the Marshall Plan in Europe, and the multilateral pillars – the United Nations, the World Bank, the IMF (International Monetary Fund), later on the General Agreement on Tariffs and Trade, which became the WTO (World Trade Organization).

I am making all these points so you understand that for the last eight decades, a world system of not only geopolitics and international law, but trade and investments, has been a very unusual phase in human history. To a large extent, (it has been) envisioned and underwritten by the United States in blood and treasure, but it was a formula for peace and prosperity, particularly for those of us who were non-Communist during the last Cold War. We were in a sense, ironically, on the right side of history. I say ironically, because the usual Communist propaganda is to say victory is inevitable, and you want to be on the right side. One key difference worth highlighting is that at the end of the Second World War, the US’ share of global GDP was about 40%. Today, it is about 24% and shrinking. That is relative share of global GDP. This shrinkage in relative share of global GDP meant that in the past, (of) every extra dollar generated for global GDP, 40 cents went to the US. At that level, it is worth the US being the architect, the underwriter, the global policeman, for a global system. At 24%, it is a perfectly legitimate question for the voters in the US to say, wait a minute, if I am only getting 24% why do I have to do the policing? Why do I have to shed blood across the world? Why do I need to exert all these superhuman diplomatic efforts?

I am making this point to get beyond the fluff, polarisation, and the polemic of the debate, to say it is a legitimate political question. That is a reminder that the debate and the terms of the debate within the US do matter. It certainly matters for the US, but it also matters for the rest of us. Today, there are about 5,500 US companies based in Singapore. You are not just running local operations –many of you run regional operations too. That is why AmCham Singapore is important, and that is why these engagements that you organise are very salient.

If you look in the last year or so, there has actually been a very steady cadence of bilateral visits. We have welcomed five Cabinet Secretaries. In fact, I should start with Vice President Kamala Harris; Commerce Secretary Gina Raimondo, Defense Secretary Lloyd Austin, Trade Representative Katherine Tai, and more recently Energy Secretary Jennifer Granholm. (US Ambassador) Jonathan has also been busy not only looking after the Secretaries, but also the multiple Congressional Delegations (CODELs) to Singapore, including one just yesterday. Of course, you will also remember the Speaker Nancy Pelosi and her delegation.

Beyond the diplomatic meetings, there has been real meat in the sandwich. We launched the Singapore-US Climate Partnership when Vice President Harris was here. This is an effort which we believe will catalyse green projects in areas like carbon trading, green financing, low carbon solutions. I believe it will offer many opportunities for US businesses to deepen your regional cooperation and investments in this evolving area. We also believe that this will help strengthen energy resilience and security in Southeast Asia and beyond. Speaking of energy, I am just going to make one small point which most people have not yet fully appreciated the strategic implications thereof. By 2018, in a space of just one decade, the US has not only become energy independent but is one of the largest producers and exporters of energy. This has profound implications for the economy, for supply chains, for manufacturing, and for the geostrategic balance of power and vulnerabilities. Most people have not yet worked out the full implications of American energy independence.

Beyond that, we have also launched the Partnership for Growth and Innovation (PGI). This was done in October 2021 to enhance cooperation in the digital economy, energy and environment technologies, advanced manufacturing, and healthcare. Many of you here are in precisely these sectors. When Prime Minister Lee Hsien Loong visited Washington in March this year, we announced three additional focus areas for the PGI and that is, one, aligning our artificial intelligence frameworks; second, a US advanced manufacturing trade mission; and third, enhancing regional cyber security collaboration. There is real work being done. We believe that the projects under this partnership can be scaled up for further regional level arrangements, and underscores the ongoing and continuing vital role of US businesses in driving innovation, and economic collaboration across our region.

The US has played a constructive and critical role in the Asia Pacific for nearly 80 years. I have mentioned post-World War Two – a very unusual period. Critics will say the US is a hegemon. These are the standard diplomatic arguments which you can engage in. But put aside the polemic, from Singapore's perspective, the US has been a constructive and benign presence in our part of the world. The economic development, which you have seen in Singapore, and indeed in Southeast Asia, and even Northeast Asia for that matter, would not have occurred if the US did not have this consistent bipartisan policy over many decades.

Prime Minister Lee Hsien Loong announced our support, therefore, for the Indo-Pacific Economic Framework in May this year, and again, this is no big surprise. We are a tiny city-state in the heart of Southeast Asia. Our trade volume is more than three times our GDP. Of course, we would stand and support these efforts, which would lead to greater economic relationships and collaboration across the Pacific. We do expect and hope the US will continue to play this constructive role in the Pacific. We would also stand for having an open, inclusive rules-based global order. We believe this has been a recipe for peace and prosperity for eight decades. We believe this still applies, even as we get into a more dangerous phase of the world.

There is one missing elephant in the room, and that is called the TPP (Trans-Pacific Partnership). If there is one strategic error that I would point to, it is the US’ absence from the TPP. It started with just four tiny countries – Singapore, Brunei, New Zealand, and Chile. We were trying to create something across the Pacific. It really did not become big until the US and Japan got involved. It remains, in my view, the most ambitious, high standard multilateral free trade agreement. In fact, many of your companies here were engaged both in the negotiations as well as the implications of that. Having brought the bride almost to the altar, suddenly a key architect was missing for political reasons. Both candidates in 2016, for domestic political reasons, had to shy away from it. It is a strategic error because it would have been a clear and obvious example of continued US engagement and commitment to our region. It goes beyond the military because even militaries need to have interests to defend. My hypothesis – it is the economics. It is the opportunities for American workers, American companies, and what American companies will do with us in Asia. Because in Asia, what are we interested in? We are interested in trade, we are interested in investments, we are interested in connectivity. We are interested in opportunities in green technologies, digital technologies, and all the evolution of standards, which is needed if we are to harvest the fruits from this bountiful field. That is just politics. We will have to wait and see, but it is ironic that in the meantime, there are other peer powers now knocking on the doors of the TPP.

But let me come back to the key point, which is that Singapore and the US are steadfast partners. I told the CODEL yesterday that they can find no more reliable, consistent, and long-standing partner in Southeast Asia for American engagement in our part of the world. We do this not in a sycophantic manner, or because we are a vassal state, or because we want to model our society on America. No, we do not. We do this because it makes perfect rational sense. Done right, it can secure the peace and prosperity, and produce great opportunities for our people in this emerging world.

Unfortunately, I have to end on a more somber note. The world has entered a much more dangerous and uncertain phase. Look around, what do we see? We see a global order facing frontal assault - the United Nations Charter, international law. Look at what is happening in Europe and in Ukraine. We see supply chain disruptions, we saw that in COVID, we are seeing it now. I think all of us have had to change the way we used to look at supply chains and management of inventories. It used to be “just in time”, now we all have to operate “just in case”. Once supply chains have to add on this insurance premium, even a non-economist like me can tell you this will add to inflation. Costs will go up. We see inflation –I think the latest number from the US was at 8.5%. We are entering a period of high and probably prolonged inflation. As Jerome Powell has said last week, if they act on their determination to bring inflation down, they will have to raise interest rates and that again will be another break on growth for all of us in the economic field.

We are witnessing increasing technological bifurcation between the US and China. Just read the latest instructions to Nvidia and to AMD on some of the more advanced chips used for machine learning and artificial intelligence. The reason why bifurcation is a big deal is that for the last eight decades, and going even before that, the world has advanced technologically by using a common stack of research, development, innovation, and technology. IP regimes, like patenting, allow everyone to benefit from this common and collective search for advances in science and technology but with sufficient advantage and incentive to inventors. That is what patent laws are about. If we really fracture the world, and I am talking here about science and technology, I think it is going to be very difficult to really bifurcate. But even the attempt to bifurcate must mean slower progress, higher costs, and a more disruptive, divided, and dangerous world.

If that is not enough, we all can see there is a food and energy crisis. Add the floods, droughts, and heatwaves in various parts of the world. I do not know how many people in here are still climate change deniers. But it is clear, we are not short of challenges. All these challenges: dealing with new technologies and the change in the means of production, dealing with inequality domestically, dealing with climate change, with pandemics, with cyberspace and outer space. These are all examples of the global commons. The tragedy of the commons is when all the stakeholders collectively are unable to get together to do what is right. You do not need to be a genius to know what we need to do for all these areas of the global commons. But the problem is political. Because in most countries, it is not that politicians do not know what to do, but they do not know how to get it done and win the next election, and work effectively together. We therefore live in a very interesting age. If it was not so dangerous, and with such fatal consequences, it would be just an invigorating intellectual exercise. But it is dangerous, and people are paying the price for inaction or for strategic mistakes. We therefore do need to put our thinking hats on, and we do need to get things going. I make an appeal to all of you as business leaders because you are also on the frontlines, and you know both the opportunities and the dangers. It is your duty to speak to your politicians, nudge them, and persuade them to make the necessary moves to protect our global commons. Thank you.

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