KEY CONCLUSIONS:
- Globalisation over protectionism
“I would say the global trend, where things are going, is actually towards more integration of the global economy. Just look at the way how things are moving in the technology space, for example. It’s hard to find someone, perhaps, in the room today who has not experienced e-commerce, shopping online, getting information online. I think the trend of technology is such that people are now getting more connected across different national borders. And trade is getting to become more and more borderless, in that sense. In that sense, that trend is going against what protectionism is trying to do, by setting up borders, setting up walls, preventing cross-border trading. I think that the longer trend is for more trade to be connected.
I think the trend is that people will still continue to look at multilateral trade agreements for trade in different regions. What we see today is that the TPP’s 11 countries are still talking how to move ahead with the TPP as it is, even with the US taking a sideline position. <...> [We will] promote more free flow of trade and services. <...> ASEAN is continuing to integrate LatAm nations to create an ASEAN economic community. And beyond the nations of Southeast Asia <...> we are also talking about creating a regional comprehensive economic partnership. <...> I think that the general trend is that regions will continue to want to have open trade among themselves,” said Poh Koon Koh, Senior Minister of State, Ministry of Trade and Industry & Ministry of National Development of the Republic of Singapore.
- China’s domination in commodity markets
“Today China’s consuming only 50% of the world’s commodities, with 1.4 billion people in 7 billion population, they’ve got a lot of room to grow. <...> And remember China’s GDP per capita is only USD 8,000, while in the US it is USD 60,000, and in Taiwan or South Korea it is about USD 25–30,000. These guys have got a long way to go. <...> I’m not concerned about China’s demand because it is good. <...> it is big, around 12 million tonnes a year.”
“The Chinese will go to new frontiers where a lot of the mining companies are not going. And you will see a lot more Chinese gold mines around the world, and especially in Africa, and I think in seven to ten years’ time China will be producing a lot of their own commodities in other parts of the world to feed their country. <...> They may have to come to Russia, where you still have a lot of reserves, and if the Russians are not prepared to invest themselves into new big mines, you may have China trying to get in,” said Erik Schatzker, Anchor.
- Development of cutting-edge technologies and robotics
“In the previous era, you would analyse markets on a monthly basis, on a weekly basis, but you need to analyse them on almost an hourly basis now. Trading in terms of the paper, not the physical volumes is getting harder and harder because of all this technology, because of all this transparency of the data.”
“The whole [logistics] sector is moving into the artificial intelligence era. I think in five to ten years’ timeframe [there will be] very little real workforce, I think everything is going to be fully automated,” said Leyla Mammad Zada, Chief Operating Officer, Summa Group.
“The computers will be analysing demand and supply, but [to understand] where demand and supply is, you will need people who are going to find out,” said Erik Schatzker.
CHALLENGES:
- US shift towards trade protectionism
“If you look at the ways that have happened since the US withdrew from the TPP, someone will see it as really shrinkage away from global trade and into more protectionist positions,” said Poh Koon Koh.
“I don’t know if it’s protectionism. Let’s see what President Trump finally does. There’s been talk about it, etc., but we may need to try to analyse what he is saying. He doesn’t want America to get disadvantaged against the other countries. [Let’s see if he introduces] the 45% tariff which they are talking about. <...> I understand he doesn’t like the trade deficit with China, Germany or Mexico. <...> but you’ve got to be careful,” said Erik Schatzker.
- Job cuts
“It’s subsidised goods coming into the US and therefore putting the US workers out of business and closing plants and factories. <...> [It is] about steel and aluminium. We have shut down a lot of aluminium plants in the US <...> [because of] subsidised material that is coming into the US,” said Erik Schatzker.
“We virtually got rid of all our textile and garment manufacturing industry in Singapore [as a result of globalisation], which used to be providing a lot of employment.”
“It really is about making sure that machines do not just take away jobs,” said Poh Koon Koh.
SOLUTIONS:
- Fair competition
“To produce aluminium, [America] could potentially be competitive. <…> But at least [China has to] get rid of the subsidised material, and let us see who can compete in the real world,” said Ivan Glasenberg.
- Education and retraining of the population
“I think it is really about finding what fits the profile of people. <…> I think that boils down to how you craft the domestic policies to make sure that there is a way of lifting up people from the bottom,” said Poh Koon Koh.