28 October 2025SM Lee Hsien Loong at the Chatham House DialoguePeopleSM Lee Hsien LoongTopicsEconomyForeign affairsTradeTranscript of Senior Minister Lee Hsien Loong's dialogue[...]

Thank you, Samir, happy to be back at Chatham House. The last time I was here was in 2014, more than a decade ago. And as Samir reminds me, soon after the [Russian] invasion of Crimea.

In the last 10 years, the world has changed a great deal. And the multilateral global order - led, guided, shepherded by the United States - has come a long way towards unravelling. It is something which has been underway for some time, partly because of the trade imbalances and tensions which have built up between countries. And partly also to a substantial degree, because of strategic tensions and rivalries between the US and China, as China has grown stronger, and contradictions have emerged in their relations.

It has been brewing for some time. But this last year, it has come to a boil with a new US administration. And it is something which affects all countries. Small countries - particularly Singapore - looking out at the world, anxiously trying to avoid the storm all round us; but even all other countries are trying to ask how to navigate through this storm and avoid any rogue waves hitting them unawares.

I would just say there are two areas which we can think about, and we can discuss later. First, on trade and secondly, on security.

Trade

On trade, we used to talk about Most Favoured Nation (MFN) - win-win, free trade, co-prosperity, interdependence. Now we talk about security, resilience, tit-for-tat, and a bilateral, transactional, win-lose approach - at least in some circles. Where do we go from there? I think for many countries, the direction it's going - we have grave forebodings, and we are not sure how to make a U-turn, but we will try our best not to go in the most disastrous directions. Because whatever the difficulties, whatever the security or resilience considerations, you have to do business with each other, and we cannot go back to autarky. The best - the only example - of autarky we have is not a very encouraging one, and that is North Korea. It is not where most countries want to be.

You have to do business. How do we do business? I would say there are three things which we could do, given that a very important player, the United States, has decided that they will no longer hold the ring; they will no longer be the champion of free trade; they will no longer stand for multilateralism and MFN rules. In fact, they want to go bilaterally. They want to use trade fully weaponised as an instrument of power. And they also look askance sometimes, when other countries come together and want to promote trade and cooperation with one another. What do you do with this reality?

I would say there are three things.

First, do not give up on the WTO (World Trade Organisation). There is life in the old dog yet. It has got many shortcomings. It is ugly, it is inefficient, it cannot make decisions because consensus means unanimity, and that is paralysing. But there are things you can do within the WTO umbrella - and you do want that umbrella - because it represents a certain ideal, a certain conception of the way we should work together, which we do not wish to give up, for good reason.

So, I give you two examples of the things which you can do in a practical way. One is something which they call the JSI - Joint Statement initiative. It has to do with e-commerce, the JSI on E-Commerce^[1]. And it is a group of countries that came together, led by Singapore and Australia. It does not cover all the countries in the WTO, but a fair number of them. And we came together and agreed on a set of rules which would govern e-commerce, and which would help to promote e-commerce amongst ourselves. And well, so it is not universal. It is consensual. But these are all consenting adults. We know what we are doing, and we hope that others will want to join us. And well, if that is a contribution to the global system, that is a plus.

A more recent example, still on a very nascent scale, is what we call FIT P - the Future of Investment and Trade Partnership. It started as, I think, 14 small countries. Singapore again, there with New Zealand, with the UAE, with Switzerland, and a few other countries. And the idea is to agree amongst ourselves on broad rules for engagement when it comes to investment, to trade, to dispute resolution. So even if the WTO mechanisms do not work, we have some idea how we can work with one another and avoid ending up in a war of "all against all". And again, if other countries would like to join, well, that is a plus.

There is some precedent for small things growing big. For example, the CPTPP - the Comprehensive and Progressive Agreement for Trans-Pacific Partnership - started off as a very small and improbable thing. Four of us: Singapore, New Zealand, Chile and Brunei. We called it the P4 and the hope was not that there was any significant volume of business, but we hoped that by creating this, it could be the nucleus around which some crystal would form. And it did form. And we negotiated, and we had Japan join the party; we had the Vietnamese join the party; we had Peru join the party; Mexico, Canada, even the United States joined the party, which really, we thought we had hit a six.

And it nearly got across the finish line. But unfortunately, Obama could not get it through Congress and did not want to try, and ran out of time. But we salvaged it, and today you have got the TPP minus the US. We call it the CPTPP. It is 11. And last year, the UK joined, and it is 12 again. And it shows that small things can grow, and it may not cover the world, but it makes a significant contribution. And I think we should work like that in the WTO.

Secondly, on trade within regions, we ought to work to enhance our own cooperation and bring down the obstacles which we have erected ourselves. Every region has these. Even the EU (European Union), which is supposed to be a single market, is not really a single market in many aspects - finance, investments, for example, regulations. And so too in Southeast Asia. We have an ASEAN (Association of South East Asian Nations), and we have a free trade agreement. But there is more we can do to bring down the obstacles to trade and integration amongst ourselves. I think you can do that with fewer of the strategic and security concerns, and it is something which is well worth doing. There is no shortage of ideas and plans the Europeans have - Mr Draghi has a very comprehensive plan published last year. And within ASEAN, we have lots of ideas too, and we hope some of them will have more legs, Now that the necessity is greater.

The third thing you can do is to link up between different regions of the world. Because the path of least resistance is to end up with regional blocs - and you have your area of influence, and I have mine - and between us, things are difficult. But you really do not want to go there, because that way leads to more friction, and I think, less prosperity. And you want to link up between blocs so that you can work together and have a network, a web which collectively encompasses the world.

So I see the EU is talking again with renewed energy, with MERCOSUR. It has been going on for a long time now, perhaps it will cross the finish line. EU is also reviving its interest talking to the ASEAN group - That also has been talking for a long time, but there is now new impetus. And it is possible for the EU to talk to the CPTPP group, which I think would be very valuable. Because on the one side you have basically a Trans-Pacific grouping - a dozen countries. On the other side, you have got the European countries. And we both have an interest in promoting trade and integration, subject to reasonable safeguards and fair trade and all that. And if those things can come to some fruition, I think that you can avoid a worst-case outcome on trade.

There is some reason for optimism. If you look at the response of countries since Liberation Day - or anyway, since the second of April - it has not descended into a war of "all against all". Countries have been mostly quite restrained in their responses. And amongst themselves, it is quite clear that they want to preserve as much of the framework as possible, so that you do not end up mutually impoverishing each other. And if that can be held, I think that would be very valuable.

One key thing is, how do you fit China into this picture? Because they are big, they are important. You have a lot of trade with them; you may want to grow your business with them at the same time - How do you resolve the imbalances which exist with China? And how do you deal with the security in other aspects, which are particularly salient in this relationship? And that is something we can discuss later.

Security

On security, taking a Singapore perspective from Asia, I would just highlight a contrast between how it is in Europe and how it is in Asia. In both cases, we are confronted with a US policy which is radically different from what we had planned on and expected. But the situations are different. In Europe, you know pretty exactly what your strategic challenges are. You are dealing with Russia now - successor to the Soviet Union. Its situation - with a backdrop of the Cold War, and that history - very present in people's minds. And you have NATO (North Atlantic Treaty Organisation), and you have a focus - this is a security challenge; at least many countries would say it is the security threat. And you know you want to build up, strengthen capabilities, and improve your collective defence.

In Asia, that is not the picture. China is a very important player. It has developed. It has grown stronger. It is strengthening its armed forces. That is one of their Four Modernizations, and it is palpably growing more significant by the day. But most countries in Asia do not see China as a threat. Some to varying extents, do. Japan - because they have a dispute with China over the Senkaku Islands, but also because of the history of the Second World War, which still hangs over us. Australia - because they are allied to the US. And also they see the Chinese's actions in the South China Sea as being inimical to their security interests, and they have said so. Taiwan is a special case - not a country, but it says it is watching very closely what is happening and concerned about its future. And then you have South Korea, for whom the most serious preoccupation would be North Korea, but who no doubt look beyond North Korea and ask, "Where does China stand on this?" Which is something you have to think about.

But most other countries do not take such a stance. Because we see China as a big power in the region - present, a geographical reality. They are here; we do a lot of business with them; we have prospered because they have prospered and we want to prosper more. And it started with trade. Now it is not just trade; it is also investments; it is also tourism, people flows.

And there are bilateral issues - the South China Sea. There are claimant states in the South, in the ASEAN countries, who come up against China, which is also a claimant state. But even while you have the bilateral issues, you do not frame it as an existential thing - you want to do business and you want to be able to manage the relationship. Because overall, you have many, many different tongs in the fire.

So that is very different from Europe. And to take it a little bit further, I would say, even US allies in the region want to maintain their equities with China. The Japanese have a lot of trade and investments in China. The Australians - China is their biggest export market - iron ore, coal, all sorts of things. They also sell oysters and wine. And from time to time, those get caught up in great geopolitical disputes and get held up, but they want to maintain that relationship.

And I think that gives the strategic situation in Asia a very different coloration and tone from the strategic situation in Europe. It does not mean that the countries do not want to maintain their ties with America. They do. They have always benefited from Pax Americana. They have appreciated the US's economic presence, certainly, but also the security presence even as they have simultaneously grown their ties with China. It was a kind of Goldilocks situation - you could have both sides of the benefit.

Now you have to make some more difficult choices. And we really do not want the US to lose interest in this and say, "Well, I am only focused on Latin America and Asia does not matter." Asia does matter, outside China. It does mean that if Asia matters to America, they will express their preferences on how you conduct relations with other powers. And all the powers will say, "I am not asking you to choose, but I would like you to be my friend." And we accept that. But I think for all the countries in the region - all the smaller countries in the region - we believe that it is better to be pushed from both sides and yet have manoeuvring room and freedom of action and autonomy in a region which is open, where you have choices, where there is a balance of power, and multiple players are here. And therefore we are all, well, we do not all get everything we want, but you are able to prosper together and take the opportunities here. And that includes Europe and UK having an interest in the region, and including on security issues. Because the South China Sea is far away from you, but if you care about global trade, then these are critical lines of communications, and you have an interest in freedom of navigation around the world.

So, we are in this situation. It is not ideal. We can find a way forward. It is much better than being left to our own devices and the world being carved up into spheres of influence, and small countries having the choice of one for their best and biggest friend.

And we hope we can sustain that. We have agency, but the outcome, well, maybe in 10 years' time, we will know what has happened. So, thank you very much.

[1] The JSI on E-Commerce is a plurilateral initiative at the World Trade Organization (WTO) that covers three broad areas of (a) digital trade facilitation; (b) open digital environment; and (c) business and consumer trust.

In July 2024, Singapore, Australia and Japan, as the co-convenors of the JSI, announced that participants had achieved a stabilised text, marking a significant milestone after five years of negotiations.