A shared rules-based order needs to be reinforced so that global trade can continue to be conducted on a free, fair, and nondiscriminatory basis amid a potential weakening of the multilateral trading system, according to senior officials and experts at a Tokyo forum.
During his speech at the two-day Nikkei's annual Future of Asia forum that kicked off on Thursday, Japanese Prime Minister Shigeru Ishiba said, "The WTO system, which benefited Asian countries including Japan, and the free and fair economic order should be maintained."
He said high tariffs would not help the economy flourish and reiterated that Japan would like to promote investment over tariffs.
"Undoubtedly, the greatest uncertainty confronting us today is what will happen at the end of the 90-day pause on the U.S. 'reciprocal' tariffs," said Gan Kim Yong, deputy prime minister of Singapore, at the forum.
"This is not only holding businesses back from making important decisions on long-term plans but also discouraging them from near-term hiring and investing. The pullback in economic activity will weaken global growth and we cannot rule out the possibility of a recession."
He emphasized that the centricity of rules-based multilateral trading order based on predictable tariff terms, with clear and shared frameworks for nontariff measures, is critically important.
"In particular, the most-favored nation principle underpinning the WTO safeguards a level-playing field for economies, big and small.
If members decide to trade only on their own terms and impose tariffs when they wish, larger economies will always possess stronger levers.
And on the other hand, smaller economies that have less bargaining power risk being marginalized and left behind. This is why recent moves by some countries to impose and remove tariffs at will are concerning," Gan said.
Since April 2, the "reciprocal" tariffs imposed by the United States have left the world in big uncertainty. For China, the "reciprocal" tariff rate is 34 percent, damaging the Chinese interest, so China must take strong action, said Zhu Guangyao, former vice-minister of finance of China.
"The retaliation is not only for protecting Chinese interests. We also protect the global trade system. We are really worried that if something continues like this, the world will return to the law of the jungle. We need multilateralism. We need a rules-based trade system," said Zhu.
"U.S. Treasury Secretary openly said the U.S. policy is to make strategic uncertainty as a tool to deal with trading partners," he said.
Zhu expressed hope that through the efforts of all global partners, the global trade system will return to the rules-based system that is in line with the interests of all countries, including the U.S..
Meanwhile, speakers underscored the importance of keeping the momentum for development in Asia. Luo Zhaohui, former chairman of the China International Development Cooperation Agency, called for the establishment of an East Asia organization based on the ASEAN Plus Three mechanism, which consists of 10 ASEAN member states and China, Japan and South Korea. Luo stressed that both China and Japan play a driving force in pushing regional cooperation ahead.
After the Ishiba administration took office in October, a lot of cooperation between the two countries, including political engagement, people-to-people exchanges, and media cooperation, has been going on. Last year, the bilateral trade hit $308.27 billion.
To promote this bilateral relations, Luo emphasized the need to abide by the four China-Japan political documents as well as explore high-level and people-to-people interactions, bilateral FTA negotiations, and new areas of cooperation.
"We hope Japan can view China and China's development objectively so that we remain on the right track at the policy level," he said.
As this year marks the 80th anniversary of the end of World War II, Ishiba stressed the importance of taking history to heart.
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