On January 30, 2003, the White House informed Congress of its intention to accede to the Free Trade Agreement. (1) As required by the procedures of the Trade Promotion Authority (TPA or Fast-Track), this notification was made more than 90 days before the signing of the Agreement on 6 May 2003. The U.S. Trade Representative (USTR) has published the text of the agreement and accompanying letters on its website. (2) Of the 31 trade advisory committees of the administration, only the Labour Advisory Committee did not approve the free trade agreement, although several of the committee`s reports were neutral, did not give a majority opinion, were divided in certain provisions or had dissenting opinions. (3) With regard to the impact of trade with Singapore on the US economy, a group of analysts quantified the impact of the free trade agreement on the US on welfare at a positive level of 0.19% of GNP, or around $18 billion. (46) Over the past three years, the USA has recorded trade surpluses with Singapore. The net macroeconomic effect of this trade on U.S. employment is therefore generally positive, although bilateral trade balances have little impact on overall U.S. employment levels. However, at the micro level, the electronics and other machinery and equipment industries could face increased competition from imports under the FTA.
The Agreement establishes a Joint Committee to monitor the implementation of the Agreement and to examine trade relations between the Parties. The committee is composed of the U.S. Trade Representative and the Singapore Minister of Trade and Industry or their representatives. The Board shall meet once a year for an ordinary session and for special sessions within 30 days of a request from both countries. The tasks of the Committee include (inter alia) reviewing the operation, functioning and implementation of the Agreement in the light of its objectives; facilitate the prevention and settlement of disputes arising from the Agreement; the consideration and acceptance of any amendment to the Agreement, subject to the conclusion by each Party of the necessary national judicial proceedings; publish interpretations of the Agreement; and examine ways to further improve trade relations between the parties. The U.S.-Singapore Free Trade Agreement (FTA) has helped boost U.S. exports, improve U.S. competitiveness around the world, and ensure a U.S. presence in Southeast Asia. It also provides a free trade standard that promotes a high degree of liberalization. Doing business in Singapore has become even easier, faster, cheaper and more transparent. The free trade agreement has given U.S.
businesses and exporters even more access to one of the world`s largest markets. As noted in this report, the Integrated Procurement Initiative has also sparked discussions. The question is the extent to which certain computer goods and medical equipment that are traded duty-free can be considered Singaporean. Since the items are already traded duty-free, the ISI would allow them to avoid U.S. tariffs of about 0.23% of the value of the import. The initiative targeted two Indonesian islands where many Singapore-based manufacturers source components. Indonesian manufacturers would not be covered by the labour, environmental and other provisions of the free trade agreement. Nor would Indonesia be obliged to grant reciprocal access to its markets. One of the concerns was that other countries, such as China, might also be able to use this provision to ship products to the U.S. via Singapore to avoid fees for U.S.
customs users. Wording removed from the final text of the free trade agreement seems to solve this problem. In order for a third country to benefit from the ISI, it would have to ship a qualified product from the United States to Singapore to be integrated into a product subject to the regional content requirement and then returned to the United States. When it comes to investment, Singapore generally has an open investment regime. At the end of 2002, the stock of U.S. foreign direct investment (FDI) in Singapore stood at $61.4 billion (based on historical costs). U.S. direct investment in Singapore is mainly focused on manufacturing (mainly industrial machinery and equipment, as well as electronics), finance, and oil. (17) In 2002, Singapore had a net direct investment item of USD 2,9 billion in the USA, compared with USD 3,5 billion in 2001. The majority are active in manufacturing, real estate, custodian banks and wholesale trade. (18) The USTR alleges that the FTA meets the labor and environmental objectives set by Congress in the TPA legislation.
The TPA (P.L. 107-210) sets labour and environmental objectives for trade negotiations (Article 2102(b)(11)). This includes ensuring that a party to a trade agreement with the United States does not fail to effectively enforce its environmental or labor laws through persistent or recurring practices or inactions in a way that affects trade between the United States; strengthen the capacity of U.S. trading partners to promote compliance with core labor standards; and strengthening the capacity of U.S. trading partners to protect the environment by promoting sustainable development. Some argue that the free trade agreement does not achieve these objectives. The United States already has free trade agreements with Canada, Mexico, Israel and Jordan and is negotiating free trade agreements with Central America, Australia, Morocco, the Southern African Customs Union and Bahrain. The United States is also a member of APEC, an organization that pursues free trade and investment in the Pacific region, and is negotiating with 33 other countries in the Western Hemisphere to establish a free trade area for the Americas. Given the trend to negotiate more free trade agreements, the agreement with Singapore would essentially give Singapore the same status as other countries that already benefit (or could benefit) from free trade with the United States. The U.S.-Singapore Free Trade Agreement will further expand the already strong and thriving business relationship with the U.S. 12th largest trading partner.
Annual reciprocal trade in goods and services between the United States and Singapore was close to $40 billion. Under the FTA, test data and trade secrets submitted to a government for product approval must be protected from disclosure for a period of five years for pharmaceuticals and 10 years for agrochemicals. The FTA also fills in the potential gaps in these provisions and aims to ensure that state marketing authorisation agencies do not grant authorisations for counterfeit products. In contrast, apparel members were largely disappointed with the free trade agreement, viewing the NAFTA rule of origin as restrictive and would be exacerbated by additional complications and burdens. They argued that the rule of origin discourages trade in clothing between recipient countries, which will reduce sales opportunities for fabric and stocking suppliers. They lobbied for the rule of origin of this free trade agreement not to be seen as a precedent for other free trade agreements. Singapore is the largest trading partner of the United States in Southeast Asia, with bilateral trade of $31.7 billion and a bilateral trade surplus of $1.4 billion in 2003 (up from $1.4 billion in 2002), reversing the deficit by $1.4 billion in 2000. The United States generally has a surplus in services trade with Singapore.
Singapore is the 11th largest export market for the United States with $16.6 billion in merchandise exports in 2003. It is the 17th largest source of imported goods into the United States, with $15.1 billion in 2003. . . .