1. SINGAPORE FREE TRADE AGREEMENTS Team 5: Ryan Karasack Barrett Seitz Lauren McKenna

2. Background of Singapore Singapore was founded as a British trading colony in 1819 Population: 4,608,595 (July 2003 est.) Ethnic Groups: Chinese 76.7%, Malay 14%, Indian 7.9%, other 1.4% Suffrage: 21 years of age; universal and compulsory

3. Key Issues Formation of Free Trade Agreements Japan United States Multinationals in Singapore

4. Singapore & Japan Dec 1999 – Negotiations Began Early 2001 – Consensus on FTA was reached Reduction of tariff and not tariff barriers. A mutual recognition of national standards Viewed by many as a possible template for future FTA’s in the region

5. Singapore & Japan Bulk of Japanese Exports to Singapore Include Machinery & Equipment Business & Financial Services Chemical & Mineral Products Singapore exports to Japan are concentrated in the service sector

6. Areas of Trade Customs Automation Reduction of customs cost on bilateral trade Electronic Commerce To improve security and harmonize standards governing e-commerce Decrease of 1.39% of the average price for e- commerce transactions Service Trade

7. Areas Of Trade Service Trade Liberalization of Service Trade Elimination of service trade barriers Lowered the effective price of business and financial services exported from Singapore to Japan by 20.6%, and for construction services the price drop is 29.9%

8. Impacts On Free Trade Singapore: Higher rates of return on investments Boost demand for Singapore products Cost of Investing in Singapore has fallen Japan: Minor impact on aggregate output, trade, investment, and GDP Advantages driven largely by the customs atomization process, which affects cost of trading with all partners

9. Other Impacts All Asian economies gain in terms of GDP Largest impact felt in Malaysia & Thailand –Two countries that do a great deal of trading with Singapore & Japan Increase in foreign ownership in Singapore is financed by a modest increase in outward foreign direct investment by U.S. and Canada Many other Asian countries reduce their foreign investment to increase investment in domestic countries.

10. The U.S. Free Trade Agreement Signed on May 6, 2003 Focuses mainly on: –services firms But also touches on: –trading of goods –protection of intellectual property rights, and –Protections for investors Overview

11. The U.S. Free Trade Agreement Singapore and The U.S. services firms will enjoy fair and non-discriminatory treatment in trade, through both: –Travel of service professionals across borders, and –Establishing a local services presence Market access commitments apply across a range of sectors, including: –Financial services –Telecommunications services –Tourism –Advertising –Professional services Trading of Services

12. The U.S. Free Trade Agreement Most U.S. tariffs on Singaporean goods will be eliminated immediately upon entry into the agreement Singapore guarantees zero tariffs immediately on all U.S. products Trading of Goods

13. The U.S. Free Trade Agreement Protection of copyrights, patents, trademarks, and trade secrets IPR Enforcement –Tough penalties for piracy and counterfeiting –Singaporean government guarantees that it has authority to seize, forfeit and destroy counterfeit and pirated goods and the equipment used to produce them Protection of Intellectual Property Rights “The U.S.-Singapore FTA contains ground-breaking protection for U.S. intellectual property such as software, movies, music and books. These protections are vitally important in the digital age.” ~Robert B. Zoellick, U.S. Trade Representative

14. The U.S. Free Trade Agreement The agreement provided U.S. investors operating in Singapore with a secure and predictable legal framework Protections for Investors

15. Objections to Free Trade Less U.S. jobs for U.S. citizens –Agreement provides laws that would create what is effectively a permanent visa worker program for Singapore An increase in the U.S. trade deficit “The U.S. trade deficit has increased in ever case where the U.S. has entered a free trade agreement with another country.” ~Marcy Kaptur, Congresswoman –FTA with China in 2000: increased 25% to $103 billion –NAFTA increased the trade deficit by almost 10 times what it was before it went into effect, from $9 billion to $87 billion –NAFTA also put over a million workers out of jobs due to free trade –The U.S. trade deficit was the largest ever reaching $435.2 billion in 2002

16. Other Free Trade Agreements New Zealand Australia – October 2002 In the works: Canada India Chile Jordan South Korea

17. Multinationals in Singapore Singapore is regarded as top Regional HUB In 2002 Forbes ranked Singapore the second best place in the world to start a business.

18. Top Regional HUB for Multinational Companies Over 6000 multinational corporations have offices in Singapore –3,600 use Singapore as their regional headquarters –1,400 of these are U.S.-based companies 300 of these use Singapore as their regional headquarters The U.S. is the largest Foreign Direct Investor in Singapore: US$27.3 billion Intra-MNC trade accounts for over 60% of US-Singapore trade

20. Singapore as a Multinational in the U.S. Singapore is the U.S.’s third largest investment Second largest Asian Investor after Japan Foreign direct investments are twice that of South Korea, Hong Kong, and Chinese Taipei Investments amounted to US$6.5 billion at the end of 2001 in: »Manufacturing »Real Estate »Depository Institutions

21. Why Multinationals Choose Singapore as their Asia-Pacific headquarters: A well-developed, free-market economy A well-educated, English-speaking workforce Favorable incentives and tax breaks –no capital gains tax A pro-business environment with the absence of labor-management disputes One of the best connected countries in the world –Air –Busiest seaport –telecommunications

22. The Effects of the USSFTA on Multinationals The USSFTA will be felt most in two of Singapore’s key sectors –Retail Banking –Information and Communication Technology (ICT) industries Impact on the Real Estate Industry

23. The USSFTA Effect on the Banking Industry U.S. companies will have access to Singapore’s country-wide ATM network It will open the ranks of full-service U.S. banks eligible to undertake retail business It will increase the number of branches that licensed U.S. banks can operate

24. The USSFTA Effect on the Information and Communication Technology Industries Will initiate intellectual property rights laws Will create significant enhancements to Trademarks Copyrights Patents and trade secrets Singapore government is determined to position Singapore as the regional ICT hub and is encouraging joint ventures and overseas investments

25. Impact on the Singapore Real Estate Market With the liberalization in bilateral trade and investment brought by the USSFTA, it is estimated that GDP will grow another 0.5% MNC’s have begun re-appraising various investment destinations which will make it more attractive to foreign investors worldwide As a result, this should raise demand for real estate in Singapore

26. The USSFTA Effect Will save Singapore up to US$170 million annually in tariffs Currently electronics account for 42% of Singapore’s total industrial output The majority of the output is exported to the U.S. Singapore-based U.S. MNC’s therefore will benefit the most from this new agreement

27. Videos http://www.uncommonknowledge.org/700/ 712.htmlhttp://www.uncommonknowledge.org/700/ 712.html http://www.us- asean.org/Singapore/fta_interview.asphttp://www.us- asean.org/Singapore/fta_interview.asp

28. Notes CIA - The World Factbook International Economics - Regional Trading Agreements Economic Intelligence Unit ISI Emerging Markets CNN Asia Pacific Connections Asian News U.S. House of Representatives United States Trade Representative U.S. Dept of Commerce