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SINGAPORE FREE TRADE AGREEMENTS Team 5: Ryan Karasack Barrett Seitz Lauren Mc. Kenna SINGAPORE FREE TRADE AGREEMENTS Team 5: Ryan Karasack Barrett Seitz Lauren Mc. Kenna

Background of Singapore • Singapore was founded as a British trading colony in 1819 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

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

Singapore & Japan • Dec 1999 – Negotiations Began • Early 2001 – Consensus 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

Singapore & Japan • Bulk of Japanese Exports to Singapore Include • Machinery & 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

Areas of Trade • Customs Automation • Reduction of customs cost on bilateral trade 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 ecommerce transactions • Service Trade

Areas Of Trade • Service Trade • Liberalization of Service Trade • Elimination of 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%

Impacts On Free Trade Singapore: • Higher rates of return on investments • Boost 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

Other Impacts • All Asian economies gain in terms of GDP • Largest impact 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.

The U. S. Free Trade Agreement Overview • Signed on May 6, 2003 • The U. S. Free Trade Agreement Overview • 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

The U. S. Free Trade Agreement Trading of Services • Singapore and The U. The U. S. Free Trade Agreement Trading of Services • 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

The U. S. Free Trade Agreement Trading of Goods • Most U. S. tariffs The U. S. Free Trade Agreement Trading of Goods • 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

The U. S. Free Trade Agreement. Property Protection of Intellectual Rights • Protection of The U. S. Free Trade Agreement. Property Protection of Intellectual Rights • 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 “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

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

Objections to Free Trade • Less U. S. jobs for U. S. citizens – 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

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

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

Top Regional HUB for Multinational Companies Over 6000 multinational corporations have offices in Singapore 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

Singapore as a Multinational in the U. S. • Singapore is the U. S. 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

Why Multinationals Choose Singapore as their Asia-Pacific headquarters: • A well-developed, free-market economy • 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

The Effects of the USSFTA on Multinationals • The USSFTA will be felt most 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

The USSFTA Effect on the Banking Industry • U. S. companies will have access 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

The USSFTA Effect on the Information and Communication Technology Industries • Will initiate intellectual 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

Impact on the Singapore Real Estate Market • With the liberalization in bilateral trade 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

The USSFTA Effect • Will save Singapore up to US$170 million annually in tariffs 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

Videos • http: //www. uncommonknowledge. org/700/ 712. html • http: //www. usasean. org/Singapore/fta_interview. asp Videos • http: //www. uncommonknowledge. org/700/ 712. html • http: //www. usasean. org/Singapore/fta_interview. asp

Notes • • • CIA - The World Factbook International Economics - Regional Trading 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