SIGNING OF URUGUAY ROUND OF GENERAL AGREEMENT ON TARIFFS AND TRADE (Significance for ASEAN Free Trade Area and Singapore)

Dr Kanwaljit Soin asked the Minister for Trade and Industry what is the significance of the signing of the Uruguay Round of the General Agreement on Tariffs and Trade for the ASEAN Free Trade Area and Singapore.

The Minister for Trade and Industry (Mr Yeo Cheow Tong): Sir, Singapore is perhaps unique in being a small, almost totally open economy which is heavily reliant on trade. Our external trade accounts for some three times our GDP. The Marrakesh agreement, the product of the seven-year Uruguay Round (UR) negotiations, is an especially important agreement for economies like Singapore.

First, the Marrakesh agreement achieved deep tariff reductions. Based on Singapore's 1993 trade figures, Singapore can look forward to potential tariff savings of about S$3 billion for our exports when the reductions are fully implemented. In the services sector, we can also look forward to greater transparency and liberalisation in the various regulations imposed by our export markets. In short, Singapore will gain when the market access barriers of our trading partners are lowered through the implementation of the Marrakesh agreement.

Second, the agreement provides for the implementation of a more effective GATT dispute settlement process. A new body, the World Trade Organisation (WTO), will be set up, hopefully by 1st January 1995, to enforce international trade rules. Stronger rules and stronger enforcement will help provide greater predictability and certainty in the conduct of international trade. This will help provide some recourse for us should any trading partner decide to take unreasonable unilateral actions against our exports.

Sir, on the significance of the UR on AFTA, the Marrakesh agreement requires countries to fulfil their tariff reduction and market opening commitments within a period of 10 years. On the other hand, tariff reductions in the AFTA Common Effective Preferential Tariff (CEPT) scheme has a 15 year implementation period, starting from 1st January 1993. The UR has also extended the market access process to cover agricultural products, an area which has been excluded from the CEPT scheme.

The ASEAN Economic Ministers discussed the implications of the UR for AFTA when we met informally in Genting on 22-23 April this year. The Ministers also took note of the rapidly changing external environment, including the strong competition from the emerging economies of China, India and Indochina. The ASEAN Ministers have asked the Senior Economic Officials to review how to keep AFTA relevant with the completion of the UR. The Senior Officials will be meeting in Jakarta from 6th to 8th June this year to review and recommend changes to the programme under the AFTA.

Mr Chng Hee Kok: Sir, I would like the Minister to clarify whether there is any loss to Singapore if Singapore is not given the opportunity to hold the first World Trade Organisation's meeting in Singapore.

Mr Yeo Cheow Tong: Sir, I think the loss would be to the whole region, because the UR meetings have taken place in all the regions of the world except in Asia. And yet Asia is today the fastest growing trading region. Therefore, if the first meeting of the WTO Ministers is not held in Asia, it represents a loss for the whole region and not just for Singapore.

Dr Kanwaljit Soin: Sir, would the Minister consider suggesting to the AFTA Senior Economic Officials the inclusion of services and investments? Otherwise AFTA will become superfluous when compared to GATT and NAFTA if services and investments are not included, besides speeding up tariff reductions.

Mr Yeo Cheow Tong; Sir, those issues will be addressed by the Senior Officials in Jakarta as well.