ASIA PACIFIC ECONOMIC COOPERATION (APEC) MEETING IN AUCKLAND (Update)

Mr Leong Horn Kee asked the Prime Minister (a) whether he will give an update on the recent Asia Pacific Economic Cooperation (APEC) meeting in Auckland, New Zealand, and in particular elaborate on the idea of signing Free Trade Agreements (FTAs) with other countries, and (b) how such FTAs would impact the trade agreements within ASEAN.

The Minister for Trade and Industry (BG George Yong-Boon Yeo) (for the Prime Minister): Mr Speaker, Sir, from Singapore's perspective, the outcome of the Auckland APEC meeting was positive. There was strong support for the launch of a New Round of multilateral trade negotiations, which would help lower market access barriers for Singapore's goods and services. There was also agreement on the scope and modalities of such negotiations. These are strong messages which would give significant impetus to efforts to launch a New Round at the Third WTO Ministerial Conference later this year at Seattle, as APEC economies account for more than half the global trade.

New Zealand has ably and skilfully chaired APEC this year towards these strong outcomes. It has managed well the bilateral and sub-regional side issues that had threatened to overshadow the APEC meetings. The general consensus is that New Zealand has put APEC back on track, and restored a good measure of the grouping's relevance and credibility.

At the fringes of the Auckland APEC meetings, Singapore announced that we would be entering into Free Trade Agreement (FTA) negotiations with New Zealand. We also reached an agreement with Mexico to explore the possibility of a bilateral FTA, and with Chile and New Zealand for a study on a 3-party FTA.

Let me put these FTA initiatives in perspective. While we pursue FTAs with strategic partners, our primary emphasis is still the multilateral trading system represented by the WTO. The WTO is the only institution that can ensure a fair and predictable environment for global trade. This is particularly important for a small country heavily dependent on trade like Singapore. We would be much poorer off in a world where trade is not governed by international rules and dominated instead by individual economies or regional blocs.

The objective of our FTA with New Zealand and others is to use them as catalysts to accelerate the pace of trade liberalisation within APEC. In 1994, APEC Leaders at Bogor made a commitment to achieve free and open trade and investment by 2010 for developed economies and by 2020 for developing economies. We think that one way to fast-track the achievement of the Bogor vision is through sub-APEC FTAs. APEC economies which are ready to embrace the Bogor goals of free trade earlier should be encouraged to form FTAs among themselves. Our FTA with New Zealand will be grounded on Bogor goals and will be open to participation by other economies. In this way, we see the Singapore-New Zealand FTA as being a stepping stone towards an eventual APEC-wide FTA, thus realising the Bogor vision.

At Auckland, we were pleasantly surprised to note that several other APEC leaders shared a similar view. They are discussing FTAs among themselves, for example, Korea and Chile, Japan and Mexico.

Singapore remains committed to ASEAN and the establishment of a strong ASEAN Free Trade Area (AFTA) that is attractive to investors. This is in our own interest because our long-term fortunes are inextricably tied to ASEAN. Our FTA initiatives will not detract from our commitments and obligations in ASEAN. We will continue to work hard for the implementation of the AFTA Agreement, the ASEAN Agreement on Services, the ASEAN Investment Area and other ASEAN economic initiatives.

Our decision to enter into FTAs with other trading partners can help to strengthen the region. We see the Singapore-New Zealand FTA as a preliminary step to build up linkages between ASEAN and other regions, for example, the Closer Economic Relations (CER) grouping of Australia and New Zealand. At a recent ASEAN meeting with Australia and New Zealand, the Ministers agreed to set up a high level taskforce to study the feasibility of establishing an FTA between ASEAN and the CER by the year 2010. This will strengthen ASEAN's negotiating position in the global trading system.

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Speaker, Sir, I would like to ask the Minister whether the Government has plans to also extend these FTAs with other countries, besides New Zealand, Mexico and Chile.

BG George Yong-Boon Yeo: We have had preliminary discussions with the United States, Australia, New Zealand and Chile on the possibility of a P5 arrangement to liberalise trade among ourselves. And with some other countries, we have also initiated preliminary discussions.

Mr Simon S C Tay (Nominated Member): Mr Speaker, may I ask the Minister, given the trade increases within Asia itself, would the Government consider prioritising a Free Trade Agreement with Japan or other East Asian economies?

BG George Yong-Boon Yeo: Our offer is to all those who are ready to move along with us. We have little difficulty in establishing FTAs with other countries. So those countries that are prepared to move earlier than others, we will welcome them to join us. For this reason, our FTA negotiations with New Zealand are based upon open-ended membership.

Mr Chiam See Tong (Potong Pasir): Mr Speaker, how far would the FTA between New Zealand and Singapore go? Will it also include travel between the citizens of the two countries?

BG George Yong-Boon Yeo: There is already free travel between the peoples of the two countries. I do not think we require visas to visit each other. I wonder whether this is the question which Mr Chiam is posing to me or he is referring to something else.

Mr Chiam See Tong: Free travel, like in Europe between the countries which have a free trade area.

BG George Yong-Boon Yeo: I do not think that we will agree on the free migration of people without control, which is possible in Europe now.

Dr Tan Boon Wan (Ang Mo Kio): Sir, I would like to ask the Minister whether, in view of the fact that there is an economic crisis, there will be a delay in achieving the Bogor time limit of 2010/2020 for the liberalisation of tariffs.

BG George Yong-Boon Yeo: Mr Speaker, Sir, two weeks ago, I chaired the ASEAN meeting in Singapore. Before the meeting, I did not have very high expectations because we are just coming out of the economic crisis and I thought that many other member countries would rather concentrate on their own domestic problems first before looking at regional issues. But to my pleasant surprise, the mood was very positive and there was strong determination to carry forward with initiatives like the ASEAN Free Trade Area and the ASEAN Investment Area, and which was why it was possible for us to talk about something which we had not talked about before, which was the possibility of establishing an FTA between ASEAN and the CER.

Mr Leong Horn Kee: I would like to ask the Minister whether there is a possibility of a Free Trade Agreement with China.

BG George Yong-Boon Yeo: Sir, China of course represents the greatest Free Trade Area in the world with 1.2 billion people. I do not think it is in China's interest for the time being to enter into an FTA with us. It will of course be in our interest to enter into an FTA with China. As I said earlier, our offer is to everyone in APEC and that includes China.