MEXICO-SINGAPORE FREE TRADE AGREEMENT (Progress of negotiation)

The following Question stood in the name of Mr Tay Beng Chuan -

Mr Tay Beng Chuan: To ask the Minister for Trade and Industry if he will provide an update on his recent visit to Mexico and the progress of the Mexico-Singapore Free Trade Agreement negotiation.

Mr Zulkifli Bin Baharudin: Question No. 17, Sir.

BG George Yong-Boon Yeo: Mr Speaker, Sir, in September last year, President Zedillo and Prime Minister Goh Chok Tong agreed to explore a Free Trade Agreement (FTA) between our two countries. Subsequently, in February this year, the Ministry of Trade and Industry of Singapore and the Secretariat of Commerce and Industrial Development (SECOFI) of Mexico agreed that negotiations would begin in July.

There were two main purposes to my recent trip to Mexico. First, to open Singapore's first trade office in Latin America. This is in recognition of the closer trade links between Mexico and Singapore and the potential for greater expansion in the future. Over the last ten years, trade between Singapore and Mexico increased by an average rate of over 30% a year, reaching $2.2 billion last year. In 1998, Mexico exported more electronics products to Singapore than to the rest of East Asia, including China, Korea, Japan, Hong Kong and Taiwan combined.

The second purpose of my trip was to deliver a personal letter of invitation from Prime Minister Goh to President Zedillo to visit Singapore in November before he steps down at the end of the year.

I also met with my counterpart Minister, Dr Herminio Blanco. Dr Blanco and I agreed that we should try to complete our negotiations for an FTA by November, in time for Prime Minister Goh and President Zedillo to witness its signing when the President is in South East Asia for the APEC Leaders' Meeting. However, we may not be able to complete negotiations within this short time frame. If negotiations cannot be completed by then, Dr Blanco and I will sign a document listing the areas that our negotiators have agreed on and expressing our common intention to complete negotiations by the middle of next year when a new Mexican administration has been in office for a number of months.

If the candidate of the present ruling party wins, there will of course be continuity. I have taken the precaution of sounding out the principal opposition candidate from PAN. He has expressed his full support for the FTA. Elections are due this weekend.

The key businessmen and representatives from the business associations we met in Mexico also expressed general support for the FTA. While there were some concerns about the impact of the FTA on specific domestic sectors, these concerns arose from a lack of knowledge about Singapore. Fundamentally, Singapore poses no threat to politically-sensitive sectors in Mexico like steel and textiles.

We will negotiate an Investment Guarantee Agreement as part of the FTA to facilitate Singapore investment in Mexico. While our present investment in Mexico, which currently amounts to US$133 million, is small in relation to our investment in Asia, it has grown significantly in recent years. The Mexicans are very keen to have more of our businessmen invest in Mexico to take advantage of NAFTA.

Strategically, we see Mexico as our gateway into Latin America and we hope that Singapore can be a gateway for Mexico into Asia.