FREE TRADE AGREEMENTS

Mr Tay Beng Chuan asked the Minister for Trade and Industry what is the progress of the Government's efforts in the Free Trade Agreement negotiations with regional countries and how the business community and Singapore workforce will benefit from the Agreements Singapore has entered into with other countries.

BG George Yong-Boon Yeo: Our Free Trade Agreement (FTA) negotiations are progressing at an encouraging pace.

We completed negotiations on a free trade agreement with New Zealand on 18th August 2000. This agreement, known as the "Agreement between New Zealand and Singapore on a Closer Economic Partnership" or ANZSCEP, has been approved by the Cabinets of both governments. The agreement will come into force once the two governments sign and ratify it. We hope to do this within the next few months.

The joint study between Japan and Singapore officials on establishing a Japan Singapore Economic Partnership Agreement (JSEPA) was concluded on 29th September 2000. The report has recommended a "new age" FTA. Besides the traditional elements of liberalisation of trade in goods and services, and investment guarantees, new elements of collaboration in high-growth areas such as info-communications technology, financial services and life sciences have also been included. The report, which has been published, has been submitted to the Prime Ministers of both sides for a decision on the launching of formal negotiations.

For the Mexico-Singapore FTA, we have conducted three rounds of negotiations since my visit to Mexico in May this year. As agreed between myself and my Mexican counterpart, Dr Herminio Blanco, we should try to complete our negotiations for a Mexico-Singapore FTA by November, in time for PM Goh and President Zedillo to witness its signing when the President is in South East Asia for the APEC Leaders' Meeting. However, if negotiations cannot be completed by then, we will continue the negotiations and aim to complete these by the middle of next year. The incoming administration of President-elect Fox has expressed his support for the free trade agreement.

We have also held exploratory talks with Canada on a Canada-Singapore FTA. Singapore sees strategic value in such an FTA, that will build a further bridge across the Pacific. We hope to launch formal negotiations once the Canadian Cabinet gives its formal endorsement.

At the AEM meeting in Chiangmai last week, the Ministers of ASEAN, Australia and New Zealand agreed to put on the official agenda the consideration of a Closer Economic Partnership (CEP) between AFTA and CER. Such a Partnership will involve an enlarged market size of 530 million people, and a combined GDP of over US$1.2 trillion. A high level Task Force, led by Mr Cesar Virata, has completed an excellent report on the value of such an agreement.

Mr Tay asked how such FTAs benefit our workforce and business community. There are substantive as well as strategic benefits.

Substantively, FTAs provide for a higher level of liberalisation in trade in goods and services, and in investment. Our manufacturers and traders can enjoy lower tariff and better market access. Provisions to facilitate trade and to remove non-tariff barriers will also promote faster and more efficient flow of goods, thereby lowering business costs. These provisions include the mutual recognition of standards and conformance measures, and the simplification of customs procedure. Our consumers also benefit from a greater variety of products.

Many of our businesses have also embarked on a globalisation strategy. FTAs help to open up markets, especially in services, and provide legal safeguards on investments. This facilitates our businesses in their overseas ventures. It also helps us to draw in investments and create jobs for our workers.

FTAs can also have collaboration elements to deepen economic linkages between the partner economies. For example, the proposed Japan Singapore Economic Partnership Agreement (JSEPA) includes collaboration in high-growth, high-tech areas. These can help us create high value-added jobs in both countries, and enhance our competitiveness.

FTAs are also of strategic importance for our long-term prosperity, and to our ability to create jobs. Singapore is highly dependent on trade, which is almost 3 times our GDP. As the world is our hinterland, a strong and effective multilateral trading system is in our best long-term interest. We therefore attach the greatest importance to multilateral liberalisation under the WTO.

Liberalisation of trade and investments under the WTO takes time, as 138 members are involved. To catalyse the liberalisation process, like-minded countries can move ahead with bolder liberalisation measures. The benefits of such measures will have a demonstration effect and build momentum for further liberalisation. In this way, FTAs can serve as building blocks to the WTO.

It is, however, important that FTAs do not lead to the formation of inward looking, protectionist blocs. Hence, our FTAs are consistent with WTO requirements, and are open to accession by other members. Singapore's FTA partners, which span different continents and regions, can help forge linkages across regions and avert the danger of a world fragmenting into distinct trading blocs.