FREE TRADE AGREEMENTS WITH UNITED STATES AND OTHER COUNTRIES (Progress of negotiations)

Mr Hawazi Daipi asked the Minister for Trade and Industry (a) what is the progress of negotiations over bilateral free trade agreements with the United States and other countries and (b) whether there are problems in reaching agreements with them.

The Minister for Trade and Industry (BG George Yong-Boon Yeo): Mr Speaker, Sir, Singapore is negotiating free trade agreements with Australia, Mexico, Japan and the United States. We are working on concluding these negotiations as soon as possible, hopefully by the end of the year. We are also in exploratory talks with Canada and the European Free Trade Area.

Discussions with our FTA partners are progressing well. The first round of formal negotiations with Japan last month was fruitful, building on the joint study conducted last year by representatives from the government, academia and private sector of the two countries.

For Mexico, we have completed four rounds of negotiations last year. Former President Zedillo and Prime Minister Goh Chok Tong signed a joint declaration in November last year, setting out the main areas of agreement, and committing to conclude a comprehensive Mexico-Singapore Free Trade Agreement (MSFTA) as soon as possible. President Vicente Fox who heads the new administration in Mexico has given his support for the Free Trade Agreement. Both sides are committed to build on the progress that has been made thus far, and will resume negotiations shortly.

We have also begun talks with Australia. Like for the others, the Australia-Singapore Free Trade Agreement will be comprehensive in scope and consistent with our broader trade liberalisation objectives within the WTO.

As for the United States, we have held two rounds of negotiations in December 2000 and January 2001. US experts in competition policy, customs and labour have also visited Singapore in early January to better understand our system and policies. They had a fruitful visit to Singapore.

We have achieved good progress over these two rounds of negotiations with the US. We have agreed with the US on a single negotiating text that will form the basis for future negotiations. But much work remains to be done.

Our immediate task ahead is to resume talks with the new Administration as soon as possible. I have signed a joint declaration with former USTR Charlene Barshefsky, reporting on the progress of our negotiations. This joint declaration provides an important bridge between the new and the old Administrations.

At the technical level, our negotiators will continue to have discussions. At the political level, we are confident that the Bush Administration will recognise the strategic importance of the US-Singapore Free Trade Agreement (USSFTA) in its engagement of ASEAN and East Asia.

Mr Hawazi Daipi (Sembawang): Mr Speaker, Sir, would we have any problem to include labour and environment clauses in this Agreement should we be asked by these bilateral partners to include?

BG George Yong-Boon Yeo: Sir, we have to stick to the approach on labour and environment from the previous Administration. For us, it is not a very important issue but is an issue which will have to be discussed with the new Administration when talks resume.

Mr Iswaran: Sir, some neighbouring countries have expressed the concern that should Singapore conclude a bilateral FTA, this will, in effect, grant backdoor entry for these partners into AFTA. Can I ask the Minister to comment on that proposition and whether there are any safeguards to reassure our neighbours?

BG George Yong-Boon Yeo: Mr Speaker, Sir, I was puzzled by the report of an Australian newspaper that Minister Rafidah of Malaysia had given Singapore warnings against allowing Singapore becoming a backdoor entrance for Australia and New Zealand to AFTA. I doubt the veracity of the report because my discussions with Minister Rafidah and the other Ministers of ASEAN had been friendly and entirely professional. There are clear rules of origin governing how much local content there must be before companies or goods qualify for the privileges of AFTA.

Mr Chiam See Tong (Potong Pasir): Sir, Singapore has started a Free Trade Agreement with countries far away from Singapore, notwithstanding AFTA. Why has Singapore not opened up Free Trade Agreement negotiations with Malaysia who is our immediate neighbour and what are the problems, if any, notwithstanding AFTA?

BG George Yong-Boon Yeo: Notwithstanding AFTA? Mr Speaker, Sir, AFTA means that we do have a Free Trade Agreement with Malaysia and with all the other countries of ASEAN. There is a schedule. Apart from automobiles for which the Malaysians had sought a delay in the schedule of inclusion, with the permission of the Thais, virtually all goods are now in and by the end of next year, I believe the tariff lines for all goods will be down to between 0% and 5%. In effect, we do have an FTA with Malaysia and last year Malaysia became our number one trading partner again, overtaking the US.

Mr Simon Tay: May I ask the Minister, given that this bilateral activity is in some ways seen to help the WTO process, is there any movement or possibility of movement on a multilateral basis?

BG George Yong-Boon Yeo: Mr Speaker, Sir, in the last month, there has been a flurry of activities all over the world to begin the process towards launching a new round either this year or next year. The WTO Ministers have already agreed to meet in Qatar in November this year. I am not sure whether we would be able to launch this year. The attitudes of the present Bush Administration are more favourable to the global trade agenda. I am optimistic that a new round would be launched. Can it be launched this year? I am not sure. But if there is a chance, we should go for it, and in these formal and informal discussions to build up momentum for a new round, Singapore is playing a helpful role.

Mr Hawazi Daipi: Sir, do we know of any countries in the region, in particular, which have launched into negotiations on FTAs on their own?

BG George Yong-Boon Yeo: Thailand has expressed interest and had exploratory talks with, I believe, countries like South Korea. Japan is interested in Mexico and South Korea. Hong Kong, which in the past, took a very doctrinal position against FTAs, is now in some kind of negotiations with New Zealand. There could be other countries involved. I do not have a comprehensive list here.