FREE TRADE AGREEMENTS

Miss Penny Low asked the Minister for Trade and Industry (a) what are the other free trade agreements that Singapore is currently pursuing; (b) whether there are any other major trade or government to government industrial co-operation agreements in the pipeline; and, if so, (c) what are the benefits of these efforts, in real terms, for (i) employees and (ii) investors.

BG George Yong-Boon Yeo: Mr Speaker, Sir, Singapore is currently engaged in on-going FTA negotiations with Canada and Mexico. Some time this year, we will start negotiations with New Zealand and Chile for a P3 (Pacific Three) FTA which will enter three corners of the Pacific. In March, we will begin a joint study with South Korea on a Korea-Singapore FTA with a view to launching negotiations after that later this year. In April, we are likely to launch negotiations with India on a Comprehensive Economic Partnership Agreement which will include an FTA.

With China, we are engaged in FTA negotiations as a member of ASEAN. A framework agreement incorporating an Early Harvest was signed by the leaders in Phnom Penh last year. We can expect to see the first round of commitments implemented as early as 1st January next year, and for the final round of commitments to be implemented by the end of the decade.

We are also involved in negotiations for an ASEAN-Japan Comprehensive Economic Partnership. This will complement the bilateral FTA that we already have with Japan. Similarly, ASEAN has embarked on an FTA joint study with India. Finally, with the successful conclusion of the US-Singapore FTA negotiations, the US is pursuing an Enterprise for ASEAN Initiative, which will provide an enhanced framework for US-ASEAN economic engagement.

To maximise the advantages of these FTAs, we must achieve greater economic integration in ASEAN. Prime Minister Goh has proposed the concept of an ASEAN Economic Community as an eventual goal. We are now pursuing this idea with other ASEAN members to see how it can be realised. We are laying stepping stones to get us there. One example is the Singapore-Thailand Enhanced Economic Relations framework, which is co-chaired by the Economic Ministers from both countries. Another is the cooperation with Indonesia on Batam and Bintan.

Apart from FTAs, we are also expanding the range of investment guarantee agreements (IGAs) with various countries. IGAs will accord greater protection and certainty for investments into and out of Singapore. Currently, we have concluded IGAs with 27 countries, including China, Cambodia, Laos, Vietnam, Germany, France, United Kingdom and some Eastern European countries. Our FTAs also contain commitments over and above IGAs. We also have on-going IGA negotiations with countries such as Romania, Russia, Myanmar and Turkey. In fact, we recently concluded negotiations for an IGA with Uzbekistan and Peru. The agreement with Peru is expected to be signed about now.

Investors will find it more attractive to invest in Singapore, so as to take advantage of our FTAs and IGAs, and the greater economic integration of ASEAN. These investments will create business opportunities and more jobs for Singaporeans.

Miss Penny Low: Given the many FTAs that have been signed, what efforts are taken by MTI to educate and inform the local business community about the opportunities presented in both the bilateral cooperation as well as the FTAs?

BG George Yong-Boon Yeo: Mr Speaker, Sir, this year, MTI and its economic agencies will be stepping up efforts to explain the provisions of these FTAs to all companies in Singapore. We are working with trade associations, the chambers of commerce and the SBF. We run a 1800-telephone call service for those with questions. We have a website and you can be sure that we will be sparing no effort to explain to Singapore companies the advantages that they can gain by making use of the provisions in some of these FTAs.

Dr Wang Kai Yuen (Bukit Timah): I would like to find out from the Minister how do our ASEAN neighbours view our initiative in all these FTAs or would they prefer us to work within the regional context as regards the liberalisation of trade ties?

BG George Yong-Boon Yeo: Mr Speaker, Sir, some of our friends in ASEAN had reservations which they expressed publicly in the past but, in recent months, far from expressing reservations, they have been jumping on the bandwagon.

Dr Amy Khor Lean Suan: For the FTAs that have been signed, could the Minister enlighten us on the tangible benefits that small and medium enterprises or local companies in Singapore have derived and whether examples could be given?

BG George Yong-Boon Yeo: FTAs mean the removal of tariffs for most products that go to our FTA partner. For example, our FTA with Japan enables some of our petrochemical products to enter Japan without tariff which gives exporters here a major advantage. Under the US-Singapore FTA, there will be hundreds of millions of dollars' worth of tariff savings across a wide range. A simple but graphic example is the repair of US ships. Before the FTA, any US ship repaired outside the US will have to pay a special fee. With the FTA, Keppel and Sembawang can repair US ships in Singapore without these ships having to pay a fee and this of course encourages our shipyards to go out to all US ships in the region to do their business. These are some of the advantages which the FTAs can bring to our businesses.

On existing trade patterns, the advantages in the initial years would already be hundreds of millions of dollars and they will ramp up as various provisions of the FTAs come into effect. This is the first order effect. A second order effect is to exploit these FTAs, new investments will come into Singapore. Our objective is that, from Singapore to all parts of the world, there should be minimal hassle and no tariffs, and if you are serving more than one region this is the best place to locate your activities.