US-SINGAPORE FREE TRADE AGREEMENT (Efforts to inform business community of benefits)

Miss Penny Low asked the Minister for Trade and Industry in view of the Singapore Confederation of Industries (SCI) survey findings on the perceived benefits of the US-Singapore Free Trade Agreement (USSFTA) that were reported in the Straits Times of 19th June 2003, (a) will his Ministry explain the finding that (i) 71% of those polled indicated no benefits and (ii) while his Ministry has hailed the Integrated Sourcing Initiative (ISI) to be of significant impact, 92% of the respondents stated that ISI will not affect them; and (b) whether his Ministry (i) has embarked on its FTA "outreach" programme to inform and educate the business community on the benefits of FTA and (ii) will intensify these efforts in view of the SCI findings.

The Minister of State for Trade and Industry (Mr Raymond Lim Siang Keat) (for the Minister for Trade and Industry): Sir, since the beginning of this year, the Ministry of Trade and Industry (MTI) has conducted 17 briefings involving over 1,500 participants, explaining to them in detail how the various free trade agreements we have negotiated could be of advantage to them. These include separate briefings to members of the Singapore Business Federation (SBF) on our FTAs with Australia, Japan and the United States.

Our programme for raising awareness ranges from open seminars and business briefings to one-to-one consultations with individual companies, which have approached MTI officials to conduct tailored briefings for them after attending our general briefings. Some companies have also sent in enquiries through the MTI website. To cast as wide a net as possible, we work closely with organisations, such as the SBF and the individual chambers of commerce. For instance, we staged a major event on the US-Singapore FTA in partnership with SBF in May 2003, which attracted over 600 participants. Our events are not solely conducted in English. In June, MTI organised a seminar in conjunction with SBF to reach out to businessmen more familiar with Mandarin. Another is planned for late July with the Singapore Chinese Chamber of Commerce and Industry. We will also be conducting a briefing for the Singapore Malay Chamber of Commerce and Industry on 8th July 2003.

Our activities are targeted at all businesses, both large corporations and SMEs. We have paid special attention to SMEs. My Ministry has worked closely with industry-specific associations as well as through SPRING, IE Singapore and, in the future, ASME, to ensure that the SMEs are not left out.

The overall response to our outreach activities has been positive, with many follow-up enquiries being received after the events. Many participants have indicated that the briefings have helped them to understand the FTAs much better, and are keen to explore the possible opportunities presented.

Our pre-negotiation consultations for FTAs, like the India-Singapore CECA and the ASEAN-China FTA, have also attracted more interest since our outreach programme started. To date, we have conducted seven sessions of pre-negotiation consultations, involving nearly 100 participants from the processed food, chemicals, construction and logistics industry clusters. Participants at such consultations are now more forthcoming with their inputs and are more aware of how they can use FTAs to help them in these markets.

Let me now turn to the results of the survey by the Singapore Confederation of Industries (SCI). I would like to first commend the SCI for its initiative in conducting the survey. The results are extremely helpful to both SCI and MTI in identifying the information gaps that exist in the minds of our business community. As part of MTI's outreach activities, MTI had, even before the survey, worked with SCI to organise a seminar on 30th July 2003 for its members. We hope that, like Miss Penny Low, SCI members will be intrigued by the results of the survey, and attend the seminar so as to find out how they can benefit from the US-Singapore FTA. The money is in the details, and I believe that once our business community studies the parts of the agreement that affect their industry, they will find numerous benefits.

Under the US-Singapore FTA, tariffs on all products have been eliminated, including electronics and precision instruments. Firms with a high volume of exports where there are substantial tariff elimination will get to gain most. Textiles companies, should they meet the rules of origin, will face lower tariffs and gain a price advantage after the textile quota system lapses in 2005.

These benefits will be immediately reaped by companies that already export to the US. I note from SCI's survey that although 71% of respondents perceive no benefits from the US, 50% of respondents also acknowledged that they do not currently export to the US. I would urge these companies to review their business plans in the light of the US-Singapore FTA. The US is a large market and will be a big boost to their business if they successfully enter it.

As for the Integrated Sourcing Initiative (ISI), it is confined to 266 IT products and certain medical devices. Manufacturers producing these goods and exporting them through Singapore will benefit directly from the provision. Although these products already enjoy zero tariffs going into the US, the ISI confers three additional benefits.

First, such goods will enjoy a waiver of the 0.21% merchandise processing fee imposed by the US Customs.

Second, the ISI reduces the paperwork relating to documentation procedures, thus saving on time-to-market costs for these manufacturers.

Third, these manufacturers will enjoy faster customs clearance as Singapore-origin products. Not all firms will see direct benefits from the ISI. But the exporters of the 266 ISI products should see higher sales which, in turn, generate a greater volume of business with Singapore companies that supply them with components or support their activities here. Hence, our industries will benefit indirectly from the ISI.

I should emphasise that the benefits of the FTA extend beyond tariff savings. Enhanced investment and IP protection, liberalisation of trade in services and other important provisions of the agreement help us to draw in more investments, while facilitating the internationalisation of Singapore-based enterprises. All these will have important secondary spin-offs to the economy. We must therefore view the FTA in totality.

For firms, I would urge them to study the details of those portions that affect them directly, and see how their operations can be re-configured to benefit from these. MTI will work with SBF and other chambers to help businesses in the coming months in this area.

Miss Penny Low: Sir, I am heartened to hear that there are one-to-one consultation sessions for interested parties. Are these limited to only companies of a certain size or are they available to all entrepreneurs, including start-ups? Is there also some form of one-stop enquiry centre for FTAs, whether it is the US-Singapore FTA or the other FTAs?

Mr Raymond Lim Siang Keat: Size is not a criterion for the one-to-one consultation. It is open to all. For the US-Singapore FTA, we are working on a handbook, for instance, so that they can get all the information in a particular handbook, and there will be a website, going ahead.

For the other FTAs which are under negotiation or which have been concluded, MTI is working very closely with SBF. So, SBF will be a key point of interface with businesses.