REGULATION OF IMPORTS AND EXPORTS (AMENDMENT) BILL

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REGULATION OF IMPORTS AND EXPORTS (AMENDMENT) BILL: Order for Second Reading read.

The Minister of State for Trade and Industry (Mr Raymond Lim Siang Keat): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

Imperative for the Bill

The Regulation of Imports and Exports Act (RIEA) requires all traders to apply for a permit to bring goods in and out of Singapore. The objective is to ensure that only legitimate trade passes through our port. The Act has stood us in good stead. Today, Singapore is renowned as a safe and efficient international trading hub.

In recent years, we have strengthened economic links with major trading partners

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through the establishment of a network of free trade agreements (FTAs). These FTAs contain significant tariff concessions for goods that originate from Singapore.

In the absence of an FTA, our trading partner would apply the same tariff to goods coming from all over the world. In ordinary circumstances, they would therefore not be concerned about where the goods were manufactured. With FTAs, and the preferential tariffs that are granted, there is a legitimate concern that non-qualifying goods may enter via the FTA provisions.

The Bill before the House today seeks to address this issue. It marks a positive effort by Singapore to cooperate with our FTA partners to prevent origin circumvention activities that undermine our trade agreements. The Bill establishes the necessary legal and enforcement means to ensure that preferential tariff concessions will be limited strictly to Singapore goods. This will encourage our major trading partners to extend maximal concessions during future FTA negotiations and reviews of existing agreements.

Key features of the Bill

Mr Speaker, Sir, let me now turn to the key features of the Bill.

This Bill creates one new provision relating to the sharing of information, two new substantive offences, and three improvements intended to streamline the administration of the RIEA.

Let us first look at the new substantive offences. The first offence is found in clause 2, which permits the Minister to prohibit the export of certain goods, unless they meet certain conditions meant to ensure compliance with preferential tariff arrangements between Singapore and its FTA partners.

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These conditions will be specified in the regulations under the RIEA. Currently applicable to textiles and garments (the only scheduled goods for export under the RIEA), the conditions are aimed at ensuring the proper registration and documentation of these exports.

The second new offence is found in clause 4 of the Bill. This clause, which adds a new section 28A to the RIEA, criminalises wrongful change of origin labels on all products traded through Singapore. When goods are transhipped through Singapore, they are repackaged at our warehouses. Errant traders could seize the opportunity to manipulate the goods' origin through false claims or labelling, with the aim of gaining preferential tariff treatment for entry into certain markets.

The penalties for falsifying product information are commensurate with the other offences in the RIEA. For first offenders, this entails a maximum $100,000 fine or three times the value of the goods, or/and two years' jail. Subsequent offenders could suffer a maximum $200,000 fine or four times the value of the goods, or/and three years' jail.

Let us now turn to the new provision on information sharing. Clause 5 of the Bill creates a new regime for the sharing of information, pursuant to a prescribed Agreement. These provisions enhance the enforcement of claims to preferential tariffs under our FTAs. The sharing of the information is not unqualified: the Director-General of Customs must be satisfied that the three conditions specified in clause 5 are met prior to the release of information.

Finally, the Bill contains three administrative improvements to the RIEA. The first requires the provision of a security deposit to secure compliance

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with the RIEA or its regulation. The second allows appeals to the Minister in respect of any matter relating to the RIEA or its regulation. The third is a consequential amendment relating to powers to investigate offences under the new section 28A.

Mr Speaker, Sir, the proposed amendments preserve the fundamental principles inherent in the design of the original RIEA. First, information sharing is subject to safeguards. We have specified three conditions for disclosure to filter out frivolous requests. In particular, we have included the confidentiality clause to safeguard the integrity of the information. The information exchange must also relate strictly to enforcement and investigative needs in all instances. Under no circumstances, should proprietory information on businesses be leaked to competitors.

Second, the proposed amendments do not impede legitimate trade. There will be no fishing expeditions to enforce the law. Singapore Customs would only act when credible information has been assembled against the suspected errant traders. Checks would not be arbitrary nor burdensome. Compliance for traders and businesses would, therefore, not be onerous.

Third, these amendments would benefit the business community. At the broad level, the new penalties for incorrect trade description (clause 4) and enhanced cooperation with foreign customs authorities information sharing (clause 5) will engender confidence in existing and potential FTA partners. At the industry-level (clause 2) which enhances the regulation of textile exports, makes it possible for this sector to enjoy the benefits of liberalisation by a major trading partner.

Under the US-Singapore Free Trade Agreement, the US was prepared to offer

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substantial tariff concessions to our textile industry, provided that we could ensure that these privileges would not be abused by non-Parties to the Agreement. The textile concessions are not insignificant given the political sensitivity of that sector within the US, especially in the southern states. Indeed, the estimated tariff savings to the local textile industry will amount to more than $130 million every year. Beyond the immediate benefits to the industry, there is potential for job creation as the industry expands.

Mr Speaker, Sir, this Bill is, therefore, in Singapore's long term economic interests and a necessary corollary of our FTA trade strategy. It safeguards our position as a major international trading hub and enhances our reputation as a responsible FTA partner. By generating greater confidence in our trade enforcement regime, we can look forward to negotiating more liberal FTAs with our major trading partners.

At this point, I would like to highlight that the domestic industries also have an important role in ensuring that the FTAs we negotiate are meaningful to our traders and businessmen. I would like to take this opportunity to commend the local textile industry for actively participating in consultations on the US-Singapore FTA. Their views were invaluable to our negotiating team who reflected them in the overall negotiated textile package. The industry has, therefore, expressed understanding with the enhancement of the RIEA, which they see as integral to the extension of exclusive trading privileges to Singapore businesses.

Our FTAs are instrumental in removing trade barriers, increasing foreign investments and creating more and better jobs for Singaporeans. Mr Speaker, Sir, the enhancement of the RIEA will help make these benefits a reality.

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Sir, I beg to move.

Question proposed.

Mr Leong Horn Kee (Bishan-Toa Payoh): Mr Speaker, Sir, the new US-Singapore Free Trade Agreement and other FTAs will generate substantial benefits for Singapore traders and manufacturers. Therefore, I would like to express my support for this amendment Bill as this Bill is essentially to amend the Regulation of Imports and Exports Act (RIEA) so as to enable Singapore to implement our bilateral free trade agreements.

The Bill will enable the Government to collect trade information for sharing with our FTA partners for the purpose of compliance with the terms under such FTAs. However, in setting down the regulations for the submission of trade information by the traders, I would like to voice some concerns.

One concern is the possible high compliance costs. The second concern is the confidentiality of sensitive company information, which the Minister had touched on in his speech. I hope that the information required to be collected and submitted to the Singapore authorities would not be too onerous and voluminous. This will add to the cost for the traders. I understand that the regulation empowers the relevant authorities to have access to computers and other storage devices of the traders to enforce compliance. The question is how can the trader be assured that when he releases his computers and files to be inspected, other sensitive information of the company stored in his computers or files would not be accessed without proper authorisation of the inspection officers.

Secondly, the information to be submitted is generally confidential company business data. Therefore, I would like to know how the authorities

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could ensure that such information is not used to the detrimental effect of the Singapore traders by third parties or companies in third countries, such as our FTA partners. Who will have access to this trade sensitive information? Are the data submitted in aggregate form to the FTA partner, or are separate details of individual companies being made available to our FTA partners? What is done to protect and ensure the confidentiality of this information?

Mr Speaker, Sir, I understand that the Bill also provides for the traders a recourse for appeal against decisions in respect of customs matters. The appeal would be against, for example, the determination of eligibility for FTA preferential treatment or against certain trade procedural requirements. I would like to know whether the process of appeal is simple, fast and efficient. Often, when a trader makes a selling price offer for his products to a buyer in a foreign country, he would base it on whether he gets preferential tariff treatment. Therefore, he needs to know quickly whether he can enjoy preferential treatment so as not to miss out on a potential transaction. Moreover, he would have incurred or committed to incur substantial costs when he has to ship certain goods to buyers in the FTA partner countries. These goods could be in the process of being shipped or would have landed in the partner country's docks. The holding and handling costs being incurred could be quite high. If there is any delay in the determination of his appeal to the Minister, he may incur higher costs, and to a businessman, time is money. So I would like to seek the Minister's assurance that his Ministry would set up a process for application, as well as appeal, that is fast and efficient, that cuts through the red tape and bureaucracy.

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Sir, I support the Bill.

Mr Raymond Lim Siang Keat: Mr Speaker, Sir, I would like to thank Mr Leong Horn Kee for his support of the Bill and some of the issues he has raised. Let me address the concerns that he has raised.

First, the information we collect from the traders will neither be onerous nor voluminous. He has our assurance. It comprises standard production and shipping documents generated in the course of conducting business. This includes documents like cost statements, commercial invoices and bills of lading relating to the goods in question. All traders are not expected to provide anything more than what they had been providing.

Inspection of traders' computers and other apparatus would be carried out only when investigating a specific suspected offence. If the inspection officer chances upon any other sensitive company information stored in the computer, he is bound by the same Act not to communicate or disclose to any other person the contents of such sensitive company information.

Second, every care would be taken to ensure that the information we share with prescribed FTA partners to detect abuses of trading privileges will not be used for any other purposes. The rationale for information sharing is to assure our FTA partners that only Singapore-origin exports will enjoy the negotiated tariff benefits. Singapore Customs will share information with its counterparts only when our FTA partners can clearly show that they have cause to suspect that the abuse of trading privileges has occurred. In other words, we will not entertain fishing expeditions when no adequate cause can be shown for the request for information. Moreover, the information given would be specific to the case being

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investigated. If there is a breach of confidentiality by the FTA partner, we are entitled to take the matter through dispute settlement procedures to seek redress.

Third, the procedure for appeals to the Minister will be kept as simple as possible. Anyone can write to the Minister, giving the circumstances and full facts of the case for the Minister's consideration. MTI, I would like to assure Mr Leong, will ensure that the appeal process will be simple, fast and efficient, as he puts it.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Raymond Lim Siang Keat].

Bill considered in Committee; reported without amendment; read a Third time and passed.