Singapore Government Press Release

Media Division, Ministry of Information, Communications and the Arts,

MITA Building, 140 Hill Street, 2nd Storey, Singapore 179369

Tel: 6837-9666




Professor Tommy Koh, Singapore's Chief Negotiator for the Singapore-US Free Trade Agreement, spoke today on "The US-Singapore Free Trade Agreement: Taking US-Singapore relations higher." The text of his speech to the American Chamber of Commerce is attached.


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15 APRIL 2002










Mr Landis Hicks, the Chairman of AmCham, Mr Nick de Boursac, the Executive Director, distinguished guests, ladies and gentlemen.


About two weeks ago, I received a phone call from Nick. He asked whether I would like to join him for lunch, following your annual general meeting today. Believing that his invitation was motivated by the sheer pleasure of our fellowship, I immediately accepted. Nick then told me that, following lunch, I would have to say a few words about the USSFTA negotiations, about which he assumed I knew something. Not daring to contradict him, I said yes. When I reported Nick’s invitation to my wife that evening, she asked whether Nick was trying to set up a debate between me and Ambassador Frank Lavin, who had spoken to you on the same topic on the 22nd of March. I assured her that Nick does not have a conspiratorial mind and that, in any case, Ambassador Lavin and I agree on most things.

In accordance with my wife’s standing instruction, I will limit my opening remarks to three points.

Taking US-Singapore Relations To A Higher Peak

First, it is important for us to remember that the USSFTA is both an end and a means to an end. The USSFTA is a worthy end because it will increase trade and investment between our two countries. It will also increase the flow of technology and people. It will create new jobs. It will make it easier for our business people, such as you, to do business in each other’s countries. In this respect, I share Ambassador Lavin’s vision of making Singapore the "undisputed, premiere business platform for US firms in Asia".

A Bridge Across The Pacific

The USSFTA is, however, also a means to other ends. It could, for example, take US-Singapore bilateral relations, which are excellent, to an even higher peak. The wisdom I have learned from my study of US trade policy is that it is largely determined by US domestic politics. I have also learned that US international trade policy is driven by US strategic interests in the world. This is obvious from the fact that the first four FTA partners of the US are Canada, Mexico, Israel and Jordan. The US-Chile FTA is a stepping stone to the FTAA. The US-Singapore FTA is a bridge across the Pacific, linking the US with East Asia. It could lead eventually to an FTA between the US and ASEAN or bilateral FTAs between the US and other countries in East Asia.

The Integrated Sourcing Initiative

During his recent visit to the Indonesian islands of Batam and Bintan, the USTR, Ambassador Bob Zoellick, announced the "Integrated Sourcing Initiative" (ISI) in the presence of his Indonesian and Singaporean counterparts. Under this initiative, information technology products, manufactured on those two islands, and exported to the US from Singapore, would be considered to be of Singapore origin. I should point out that this initiative is limited to ITA products, which are tariff-free and not a sensitive sector in the US. This initiative will enable US companies to capture the complementarities between Singapore, Batam and Bintan. It creates a win-win-win relationship between the US, Indonesia and Singapore.

The State Of The USSFTA Negotiations

Second, let me give you a brief assessment of the state of the USSFTA negotiations. My account will be less exuberant than that of Ambassador Lavin because I am an old fashioned negotiator. I believe that I should be discreet and not divulge the details of issues which are still under negotiation. I prefer to negotiate with my good friend, Mr Ralph Ives, the US Chief Negotiator, rather than through the media. I will therefore only share with you some information on some areas in which convergence has been achieved. Another rule which I will observe is not to insult my negotiating partner. I will therefore refrain from saying whether there are sectors of the US economy which are either not competitive or not world class. I hope the members of the media will forgive me if I choose not to talk about the US steel industry or the textile and apparel industry. As an old fashioned negotiator, I believe that I should also put myself in the shoes of my negotiating partner. In this way, I will have a better understanding of my counterpart’s interests, demands and constraints. The Native Americans have a wonderful saying that you should not condemn a man until you have walked in his moccasins. Let me now share with you some of the broad areas in which we have achieved convergence.

Market Access For Goods

We will liberalise substantially all trade in goods. In the area of "Rules of Origin", we will adopt rules which recognise outward processing and the accumulation of value-add. This reflects the reality of the modern manufacturing process in which components and intermediate goods are shuttled between plants and countries in order to harness their different comparative advantages.

Preventing Abuse Of FTA Privileges

The USSFTA will put in place strong measures to prevent any abuse of FTA privileges. We will strengthen customs cooperation in order to weed out illicit trade. For example, in the sensitive area of textiles and apparels, we will institute additional mechanisms to prevent circumvention of the US system of textile quotas. We are also looking into practical ways in which we can respond to the concern that the USSFTA should not become a loophole for traders to pass off transhipped goods as goods of Singapore origin.

General Services

We have agreed to adopt a negative list approach in services. This means that all sectors, unless specifically reserved, will be automatically liberalised. As part of the USSFTA, Singapore has agreed to liberalise many sectors, including direct selling, express courier, undergraduate and graduate education, private health and high-end environmental services.

Financial Services

In the case of financial services, Singapore’s ambition is to have a financial sector which is open and competitive. The sector is in the process of liberalisation. At present, there are about 120 commercial banks operating in Singapore, including 22 foreign banks which offer the full range of services. Foreign participation in the Singapore banking market, both retail and wholesale, is substantial and compares very favourably with other international cities.

The financial services chapter in the USSFTA is shaping up very well. It will be significantly more ambitious than the GATS. We share the same objectives in creating state-of-the-art disciplines in two important areas: transparency and innovative financial services.

Intellectual Property Rights

The Singapore economy is in a transition to a knowledge-intensive economy. In order to attract knowledge industries and activities to Singapore, we will have to enhance our protection of intellectual property rights. This is the perspective from which we are negotiating the chapter on intellectual property rights. We have agreed to incorporate many TRIPS-plus features into the Chapter. Where there is an international best practice, we will follow that practice. Where there is no universal standard but different US, European and Japanese standards, we will select the standard which best suits our circumstances. The bottomline is that it is in Singapore’s national interest to have a world class regime on intellectual property rights.

Telecommunications And E-Commerce

In these two areas, the two delegations are acting as thought leaders. We are confident that these two chapters in the USSFTA will contain new templates which will surpass all precedents.


Third, let me conclude with a few words about timing and quality. Can I predict when the USSFTA negotiations will be concluded? I am afraid I cannot. We have made very good progress. I think we have finished about eighty per cent of the work but the last twenty per cent contains some of the most difficult issues. Also, because the US Senate has not yet passed the Trade Promotion Authority (TPA), the US delegation has been unable to give the Singapore delegation its proposals on labour, environment, investment and dispute settlement. I have set no artificial deadline but I share the business community’s wish to pop the champagne as soon as possible. With a little bit of luck, we should be able to finish in the coming months.


Will the USSFTA be a good agreement? It will definitely be a good agreement. As I have already explained, it will be both WTO+ and NAFTA+. In some areas, such as telecommunications and e-commerce, we are writing new templates. The two delegations will try to live up to Minister George Yeo’s exhortation for us to make the USSFTA a gold standard FTA.

Thank You

In conclusion, I wish to thank AmCham in Singapore and the US Chamber of Commerce in Washington DC for the help, advice and support which you have given us.

Thank you very much.



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