Transcript singapore!!! - Personal.psu.edu

SINGAPORE
FREE TRADE
AGREEMENTS
Team 5:
Ryan Karasack
Barrett Seitz
Lauren McKenna
Background of Singapore
• Singapore was founded as a British
trading colony in 1819
• Population: 4,608,595 (July 2003 est.)
• Ethnic Groups:
• Chinese 76.7%, Malay 14%, Indian 7.9%, other
1.4%
Suffrage:
• 21 years of age; universal and compulsory
Key Issues
• Formation of Free Trade Agreements
• Japan
• United States
• Multinationals in Singapore
Singapore & Japan
• Dec 1999 – Negotiations Began
• Early 2001 – Consensus on FTA was
reached
• Reduction of tariff and not tariff barriers.
• A mutual recognition of national standards
• Viewed by many as a possible template
for future FTA’s in the region
Singapore & Japan
• Bulk of Japanese Exports to Singapore
Include
• Machinery & Equipment
• Business & Financial Services
• Chemical & Mineral Products
• Singapore exports to Japan are
concentrated in the service sector
Areas of Trade
• Customs Automation
• Reduction of customs cost on bilateral trade
• Electronic Commerce
• To improve security and harmonize standards
governing e-commerce
• Decrease of 1.39% of the average price for ecommerce transactions
• Service Trade
Areas Of Trade
• Service Trade
• Liberalization of Service Trade
• Elimination of service trade barriers
• Lowered the effective price of business and financial
services exported from Singapore to Japan by
20.6%, and for construction services the price drop
is 29.9%
Impacts On Free Trade
Singapore:
• Higher rates of return
on investments
• Boost demand for
Singapore products
• Cost of Investing in
Singapore has fallen
Japan:
• Minor impact on
aggregate output,
trade, investment,
and GDP
• Advantages driven
largely by the
customs atomization
process, which affects
cost of trading with all
partners
Other Impacts
• All Asian economies gain in terms of GDP
• Largest impact felt in Malaysia & Thailand
– Two countries that do a great deal of trading with Singapore &
Japan
• Increase in foreign ownership in Singapore is
financed by a modest increase in outward
foreign direct investment by U.S. and Canada
• Many other Asian countries reduce their foreign investment to
increase investment in domestic countries.
The U.S. Free Trade
Agreement
Overview
• Signed on May 6,
2003
• Focuses mainly on:
– services firms
• But also touches on:
– trading of goods
– protection of
intellectual property
rights, and
– Protections for
investors
The U.S. Free Trade
Agreement
Trading of
• Singapore andServices
The U.S. services firms will enjoy fair and
non-discriminatory treatment in trade, through both:
– Travel of service professionals across borders, and
– Establishing a local services presence
• Market access commitments apply across a range of
sectors, including:
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Financial services
Telecommunications services
Tourism
Advertising
Professional services
The U.S. Free Trade
Agreement
Trading of
Goods
• Most U.S. tariffs on Singaporean goods
will be eliminated immediately upon entry
into the agreement
• Singapore guarantees zero tariffs
immediately on all U.S. products
The U.S. Free Trade
Agreement
Protection of Intellectual Property
Rights of copyrights, patents, trademarks,
• Protection
and trade secrets
• IPR Enforcement
– Tough penalties for piracy and counterfeiting
– Singaporean government guarantees that it has
authority to seize, forfeit and destroy counterfeit and
pirated goods and the equipment used to produce
them
“The U.S.-Singapore FTA contains ground-breaking protection for U.S.
intellectual property such as software, movies, music and books. These
protections are vitally important in the digital age.”
~Robert B. Zoellick, U.S. Trade Representative
The U.S. Free Trade
Agreement
Protections for
•
Investors
The agreement
provided U.S.
investors operating in
Singapore with a
secure and
predictable legal
framework
Objections to Free Trade
• Less U.S. jobs for U.S. citizens
– Agreement provides laws that would create what is effectively a
permanent visa worker program for Singapore
• An increase in the U.S. trade deficit
“The U.S. trade deficit has increased in ever case where the U.S.
has entered a free trade agreement with another country.”
~Marcy Kaptur, Congresswoman
– FTA with China in 2000: increased 25% to $103 billion
– NAFTA increased the trade deficit by almost 10 times what it was
before it went into effect, from $9 billion to $87 billion
– NAFTA also put over a million workers out of jobs due to free
trade
– The U.S. trade deficit was the largest ever reaching $435.2
billion in 2002
Other Free Trade
Agreements
• New Zealand
• Australia – October 2002
• In the works:
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Canada
India
Chile
Jordan
South Korea
•
Multinationals in
Singapore
Singapore is regarded as top
Regional HUB
• In 2002 Forbes ranked Singapore
the second best place in the world
to start a business.
Top Regional HUB for Multinational
Companies
Over 6000 multinational corporations have offices in
Singapore
– 3,600 use Singapore as their regional headquarters
– 1,400 of these are U.S.-based companies
• 300 of these use Singapore as their regional headquarters
• The U.S. is the largest Foreign Direct Investor in
Singapore: US$27.3 billion
• Intra-MNC trade accounts for over 60% of US-Singapore
trade
Singapore as a Multinational in the
U.S.
• Singapore is the U.S.’s third largest
investment
• Second largest Asian Investor after Japan
• Foreign direct investments are twice that of South
Korea, Hong Kong, and Chinese Taipei
• Investments amounted to US$6.5 billion at the end
of 2001 in:
» Manufacturing
» Real Estate
» Depository Institutions
Why Multinationals Choose Singapore
as their Asia-Pacific headquarters:
• A well-developed, free-market economy
• A well-educated, English-speaking workforce
• Favorable incentives and tax breaks
– no capital gains tax
• A pro-business environment with the absence of
labor-management disputes
• One of the best connected countries in the world
– Air
– Busiest seaport
– telecommunications
The Effects of the USSFTA
on Multinationals
• The USSFTA will be felt most in two of
Singapore’s key sectors
– Retail Banking
– Information and Communication Technology
(ICT) industries
• Impact on the Real Estate Industry
The USSFTA Effect on the
Banking Industry
• U.S. companies will have access to
Singapore’s country-wide ATM network
• It will open the ranks of full-service U.S.
banks eligible to undertake retail business
• It will increase the number of branches that
licensed U.S. banks can operate
The USSFTA Effect on the
Information and Communication
Technology Industries
• Will initiate intellectual property rights laws
• Will create significant enhancements to
• Trademarks
• Copyrights
• Patents and trade secrets
• Singapore government is determined to position
Singapore as the regional ICT hub and is encouraging
joint ventures and overseas investments
Impact on the Singapore Real
Estate Market
• With the liberalization in bilateral trade and
investment brought by the USSFTA, it is
estimated that GDP will grow another 0.5%
• MNC’s have begun re-appraising various
investment destinations which will make it
more attractive to foreign investors worldwide
• As a result, this should raise demand for real
estate in Singapore
The USSFTA Effect
• Will save Singapore up to US$170 million
annually in tariffs
• Currently electronics account for 42% of
Singapore’s total industrial output
• The majority of the output is exported to the U.S.
• Singapore-based U.S. MNC’s therefore will benefit
the most from this new agreement
Videos
• http://www.uncommonknowledge.org/700/
712.html
• http://www.usasean.org/Singapore/fta_interview.asp
Notes
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CIA - The World Factbook
International Economics - Regional Trading Agreements
Economic Intelligence Unit
ISI Emerging Markets
CNN
Asia Pacific Connections
Asian News
U.S. House of Representatives
United States Trade Representative
U.S. Dept of Commerce