Information Paper on the US-Singapore Free Trade Agreement (USSFTA),
16 May 2003
On 19 Nov 2002, USTR Robert Zoellick and Minister for Trade and
Industry George Yeo jointly announced the substantive conclusion of
the USSFTA in Singapore.
The US is one of the most important trading and investment partners
* 1,300 US companies and 15,000 US citizens are in Singapore.
Many US MNCs use Singapore as a base to export around the world.
* The US is Singapore's second largest trading partner.
Singapore is the US' 11th largest trading partner.
* The US is Singapore's largest foreign direct investor. In
terms of Foreign Direct Investment (FDI), US$27.3 billion or
2.2% of US investment overseas, as at end 2001. Singapore is the
second largest Asian investor in the US after Japan.
USSFTA - Key Elements
The USSFTA covers trade in goods, rules of origin, customs
administration, technical barriers to trade, trade remedies, cross
border trade in services, financial services, temporary entry,
telecommunications, e-commerce, investment, competition, government
procurement, intellectual property protection, transparency, general
provisions, labour, environment, dispute settlement.
Key elements are:
Maximum liberalisation for bilateral trade-in goods to help anchor
manufacturing activities in Singapore.
Many of these benefits accrue to US MNCs, because intra-MNC trade
accounts for over 60% of US-Singapore trade.
Singapore commitment - zero tariffs for all imports upon entry into
force of the USSFTA. Eliminate tariffs on beer, stout, samsoo and
US commitment - eliminate 92% of current tariffs on exports from
Singapore to the US, immediately upon entry into force of the USSFTA.
Practically all the rest will be eliminated within 8 years.
Sectors that will benefit - electronics, chemicals and
petrochemicals, instrumentation equipment, processed foods and
Only exports with substantial transformation and value add done in
Singapore can be conferred 'Singapore origin' and qualify for
preferential tariff. There are a few ways:
* Imported inputs used in the manufacture of the final product
within Singapore, are classified under a different tariff
classification from the final product.
* For some electronic products, certain percentage of value add,
typically 35-60%, is done in Singapore. Overhead activities done
in Singapore, such as R&D, design, engineering, purchasing, can
count towards the value add.
* For chemicals and petrochemicals, a specified process occurs
in Singapore, such as a specific chemical reaction.
To claim tariff preferences, a US importer has to declare that the
good is of Singapore origin. Customs authorities on both sides will
provide advance rulings on originating goods and enhance its
transparency in regulation.
The Integrated Sourcing Initiative (ISI), applies to non-sensitive,
globalised sectors, such as IT. Over 100 hi-tech goods, which
already enter into the US duty-free, when exported from Singapore to
the US, can be given preferential treatment, such as less
For textiles and apparels, immediate tariff elimination for products
that meet the yarn forward rule of origin. This require the products
to be made from the US and/or Singapore originating yarn, with
limited exceptions. All other assembly processes must be carried out
in Singapore. The industry will work with US yarn suppliers, and
restructure their manufacturing operations, to benefit from the
A 'Tariff Preference Level' mechanism allows some amount of apparel
exports from Singapore to be exempted from the yarn forward rule for
8 years. For such exports, tariffs will be phased out over 5 years.
The US also commits to introduce more liberal rules of origin for
textiles in USSFTA once further liberalisation on rules of origin is
achieved in WTO.
Singapore will establish a system to monitor the import, production,
export of textiles and apparel goods, so that only eligible goods
will be allowed to enjoy the FTA benefits.
Tariff savings will be substantial, and will depend on actual trade
volumes as a result of the FTA and how companies restructure their
operations to meet rules of origin.
The US will immediately waive the Merchandise Processing Fee for all
Singapore exports, currently worth US$30mn.
The US will immediately eliminate its Vessel Repair Duty for
Singapore, currently worth US$4mn.
Enhanced bilateral customs co-operation. Singapore will implement
systems and procedures to ensure that only legitimate goods can
claim preferential treatment under the USSFTA. Both sides will
actively exchange information and use risk management techniques to
enforce against trade in illicit goods.
Services in general
Service suppliers from both sides assured of fair and
non-discriminatory treatment and market access unless specifically
exempted in writing - the so-called 'negative list' approach.
US States are to give a Singapore service supplier the same
treatment that it gives to a supplier of that State or of another US
Regulatory authorities are bound to high standards of openness and
transparency, including consultations with interested parties,
advance notice, reasonable comment period, and publication of
Mechanism to lock in future liberalization of an exempted measures,
including exempted measures of US States.
Extends benefits of the FTA to all Singapore companies that are not
shell companies, regardless of ownership.
For professional services, Singapore will:
* ease conditions on US firms creating joint law ventures to
practice Singapore law;
* recognise degrees earned from 4 US law schools for admission
to the Singapore bar;
* reduce board of director requirements for architectural and
* phase out capital ownership requirements for land surveying
Both sides will engage in consultations to develop mutually
acceptable standards and criteria for licensing and certification of
professional service providers, especially with regard to architects
Singapore will give US banks better access to Singapore's retail
* remove quota on Qualifying Full Bank (QFB) and Wholesale Bank
licenses for US banks 1.5 year and 3 years after the entry into
force of the USSFTA;
* remove restrictions on customer service locations for QFBs 2
years after the entry into force of the USSFTA;
* allow Singapore incorporated US QFBs to negotiate with local
banks for access into their ATM networks on commercial terms 2.5
years after the entry into force of the USSFTA.
Telecommunications and ecommerce
Service suppliers from both sides will have access to respective
public telecommunications networks, including submarine cable
landing stations, with transparent and effective enforcement by the
Robust competition safeguards to protect against discriminatory and
anti-competitive behaviour by incumbent suppliers in areas such
interconnection, co-location, access to rights of way and resale.
Both sides will work towards the implementation of a comprehensive
arrangement for the mutual recognition of conformity assessment for
Both sides commit to the non-discriminatory treatment of digital
products and the permanent duty-free status of products delivered
electronically. First time such commitments have been enshrined in
an international trade agreement.
Temporary entry of business persons
Creates separate categories of entry for citizens of each Party to
conduct a wide variety of business and investment activities on a
Singapore citizens who are business visitors can enter US to conduct
business activities for up to 90 days without the need for labour
market test, subject to usual immigration and security measures.
Both sides committed to allowing market access by service suppliers
of the other Party unless specifically reserved, i.e. 'negative
Commitment applies to all procurement contracts for goods and
services worth more than US$56,190 and for construction procurement
contracts worth more than US$6,481,000.
Both sides will commit to grant fair market value for expropriation.
Both sides undertake not to impose any unfair performance
requirements, such as requiring the investor to export a given level
of goods and services, as a condition for the investment.
USSFTA provides for an investor-to-state dispute mechanism.
Investors aggrieved by government actions that are in breach of
obligations under this Chapter have the right to take the dispute
directly to an international arbitration tribunal for resolution.
Further, Singapore investors who enter into investment agreements
with the federal government, after the entry into force of the
USSFTA, can take the dispute directly to international arbitration
Incorporates strong commitments to enhance intellectual property
protection standards on a non-discriminatory basis.
Changes will strengthen Singapore's thrust towards a knowledge-based
economy and its increased emphasis on developing research and
development capabilities in biomedical sciences and
On copyright, both sides agreed to align their terms of protection
for copyrighted works, performances and phonograms. Both sides will
also adopt additional protection standards relevant and applicable
in the digital environment. Specifically,
* Both sides will provide strong anti-circumvention provisions
prohibiting tampering with technology designed to prevent piracy
of copyrighted works over the Internet.
* Both sides agree to criminalise unauthorised reception and
re-distribution of satellite signals.
* Both sides will provide immunity to Internet service providers
for complying with notification and take-down procedures when
material suspected to be infringing are hosted on their servers.
On patents, both sides will strengthen their regimes to protect
* Singapore will accede to the International Convention for
the Protection of New Varieties of Plants (UPOV) to better
protect new plant varieties.
* Both sides commit to its current regime on allowing all
inventions, including bio-inventions to be patentable, so long
as they do not contradict public order or morality.
* Both sides agree to limit the use of compulsory licenses to
safeguard against anti-competitive practices, public-non
commercial use, national emergencies and other circumstances of
extreme urgency. Singapore has, to date, not issued any
* Both sides will also introduce safeguards to strengthen patent
protection, especially for pharmaceuticals. In particular, both
o grant originators a data exclusivity period of up to 5
years from the date of marketing approval, instead of the
date of application.
o extend patent protection period if there is an
administrative delay during the marketing approval process.
* All trademarks, including sound trademarks, will also be
registrable in Singapore.
* Both sides will accord stronger protection for well-known
* Trademark licensees no longer need to register their trademark
licenses in order to assert their rights in a trademark.
The stronger protection rights will be complemented by robust
enforcement obligations. Both sides will continue to undertake
stringent enforcement against piracy, in close consultation and
collaboration with the industry. Both sides agree to:
* provide an additional avenue for right owners to opt for
compensation based on a pre-determined range of statutory
damages for civil proceedings against copyright and trademark
* prevent and enforce against the illegal manufacture, import
and export of pirated goods. In this connection, Singapore will
formalise its regime of regulating optical disc manufacturing
activities through the imprint of Source Identification Code on
optical discs unless specifically exempted by the right owner.
* criminalise companies that make pirated copies from
legitimately purchased products.
Singapore commits to its earlier announced intention to set up a
general competition regime by 2005.
Singapore commits to maintain its existing policy of not interfering
with the commercial decisions of Government Linked Companies (GLCs),
ensuring that GLCs are commercially run, and do not discriminate
against US companies.
Labour and Environment
Both sides are committed to enforce their own domestic laws relating
to labour and environment, consult and cooperate closely on
environmental and labour issues of mutual concern and interest.
Dispute Settlement and General Provisions
Dispute settlement system that focuses more on co-operation rather
than on traditional trade sanctions by allowing a Party to pay a
monetary assessment into a common fund. The common fund will be used
to facilitate trade between the Parties.