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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
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16 East 34th Street, 4th floor---------------------- Stuart Basefsky
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Congressional Research Service (CRS)

 

The U.S.-Singapore Free Trade Agreement: Effects After Five Years

Dick K. Nanto, Specialist in Industry and Trade

March 26, 2010

http://opencrs.com/document/RL34315/2010-03-26/download/1013/

[full-text, 21 pages]

 

Summary

The U.S.-Singapore Free Trade Agreement (FTA) (P.L. 108-78) went into effect on January 1,

2004. This report provides an overview of the major trade and economic effects of the FTA over

the three years ending in 2006. It also includes detailed information on key provisions of the

agreement and legislative action.

 

The U.S.-Singapore FTA has taken on new importance in trade policy because the United States

is engaged in negotiations to join the Trans-Pacific Partnership (TPP). The TPP negotiations are

the first major market-opening initiative of the Obama Administration. On December 14, 2009,

United States Trade Representative Ron Kirk notified Congress of the intent to enter into the TPP

negotiations. The objective is to shape a high-standard, broad-based regional free trade agreement

with Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, and Vietnam. The first

round of negotiations began March 15, 2010, in Sydney, Australia.

 

The U.S.-Singapore FTA has provided greater access for U.S. companies, has been instrumental

in increasing bilateral trade, and has provided reassurance to Singaporeans of U.S. interest in the

country. As a city-state, Singapore operates as an entrepot with essentially free trade. Under the

FTA, concessions dealt mainly with providing greater access for American service providers and

with strengthening the business environment in areas such as the protection of intellectual

property rights and access to government procurement.

 

In 2009, the United States ran a $6.6 billion surplus in its balance of merchandise trade with

Singapore, up from $1.4 billion in 2003, but down from the $12.0 billion in 2008. U.S. exports of

goods to Singapore surged from $16.6 billion in 2003 to a peak of $27.9 billion in 2008 before

declining to $22.3 billion in 2009. Even with this rapid increase in U.S. exports to Singapore, the

U.S. share of Singapore’s imports has declined from 16% in 2003 to 12% in 2009. The main

reason for this is that Singapore’s overall trade is booming. Still, Singapore imports more from

the United States ($28.5 billion) than from China ($26.0 billion).The U.S. balance of trade in

services with Singapore declined from a surplus of $4.0 billion in 2001 to $1.2 billion 2005 but

has risen to $4.2 billion in 2008. A significant increase has been in income from U.S. direct

investments in Singapore. U.S. access to the Singaporean market for multinational corporations

seems to have been enhanced considerably under the FTA. U.S. income from assets in Singapore

rose from $6.7 billion in 2003 to $21.1 billion by 2008.

 

On the U.S. import side (Singapore’s exports), a noteworthy development is that U.S. imports of

pharmaceuticals from Singapore have risen from $0.09 billion in 2003 to $3.0 billion in 2007

before declining to $2.0 billion in 2008. Singapore has developed as a regional center for

multinational pharmaceutical companies. This apparently was partly triggered by provisions in

the FTA that required Singapore to strengthen its intellectual property protection.

 

Negotiations for the U.S.-Singapore Free Trade Agreement were launched under the Clinton

Administration in December 2000. The FTA became the fifth such agreement the United States

has signed and the first with an Asian country. This report will be updated as circumstances

warrant.

 

Contents

Trade in Goods...........................................................................................................................3

Trade and Market Access in Services...........................................................................................7

Financial Services .................................................................................................................8

Legal Services.......................................................................................................................9

Electronic Commerce..................................................................................................................9

Intellectual Property Rights (IPR) Protection.............................................................................10

Investments..............................................................................................................................10

U.S. Imports from Singapore..................................................................................................... 11

Balance of Trade by Sectors ......................................................................................................14

Labor Issues.............................................................................................................................15

Environmental Issues ................................................................................................................16

Cargo Security ..........................................................................................................................17

Other Effects............................................................................................................................17

 

Figures

Figure 1. U.S. Merchandise Exports to, Imports from, and Trade Balance with Singapore ...........3

Figure 2. Leading U.S. Exports to Singapore by Category ...........................................................4

Figure 3. U.S. Balance of Merchandise Trade with FTA Partner Countries...................................6

Figure 4. U.S. Balance of Trade with Singapore in Services and Its Components .........................8

Figure 5. Average Annual Growth Rates in Top 40 U.S. Imports from Singapore Pre- and Post-FTA ..........12

Figure 6. Singapore’s Exports of Pharmaceutical Products by Origin.........................................14

Figure 7. U.S.-Singapore Balance of Trade by Major Surplus and Deficit Sectors, 2009 ............15

 

Tables

Table 1. Singapore’s Import Market Shares by Import Source......................................................5

Contacts

Author Contact Information ......................................................................................................18

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