JORDAN/SINGAPORE: US FTA PARTNERS LINK UP?

C O N F I D E N T I A L SECTION 01 OF 02 AMMAN 004185

SIPDIS

SENSITIVE

STATE PASS USTR FOR CATHY NOVELLI
USDOC FOR 4520/ITA/MAC/ONE/DAS WILLIAMSON

E.O. 12958: DECL: 07/07/2013
TAGS: ETRD PREL SN JO
SUBJECT: JORDAN/SINGAPORE: US FTA PARTNERS LINK UP?


Classified By: Ambassador Edward W. Gnehm, reasons 1.5 (b,d)


1. (u) This is a joint Embassy Singapor/Embassy Amman cable.


2. (sbu) Summary: Singapore Trade Minister George Yeo
passed King Abdullah a letter from Prime Minister Goh Chok
Yong on the margins of the World Economic Forum proposing a
Free Trade Agreement between Jordan and Singapore.
Jordanian officials have been warmly receptive to the
proposal, which they see as offering future opportunities for
cooperation in a diverse range of economic sectors, from
textiles to tourism to info tech. Singapore trade officials
say an FTA with Jordan can support liberalization efforts in
the Middle East. Another, unstated, objective may be to
reassure Singapore's Muslim minority of the government's
concern for their middle eastern co-religionists, especially
after Singapore's public endorsement of Operation Iraqi
Freedom. In the short term, the effects of any FTA will
probably be modest, as trade between the two countries
currently stands at only about $26 million. Singapore has
completed or is negotiating bilateral FTAs with a diverse
range of countries, including Japan, New Zealand, Australia,
the European Free Trade Association, the US, Mexico, Canada,
India, and Chile. End summary.


3. (u) In an audience with King Abdullah on the margins of
the Dead Sea World Economic Forum June 23, Singapore Trade
Minister George Yeo presented a letter from Singapore's PM
Goh proposing a bilateral free trade agreement with Jordan.
According to Jordanian press reports, the agreement would
include an investment framework agreement and would
facilitate cooperation in e-government, information
technology, port management, and tourism, and would remove
barriers to trade in both goods and services. The agreement
between a current and a future U.S. FTA partner would be
Jordan's first with an East Asian country, as well as
Singapore's first with a country in the Middle East.


4. (sbu) Jordanian officials have been cautiously positive
about the proposal. Trade Minister Salah Bashir told Amman
ECON/C that such an agreement with a major global IT player
could open the door to IT investments or joint ventures with
Singaporean partners, as well as technology transfer
possibilities. Bashir cautioned, though, that any FTA with
Singapore would have to include strong anti-circumvention
mechanisms, to guard against the agreement being exploited
for the surreptitious entry of Chinese goods into Singapore,
Jordan, or the U.S.


5. (C) A senior Singapore trade official told Singapore
acting E/P Couns that the Middle East is an important region,
but one where Singapore's economic engagement has been
minimal. The official said an FTA with Jordan would help to
correct this, and could act as a catalyst for further
liberalization elsewhere in the region. He said Yeo had
briefed USTR Zoellick on the initiative. Separately, Yeo
commented to acting E/P Couns that a possible FTA with Jordan
had initially been raised by then USTR Barshefsky, when the
U.S. and Singapore were planning to use the US-Jordan FTA as
a model for the US-Singapore FTA. Yeo said he had asked
Singapore's Ambassador to Washington to "let Charlene know
that we're doing this."


6. (C) Comment: Current Jordan-Singapore trade is very
small, about $26 million annually. Nevertheless, there is a
certain logic to the initiative: Jordan likes to picture
itself as the "Singapore of the Middle East," having, to some
extent, modeled its open trade and investment policies on
Singapore's. The key difference is that Jordan is not
surrounded by large, relatively prosperous neighbors. Jordan
has also focused its investment promotion activities on
companies, often high-tech firms from Asia, wanting to use
Jordan's FTA with the U.S. and Partnership Agreement with the
EU as hubs for access to these large consumer markets. An
FTA with Singapore could build on this in Asia.


7. (C) Comment continued: While a Jordan FTA might also
improve Singapore's access to Middle East markets as progress
is made on a regional FTA and on cumulation agreements within
the region, Singapore more likely views its offer as a
political tool - a way to show the country's Muslim minority
that the government, despite strong public support for the
war against Saddam Hussein and defense links to Israel, is
concerned about promoting economic prosperity among Muslims
in the middle east. Singapore is unlikely to be too
ambitious with an FTA with Jordan; most of Singapore's
existing FTAs, with the exception of that with the US (and to
some extent that with Australia),offer little new
liberalization beyond the status quo. End comment.
GNEHM