USTR CONCLUDES FIRST REVIEW OF U.S.-SINGAPORE FTA

UNCLAS SECTION 01 OF 04 SINGAPORE 000370

SIPDIS

SENSITIVE

STATE PASS USTR FOR AUSTR BWEISEL, COMMERCE FOR
DBISBEE, USPTO FOR JNESS AND PFOWLER
USDA FAS FOR CMP/DLP, ITP/AAD

E.O. 12356: N/A
TAGS: ETRD ECON EFIN ECPS EINV KIPR EAGR SENV SN
SUBJECT: USTR CONCLUDES FIRST REVIEW OF U.S.-SINGAPORE FTA

REF: A) Singapore 165 B) Singapore 275


1. (SBU) Summary: In their first annual review of the U.S.-
Singapore Free Trade Agreement (FTA) held February 2,
representatives from the USG and GOS expressed general
satisfaction with implementation of the FTA during its first
year. AUSTR Barbara Weisel noted Singapore's recent efforts
to engage on our intellectual property concerns and its
plans to amend its Copyright Law by May 2005. Weisel
emphasized that the USG remained concerned about Singapore's
implementation of its telecom commitments. Singapore's
telecom regulator said that it had launched an investigation
into claims that its dominant carrier, SingTel, was using
technology as a way to undermine the prescribed deregulation
process, and accepted the USG's offer to weigh in with
comments before it makes a final determination concerning
possible non-competitive and discriminatory practices. The
GOS said that it had established a Competition Commission as
a first step in implementing its new Competition Law and
that regulations would begin to take effect by the end of
the year. The FTA review also covered issues related to
Singapore's requests for changes to the FTA, discussed its
ban on U.S. beef, and touched on implementation updates
concerning professional services, financial services, and
the environment. AUSTR Weisel called on Singapore to work
with the U.S. on the Doha Round, and to take on a
coordinating role in ASEAN to push the regional trade agenda
forward. The GOS acknowledged that this was possible, but
cautioned that Singapore had to be mindful of sensitivities
in the region. End Summary.

FTA's First Year: A Good Start
--------------


2. (U) Ministry of Trade and Industry (MTI) Deputy
Secretary for Trade Ms. CHAN Lai Fung told Assistant USTR

SIPDIS
Barbara Weisel that Singapore was very pleased with the
generally smooth implementation of the U.S.-Singapore FTA
during its first year. AUSTR Weisel agreed that positive
economic and trade data as well as public feedback supported
this conclusion. She noted that this was the most
comprehensive FTA undertaken by both countries and that the
USSFTA had become the model for other agreements. Economic
and trade cooperation between the U.S. and Singapore had
always been good, Weisel said, and the USSFTA had done much
to generate even closer ties that would prove invaluable as
both countries worked together on the WTO Doha Round.

Intellectual Property
--------------


3. (U) AUSTR Weisel expressed her appreciation for
Singapore's efforts to engage fully over the past few weeks
on implementation concerns related to its intellectual
property (IP) regime. She expressed her hope, and DepSec
Chan concurred, that both sides were very close to resolving
remaining issues, possibly as soon as within the next few
days. Asked why Singapore was projecting that it could not
amend its Copyright Law before May, Ministry of Law Deputy
Director Mr. CHERN Siang Jye explained that this timeline
took into account a number of requirements, including:
finalizing the revisions currently under discussion with
USTR; drafting the amended legislation; allowing for a 30-
day comment period and subsequent consideration of this
input; and presentation of the bill to Parliament when next
in session.


4. (U) Asked about the status of implementing regulations
for internet service providers (ISPs),Intellectual Property
Office of Singapore (IPOS) Director/Legal Counsel Ms. LEE Li
Choon said that these should come into force no later than
early March.

Telecom
--------------


5. (SBU) AUSTR Weisel emphasized that Singapore's
implementation to date of its telecommunications commitments
related to leased circuit services constituted the USG's
issue of greatest concern. She acknowledged that
Singapore's regulator, the Infocomm Development Authority
(IDA),had made progress in trying to make these services
available to U.S. carriers at more competitive prices, but
stressed that the technical interconnection specifications
offered by the dominant carrier, SingTel, made it impossible
for these companies to take advantage of the new
regulations. AUSTR Weisel noted that U.S. carriers felt
SingTel's requirements were non-competitive, ran counter to
industry practice in the region and globally, and rendered
the intended price reductions meaningless. She stressed
that the FTA obligated Singapore to provide carriers with
prices that were not only reasonable, but also non-
discriminatory. Deputy AUSTR Elena Bryan said that the USG
was concerned that SingTel was using technology as a way to
undermine the prescribed deregulation process. DepSec Chan
agreed that, if this were the case, the Singapore government
would need to take action.


6. (SBU) IDA Senior Manager Gerald Wee explained that IDA
had launched an internal investigation of SingTel's
practices after foreign carriers brought this issue to its
attention and expected to report its findings within one to
two months. In making a final determination, Wee said, IDA
would need to balance its FTA commitments to ensure that
local leased circuits (LLCs) were provided at a reasonable
cost with the needs of SingTel, which had invested millions
of dollars in infrastructure. Wee assured Weisel that if
its findings suggested SingTel was engaging in non-
competitive behavior, IDA would take all the necessary steps
to rectify this problem.


7. (U) AUSTR Weisel said that the USG would appreciate an
opportunity to weigh in with comments before IDA made its
decision. DepSec Chan agreed, but cautioned that this might
delay IDA's decision-making process. Weisel explained that
the FCC had considerable experience with these type of
issues in the U.S. market and would be willing to share this
information with the Singapore government. Wee asked if FCC
could also provide data available for other
telecommunications markets.

Competition Law
--------------


8. (U) DepSec Chan said that Singapore was in the beginning
stages of implementing Phase I -- establishment of a
Competition Commission -- of its new Competition Law that
came into effect January 1, 2005. The Commission currently
employed 25 staff, and had shortlisted names for Assistant
Chief Executive level positions, including a number of
overseas competition experts, Chan explained. The
Commission was prepared to begin drafting implementing
regulations (as part of Phase II),with public consultation
periods and related enactments targeted for the end of 2005,
Chan explained. The Singapore government was also working
to expand public awareness of the new law's provisions, Chan
said, and was considering outreach programs similar to those
launched by IPOS in 2004 on IPR.

Lifting Singapore's Beef Ban
--------------


9. (U) In addition to reiterating GOS talking points
reported in reftels, DepSec Chan said that Singapore's
decision to lift its ban on U.S. beef and beef products
should not require any legislative changes. She noted that
the BSE issue concerned food safety and not trade, and that
the Agri-Food and Veterinary Authority (AVA) would therefore
make the determination whether to lift the beef ban.
AgCounselor stressed the need to keep discussion and
evaluation of the issue science-based.

Singapore's Specific FTA-Related Requests
--------------


10. (SBU) -- Tariffs acceleration (polycarbonates, LCD
televisions, nutritionals): AUSTR Weisel explained that the
USG is developing a process by which to balance tariff
agreements made in different FTAs, and would follow up with
the GOS once this information is available.

-- Rules of Origin (electric smoothing irons): Deputy AUSTR
Bryan explained that the Singapore company in question that
was engaged in the manufacture of electric smoothing irons
would not qualify for a change in the regional value content
(RVC) rule since key components of its manufacturing process
were taking place outside Singapore. She suggested, and
Chan agreed, that both side's technical experts should
engage in further discussions related to this request.

-- Electronic Exchanges of Health Certificates: AUSTR
Weisel said that the USG would first evaluate the efficacy
of its pilot project with Australia (Singapore is also
engaged in a pilot project with Australia) before deciding
whether to extend this initiative to Singapore.

-- Textiles (more flexible tariff preference level (TPL)
program; relaxation of "wholly done in Singapore"
requirement; use of foreign-origin components; improvements
in de minimis provision): AUSTR Weisel explained that these
issues were very sensitive and that changing the USSFTA to
accommodate them would be extremely difficult.

Enhancement of the Trade Relationship
--------------


11. (U) AUSTR Weisel asked for Singapore's continued
support for ongoing work in the WTO and other regional fora
such as APEC and ASEAN. She said that USTR considered
Singapore to be a key player in ASEAN and encouraged it to
take on a coordinating role to push ASEAN's trade agenda
forward. Chan acknowledged that this was possible, but
cautioned that Singapore had to be mindful of various
sensitivities in the region. Chan noted that she would be
in Geneva the week of February 7 and would engage in
discussions with other WTO representatives about how to
conclude the Doha Round.

Other Implementation Issues and Follow Up
--------------


12. (SBU) In reviewing the list of other pending FTA
implementation requirements, both sides agreed to the
following:

-- Medical Products Working Group: Both sides will clarify
the remaining steps that need to be taken to formally
establish the working group.

-- Law Schools: USTR will respond to Singapore's proposed
list of those four U.S. law schools whose degrees earned by
Singapore citizens will be recognized for admission to the
Singapore bar.

-- Financial Services: DepSec Chan said that Singapore
stands ready to implement its various phased-in financial
services commitments, the next of which (lifting the current
quota on new licenses for full-service banks) comes into
effect in July 2005. Chan confirmed that no legislative
changes, only regulatory revisions, would be necessary for
implementation. At USTR's request, Chan offered to provide
a more detailed written explanation of the procedures that
would be put in place in order for U.S. financial service
providers to take advantage of these new provisions.

-- Telecom: In addition to comments pertaining to the LLC
issue and related background information, USTR agreed to
provide the GOS with an explanation of the FCC's new
regulations concerning unbundled network elements (UNE).

-- Maritime: The GOS will forward to the USG proposed
language to correct omissions to its revised requirements
for the registration of ships.

-- Environmental Cooperation: The USG will provide the GOS
a Plan of Action as called for under the Memorandum of
Intent on Cooperation in Environmental Matters signed in

2003.

-- Rules of Procedure: USTR will present a draft Rules of
Procedure to the GOS for its comments.

FTA Review Participants
--------------


13. (U)

USG
--------------

Barbara Weisel, Assistant USTR for Southeast Asia, the
Pacific and Pharmaceutical Policy
Elena Bryan, Deputy Assistant USTR for Southeast Asia and
the Pacific
Peter Fowler, Senior Counsel, Office of Enforcement,
External Affairs, U.S. Patent and Trademark Office
Jennifer Ness, Attorney-Advisor, Office of International
Relations, U.S. Patent and Trademark Office
Jeff Beller, Economic Officer, Office of Bilateral Trade
Affairs, Economic and Business Affairs Bureau, Department of
State
David Bisbee, Market Access and Compliance Officer, Office
of the Pacific Basin, Department of Commerce
Jonathan Gressel, Agricultural Counselor, Embassy Kuala
Lumpur/Singapore
Paul Horowitz, Economic Officer, Embassy Singapore

GOS
--------------

Ms. Chan Lai Fung, Deputy Secretary for Trade, Ministry of
Trade and Industry (MTI)
Mr. Lionel Yeo, Director, Trade Division 3, MTI
Ms. Ng Kim Neo, Consultant, Trade Division, MTI
Mr. Minn Naing Oo, Deputy Director, Trade Division, MTI
Ms. Lai Jiunn Ning, Assistant Director, Trade Division, MTI
Ms. Jill Wong, Senior Assistant Director, Trade Division,
MTI
Ms. Lyndis Kang, Assistant Director, Trade Division, MTI
Ms. Cherie Lee, Assistant Director, Trade Division, MTI
Mr. Chern Siang Jye, Deputy Director, Ministry of Law
Ms. Valerie D'Costa, Director, International Division,
Infocomm Development Authority
Mr. Gerald Wee, Senior Manager, Infocomm Development
Authority
Mr. Daren Tang, State Counsel, Attorney General's Chambers
Ms. Deena Bajrai, State Counsel, Attorney General's Chambers
Ms. Lee Li Choon, Director/Legal Counsel, Intellectual
Property Office of Singapore (IPOS)
Mr. Christopher Cheang, Deputy Director, International
Economics Directorate, MFA
Mr. Sharon Chan, Assistant Director, International Economics
Directorate, MFA
Ms. Margaret Liang, Consultant, MFA
Ms. Charlene Chang, Senior Assistant Director, Competition
Commission of Singapore


14. (U) AUSTR Barbara Weisel cleared this message.

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