AMBASSADOR'S CALL ON TRADE AND INDUSTRY MINISTER

UNCLAS SECTION 01 OF 02 SINGAPORE 000277 SIPDIS SENSITIVE, SIPDIS STATE PASS USTR FOR AUSTR BWEISEL, EBRYAN, AND JMCHALE COMMERCE FOR CPETERS E.O. 12356: N/A TAGS: ETRD ECON EINV ETTC ECPS EPET EAGR KIPR SN SUBJECT: AMBASSADOR'S CALL ON TRADE AND INDUSTRY MINISTER LIM HNG KIANG ¶1. (SBU) Summary: The Ambassador told Minister for Trade and Industry LIM Hng Kiang that, short of an immediate solution, the United States would again raise Singapore's fulfillment of its telecom-related commitments at the upcoming second annual review of our bilateral Free Trade Agreement (FTA). During her January 27 courtesy call, the Ambassador noted progress in other trade-related areas since last year's FTA Review, including Singapore's recent reopening of its market to U.S. beef and copyright-related enhancements to its intellectual property regime. Minister Lim said that Singapore was committed to creating a competitive energy and gas sector, but that progress had been slowed by the need for several rounds of public consultations on draft laws and regulations, and ongoing arbitration proceedings between certain government-linked corporations (GLCs). On casinos, Minister Lim asserted that Singapore's financial sector was well prepared for any increase in gambling-related money laundering and that such activities would not be allowed to take root here. End Summary. FTA Review Progress and Outstanding Issues -------------- ¶2. (U) Reflecting on progress made on trade issues since the FTA's first annual review in February 2005, the Ambassador thanked Minister Lim for Singapore's recent lifting of its ban on U.S. beef, and for publicly confirming that its position remained unchanged despite Japan's January 20 decision to again close its market. She cited Singapore's additional amendments to its Copyright Law in 2005 to comply with its FTA obligations as another step forward. ¶2. (SBU) The Ambassador expressed concern, however, that Singapore's implementation of telecom-related FTA commitments related to mandatory wholesale pricing for "tail" local leased circuits remained unresolved after more than two years. She advised Minister Lim that, short of an immediate solution, USTR would again be compelled to raise this issue at the upcoming FTA Review tentatively scheduled for early March. Minister Lim said that he would convey our concerns to Singapore's telecom regulator, the Infocomm Development Authority. He suggested that all telecom regulators in liberalizing markets, including the United States, had to grapple with similar competing interests among dominant and non-dominant carriers. ¶3. (SBU) Minister Lim said that Singapore also had raised outstanding issues at last year's FTA Review, including requests related to the acceleration of certain tariffs and changes in textile quotas. He explained that, during the negotiation phase, when the GOS was promoting the FTA to Singapore businesses, textile manufacturers were disappointed when actual market access enhancements fell short of their initial expectations. Energy and Gas Market Deregulation -------------- ¶4. (SBU) The Ambassador asked about Singapore's attempts to deregulate the energy sector, in particular efforts to resolve problems with third-party access to the Sumatra-to- Singapore Pipeline. MTI Permanent Secretary Peter Ong, who accompanied Minister Lim, said that Singapore was committed to opening the energy market; the GOS was planning to seek public comment on draft legislation in this regard, including amendments to the 2001 Gas Act. Minister Lim noted that the GOS had held several rounds of consultations with industry representatives, particularly on the Gas Network Code, but that the entire process had taken longer than anticipated. He claimed that U.S. and Singapore interests converged on the goal of achieving a competitive gas market. He cautioned, however, that current arbitration between two of the sector's GLCs - PowerGas and Gas Supply - - had to run its course. Casinos: Moving Beyond "OB Markers" -------------- ¶5. (SBU) Turning to Singapore's decision announced in April 2005 to build two multi-billion dollar casinos, Minister Lim praised the excellent dialogue between the GOS and U.S. SINGAPORE 00000277 002 OF 002 casino operators bidding on the Marina Bay project. He observed that the process of legalizing, regulating, and seeking bids on the casinos had been a "good learning experience" for the nation; previously, any discussion about allowing casinos in Singapore had been "out-of-bounds." It was a great comfort to have three top Las Vegas casino operators among the four bidding finalists, Minister Lim said; their participation lent credibility to the government's decision to allow casinos. ¶6. (SBU) Highlighting her prior experience on the Washington State Gambling Commission, the Ambassador said that she was pleased that Singapore was addressing early on casino-related issues such as gambling addiction and the potential for increased money laundering activities. Minister Lim explained that Singapore's role as a key financial sector factored into the government's earlier resistance to legalizing casinos. The sector was now more mature and prepared to cope with any side-effects, he asserted, emphasizing that Singapore would not allow money laundering activities to take root. Herbold