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