Identifier
Created
Classification
Origin
06SINGAPORE943
2006-03-24 04:31:00
CONFIDENTIAL
Embassy Singapore
Cable title:  

COMMERCE U/S LAVIN'S MEETINGS WITH SINGAPORE'S

Tags:  ECON ETRD EINV KIPR PREL PGOV EFIN PTER EAIR 
pdf how-to read a cable
VZCZCXRO0022
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #0943/01 0830431
ZNY CCCCC ZZH
R 240431Z MAR 06
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 9296
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 2140
RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000943 

SIPDIS

SIPDIS

STATE PASS COMMERCE FOR U/S LAVIN
USTR FOR DUSTR BHATIA AND AUSTR BWEISEL

E.O. 12958: DECL: 03/22/2016
TAGS: ECON ETRD EINV KIPR PREL PGOV EFIN PTER EAIR
SN
SUBJECT: COMMERCE U/S LAVIN'S MEETINGS WITH SINGAPORE'S
LEADERSHIP


Classified By: Ambassador Patricia L. Herbold for reasons
1.4 (b) and (d)

C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000943

SIPDIS

SIPDIS

STATE PASS COMMERCE FOR U/S LAVIN
USTR FOR DUSTR BHATIA AND AUSTR BWEISEL

E.O. 12958: DECL: 03/22/2016
TAGS: ECON ETRD EINV KIPR PREL PGOV EFIN PTER EAIR
SN
SUBJECT: COMMERCE U/S LAVIN'S MEETINGS WITH SINGAPORE'S
LEADERSHIP


Classified By: Ambassador Patricia L. Herbold for reasons
1.4 (b) and (d)


1. (C) Summary. Commerce Under Secretary for
International Trade Frank Lavin assured Singapore's top
leadership that the United States was pursuing a vigorous
free trade agenda in the Asia region despite
protectionist sentiment in Washington. Although a Malaysia
FTA would help ASEAN integration, Senior Minister Goh Chok
Tong questioned whether the GOM fully grasped what a "gold
standard" FTA with the United States entailed. Minister
Mentor Lee Kuan Yew doubted that Malaysia would be willing
to dismantle its bumiputra-related ownership and labor
requirements. Although Thailand Prime Minister Thaksin
wanted an FTA, he lacked the support among the established
elite, MM Lee said. Foreign Minister George Yeo surmised
that, even if Thaksin won a solid majority at the polls, he
would have to wait at least six months before trying to
seek approval for the FTA. MM Lee observed that Indonesia
was "creeping back" slowly to economic and political
health; President Yudhoyono was decisive, but he "wasted
time" soliciting and weighing different viewpoints. Both
SM Goh and FM Yeo voiced their concerns about the Dubai
ports decision, asking whether Singapore would have
engendered the same reaction had it made the acquisition
instead of Dubai. PM Lee worried about what Dubai meant
for ongoing U.S. free trade initiatives and progress on the
Doha round. With regard to Chinese President Hu Jintao's
upcoming visit to the United States, Singapore's leaders
noted the need for China to make political gestures on the
trade front. On Iraq, MM Lee said that the ruling parties

needed to find a way to bring the Sunnis back into the
fold, at a minimum by striking a deal for sharing oil
revenues. SM Goh asked for U.S. support in encouraging
Australia to conclude an open skies agreement with
Singapore (Note: Singapore is particularly interested in
rights to fly from Singapore through Australia to the United
States. End note). U/S Lavin raised Singapore,s view of
antidumping with Trade Minister Lim, noting that Singapore,s
participation in the &Friends of Anti-dumping8 was
inconsistent with its genuine friendship with the United
States. End summary.


2. (U) On March 21, U/S Lavin met with Prime Minister Lee
Hsien Loong, Senior Minister Goh Chok Tong, Minister Mentor
Lee Kuan Yew, Foreign Minister George Yeo, and Minister for
Trade and Industry Lim Hng Kiang.

U.S.-Malaysia FTA
--------------


3. (C) FM Yeo said he was pleased that Malaysia had agreed
to pursue FTA negotiations with the United States. He
noted that Malaysia's concerns with its declining level of
foreign direct investment compelled it to make this
decision. SM Goh questioned how serious Malaysia was about
concluding an FTA, and asked if the GOM fully grasped what
a "gold-standard" FTA with the United States actually
entailed. MM Lee wondered why Malaysia would want an FTA
if it meant having to dismantle its bumiputra (ethnic
Malay) ownership and labor requirements. U/S Lavin
expressed his hope that Malaysia Trade Minister Rafidah
Aziz would be able to navigate domestic resistance;
otherwise, Malaysia's FTA negotiations could stall like
Thailand's had done in recent weeks. SM Goh observed that
a successful FTA with Malaysia would help breathe life into
Thailand's FTA. MTI Minister Lim said this in turn would
bode well for ASEAN integration. U/S Lavin said that an
FTA with Malaysia would benefit Singapore by increasing the
overall level of economic activity with its largest trading
partner.

U.S-Thailand FTA
--------------


4. (C) MM Lee said that Prime Minister Thaksin wanted an
FTA with the United States, but doubted his administration
and the "old elite" supported one, given the domestic
interests they wanted to protect. The King was not a
supporter and his privy council "disliked Thaksin
intensely," MM Lee observed. Noting the large
demonstrations recently in Bangkok, MM Lee said that
Thailand was in danger of going the "Corazon Aquino People
Power" route. FM Yeo said that PM Thaksin was in a
"tricky" position. He was "too arrogant and acerbic, and
quick to reveal his true nature when pushed up against the

SINGAPORE 00000943 002 OF 003


wall," Yeo asserted. Thaksin would need to do well at the
polls during the upcoming elections to shore up support for
the FTA. Even then, however, he would need to wait at
least six months before trying to push it through
parliament for approval, he said.

Indonesia
--------------


5. (C) MM Lee said that Indonesia was "creeping back"
slowly to economic and political health: President
Yudhoyono knew what to do, but he was cautious, taking his
time to solicit and weigh differing viewpoints. The good
news was that, when he finally made a decision, he acted,
MM Lee said; time might be lost, but Yudhoyono was moving
in the right direction. FM Yeo said that he had just
returned from Batam, Indonesia, where he met with GOI Vice
President Kalla to discuss investor issues in Batam's
special economic zone. He emphasized that the two
countries needed to sort out the customs facilitation
process.


6. (C) FM Yeo agreed with U/S Lavin that terrorists were
on the defensive in recent months, but cautioned that the
Muslim Brotherhood appeared to be gaining strength and was
still a formidable force. FM Yeo held out good prospects
for the Aceh peace agreement, noting that Aceh's leader was
not corrupt and was close to President Yudhoyono. If
Indonesia succeeded in solving the Aceh problem, this would
create an environment conducive to solving other problems
in the country, FM Yeo concluded.

Dubai Ports Deal
--------------


7. (C) With regard to the recent Dubai Ports decision,
both SM Goh and FM Yeo asked if the U.S. reaction would
have been the same if Singapore instead of Dubai were
making the acquisition. U/S Lavin said that the U.S.
response, if any, would have been much more muted, perhaps
eliciting only some rumblings about loss of jobs or
purported links to China. He pointed out that the real
question hinged on how well Dubai understood the Washington
political process, not to mention U.S. public sentiment
more broadly. Singapore would have lobbied more
effectively, he ventured. FM Yeo lamented the "great harm"
that this decision created globally: it sent the wrong
message to friendly governments in the Middle East. He
noted that Singapore stood to benefit from the increasing
amounts of money that would flow its way rather than to the
United States. FM Yeo said that Singapore was engaging the
Middle East more vigorously than in the past, in part
"because we need to protect ourselves."

Whither Free Trade?
--------------


8. (C) PM Lee expressed concern that the recent
protectionist backlash against Dubai Ports might have
serious repercussions for ongoing U.S. FTA negotiations and
progress in the WTO. In terms of promoting free trade, the
United States was the "only good guy out there; we cannot
rely on the EU," PM Lee said. MTI Minister Lim echoed
these points, adding that he was skeptical current WTO
negotiations would succeed unless the United States and the
EU began cooperating on key issues. Asked about the
implications of increasing protectionism on U.S. trade
policy in Asia, U/S Lavin noted the rising frustrations in
Congress over China. Confronted with a huge and growing
trade deficit, U.S. government leaders were finding it
increasingly difficult to indulge the Chinese, he said.
The imbalance of Chinese companies enjoying excellent
access to the U.S. market and U.S. companies facing
numerous trade barriers (e.g., steel, beef, films, etc.)
and IPR-related theft in the Chinese market was striking,
U/S Lavin said.

Chinese President Hu's Visit to the United States
-------------- --------------


9. (C) FM Yeo said that during their recent visit to
Singapore, Zheng Bijian, China's (Communist) Party School
Executive Vice President, and Dai Bingguo, Vice Minister
for Foreign Affairs, solicited GOS views about how best to
position the upcoming visit of Chinese President Hu Jintao
to the United States. Singapore advised them that, with

SINGAPORE 00000943 003 OF 003


President Bush challenged politically and rising
protectionist sentiment in Congress, President Hu must be a
"good guest" and "make it easy" for President Bush (by
increasing market access and reducing trade barriers). U/S
Lavin said that the USG had been making a similar point
over the past few months, but the Chinese were taking a
minimalist approach that fell far short of what was
necessary to assuage Washington's concerns. Both PM Lee
and SM Goh said that it was important for China to make a
political gesture. PM Lee noted that China's economic
team, including Vice Minister Ma, consisted of capable
technocrats, but that they lacked the authority to make the
tough decisions to push necessary reforms. FM Yeo advised
U/S Lavin to find a way to assist Vice Minister Ma. She
may appear unhelpful, but she was under instructions to
deliver a good visit for President Hu, he said.

India
--------------


10. (SBU) SM Goh said that India was serious about reform
and that its recent rapid growth did not constitute a
bubble. India needed to move forward with economic reform
-- and infrastructure investment -- as fast as the
political left would allow, he stated. The government
needed to ensure that the benefits of India's growth
trickled down quickly to ensure a broad base of support for
further economic liberalization.

Iraq
--------------


11. (C) MM Lee noted that the United States had set the
highest possible targets for Iraq's democratization, the
economy, and overall stability. The Sunnis appeared to
have been cut out of the deal, which only made these
objectives more difficult to achieve, he said. The Sunnis
had been "used" by the Ottomans, the British, and finally
by Saddam Hussein to counter the influence of the Shia
majority and the Kurds, but no longer, he observed. At a
minimum, the ruling parties should strike a deal whereby
the Sunnis were entitled to their fair share of the oil
revenues, he said. Iraq was not another Vietnam, MM Lee
emphasized. The United States must have the resolve to see
it through: U.S. withdrawal from Iraq would only swell the
ranks of the Islamic fundamentalists.

Australia and Open Skies
--------------


12. (C) SM Goh asked U/S Lavin for U.S. support in
encouraging Australia to conclude an open skies agreement
with Singapore. U/S Lavin agreed that all countries would
benefit from opening up the Australian aviation market.
Noting that the U.S. had gradually lowered its foreign
ownership caps for U.S. carriers, he suggested that Singapore
could partially achieve its goal by investing in a U.S.
carrier. As a U.S.-owned entity, this airline could take
advantage of the more liberal U.S-Australia aviation regime
to fly Singapore-Australia routes.


13. (U) U/S Lavin cleared this message.
HERBOLD