Publication Date

3-26-2010

Abstract

[Excerpt] The U.S.-Singapore Free Trade Agreement (FTA) (P.L. 108-78) went into effect on January 1, 2004. This report provides an overview of the major trade and economic effects of the FTA over the three years ending in 2006. It also includes detailed information on key provisions of the agreement and legislative action.

The U.S.-Singapore FTA has taken on new importance in trade policy because the United States is engaged in negotiations to join the Trans-Pacific Partnership (TPP). The TPP negotiations are the first major market-opening initiative of the Obama Administration. On December 14, 2009, United States Trade Representative Ron Kirk notified Congress of the intent to enter into the TPP negotiations. The objective is to shape a high-standard, broad-based regional free trade agreement with Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, and Vietnam. The first round of negotiations began March 15, 2010, in Sydney, Australia.

The U.S.-Singapore FTA has provided greater access for U.S. companies, has been instrumental in increasing bilateral trade, and has provided reassurance to Singaporeans of U.S. interest in the country. As a city-state, Singapore operates as an entrepot with essentially free trade. Under the FTA, concessions dealt mainly with providing greater access for American service providers and with strengthening the business environment in areas such as the protection of intellectual property rights and access to government procurement.

In 2009, the United States ran a $6.6 billion surplus in its balance of merchandise trade with Singapore, up from $1.4 billion in 2003, but down from the $12.0 billion in 2008. U.S. exports of goods to Singapore surged from $16.6 billion in 2003 to a peak of $27.9 billion in 2008 before declining to $22.3 billion in 2009. Even with this rapid increase in U.S. exports to Singapore, the U.S. share of Singapore’s imports has declined from 16% in 2003 to 12% in 2009. The main reason for this is that Singapore’s overall trade is booming. Still, Singapore imports more from the United States ($28.5 billion) than from China ($26.0 billion).The U.S. balance of trade in services with Singapore declined from a surplus of $4.0 billion in 2001 to $1.2 billion 2005 but has risen to $4.2 billion in 2008. A significant increase has been in income from U.S. direct investments in Singapore. U.S. access to the Singaporean market for multinational corporations seems to have been enhanced considerably under the FTA. U.S. income from assets in Singapore rose from $6.7 billion in 2003 to $21.1 billion by 2008.

On the U.S. import side (Singapore’s exports), a noteworthy development is that U.S. imports of pharmaceuticals from Singapore have risen from $0.09 billion in 2003 to $3.0 billion in 2007 before declining to $2.0 billion in 2008. Singapore has developed as a regional center for multinational pharmaceutical companies. This apparently was partly triggered by provisions in the FTA that required Singapore to strengthen its intellectual property protection.

Negotiations for the U.S.-Singapore Free Trade agreement were launched under the Clinton Administration in December 2000. The FTA became the fifth such agreement the United States has signed and the first with an Asian country. This report will be updated as circumstances warrant.

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Suggested Citation
Nanto, R. K. (2010). The U.S.-Singapore Free Trade Agreement: Effects after five years. Washington, DC: Congressional Research Service.
http://digitalcommons.ilr.cornell.edu/key_workplace/726

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