US trade with S’pore grows faster than rest of the world
Trade Representative Susan Schwab says in ST interview that FTA has had major benefits.
SINGAPORE-US trade has grown significantly since a free trade agreement (FTA) between the two countries took effect in January 2004.
Growth has been across the board, in trade as well as in investment.
Disclosing this in an interview with The Straits Times, US Trade Representative Susan Schwab said the increase in bilateral trade has been “very dramatic, more dramatic than US trade with the rest of the world”.
“The Singapore-US FTA has been successful. US exports to Singapore are up. Singapore’s exports to the US are also up.
“It has been successful whether in manufacturing, agriculture or services. Singapore is the third-largest destination for foreign direct investment in Asia after Japan and Australia, and that keeps growing,” she said.
Bilateral trade has increased by 40 per cent to reach about $90 billion last year. Over the same period, Singapore’s exports to the US have increased by 28 per cent, and investment flows from America have also grown.
The US remains one of the top three foreign investors in Singapore, with foreign direct investments (FDI) amounting to $41.5 billion.
According to the US Department of Commerce, Singapore was the 14th largest recipient of US FDI worldwide. The US invested nearly three times as much in Singapore in 2005 as it did in China.
Ms Schwab noted that the FTA with Singapore had helped improve US competitiveness in the region.
“American firms carry out a lot of regional activities from Singapore that make us that much more competitive vis-a-vis China or Japan,” she explained.
Indeed, she said that free trade deals with Singapore and South Korea were important to maintain an American presence in Asia in the face of Beijing’s growing economic dominance, something which Washington had to be “conscious of”.
Besides Singapore, the Bush administration has negotiated 16 FTAs so far with several countries – including Chile, Panama, Australia, Morocco and Bahrain – since 2002.
Four of them are awaiting approval by lawmakers, the most significant of which is that with South Korea, which faces a tough passage in Congress.
The pact with South Korea, which needs to be approved by the legislatures of both countries, is the biggest such deal Washington has made since the North America Free Trade Agreement (Nafta) 15 years ago.
Two-way trade between the United States and South Korea, its seventh-largest trading partner, is about US$80 billion (S$123 billion) annually.
Ms Schwab appeared unfazed about the Korean pact, arguing that Congress would ultimately enact the deal based on its merits after Washington had resolved the thorny issue of beef exports to South Korea.
Ms Schwab also said Washington was keen to move forward on other free trade agreements in the region. She ruled out an FTA with Thailand following the military coup there last year, but remained optimistic that one could be concluded with Malaysia.
She also indicated clearly that a US-Asean FTA was unlikely to be on the table anytime soon, but said the Asean-US Trade and Investment Framework Agreement (Tifa), which Singapore was instrumental in establishing, could be used as a building block towards such a pact.
“At some point, we could build towards an Asean-wide FTA,” she said. “I do not think any of us has ruled that out. But at this stage of the game, it is premature talking about it.”