Singapore’s free trade agreement (FTA) strategy is not about signing any deal available but rather forging solid trade agreements that benefit employers, according to Prime Minister Lee Hsien Loong.
“We’re not just trying to get as many deals as possible, otherwise we’ll collect up lots of little stamps, and we’ll have an album full and not much to show for it,” Lee said after returning from Sri Lanka, where an agreement was signed.
The Sri Lanka-Singapore FTA will reportedly see Singaporean firms enjoying potential tariff savings of up to S$10 million each year, among other benefits.
Singapore’s Ministry of Trade and Industry (MTI) said Sri Lanka would, over the next 15 years, eliminate tariffs on 80 per cent of exports.
The deal includes Sri Lanka’s first treaty commitment on government procurement to allow Singaporean firms to bid for projects with several of Sri Lanka’s large central entities and state-owned enterprises.
The countries also committed to granting better access to each other’s services markets, said the MTI.
The deal covers cross-border transfers of information by electronic means and data flows, with the MTI saying this would benefit traders given the rising demand for e-commerce and digital services.
On his return, Lee used the bilateral deal as an excuse to criticise the global trade body.
The most-favoured-nation principle of WTO (World Trade Organisation) agreements means countries cannot discriminate between their trading partners nor grant lower trade tariffs or other perks to one country.
Lee, the world leader with the highest official of wage of US$1.7 million a year, said:
“Unfortunately the WTO is not making very good progress, political whims are against it.
“The United States’ position is quite sceptical of the WTO, to put it very mildly. And even without the US position, it’s very difficult to make an agreement in the WTO, because they got 160, 170 countries participating now, countries and economies,” Lee told the media.
“And there is not a sufficient convergence of interests for all 170 to say OK, let’s go ahead. So, for 20 something years now, we’ve not had a good deal in the WTO. Minor steps forward, but no substantive deal.”
Frustration had led the government to pursue bilateral or regional FTAs, the prime minister said.
Outside Asean, Singapore has 13 bilateral FTAs and several regional FTAs. The MTI said Sri Lanka was Singapore’s 36th largest trading partner last year with bilateral trade amounting to S$2.7 billion. Singaporean exports to the Indian Ocean island totalled S$2.5 billion while imports reached just S$178 million.
A Sri Lankan tea plantation. Picture credit: Wikimedia