US embassy cable - 05SINGAPORE370

UNCLAS SECTION 01 OF 04 SINGAPORE 000370 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS USTR FOR AUSTR BWEISEL, COMMERCE FOR 
DBISBEE, USPTO FOR JNESS AND PFOWLER 
USDA FAS FOR CMP/DLP, ITP/AAD 
 
E.O. 12356: N/A 
TAGS: ETRD, ECON, EFIN, ECPS, EINV, KIPR, EAGR, SENV, SN 
SUBJECT:  USTR CONCLUDES FIRST REVIEW OF U.S.-SINGAPORE FTA 
 
REF:  A) Singapore 165 B) Singapore 275 
 
1.  (SBU) Summary:  In their first annual review of the U.S.- 
Singapore Free Trade Agreement (FTA) held February 2, 
representatives from the USG and GOS expressed general 
satisfaction with implementation of the FTA during its first 
year.  AUSTR Barbara Weisel noted Singapore's recent efforts 
to engage on our intellectual property concerns and its 
plans to amend its Copyright Law by May 2005.  Weisel 
emphasized that the USG remained concerned about Singapore's 
implementation of its telecom commitments.  Singapore's 
telecom regulator said that it had launched an investigation 
into claims that its dominant carrier, SingTel, was using 
technology as a way to undermine the prescribed deregulation 
process, and accepted the USG's offer to weigh in with 
comments before it makes a final determination concerning 
possible non-competitive and discriminatory practices.  The 
GOS said that it had established a Competition Commission as 
a first step in implementing its new Competition Law and 
that regulations would begin to take effect by the end of 
the year.  The FTA review also covered issues related to 
Singapore's requests for changes to the FTA, discussed its 
ban on U.S. beef, and touched on implementation updates 
concerning professional services, financial services, and 
the environment.  AUSTR Weisel called on Singapore to work 
with the U.S. on the Doha Round, and to take on a 
coordinating role in ASEAN to push the regional trade agenda 
forward.  The GOS acknowledged that this was possible, but 
cautioned that Singapore had to be mindful of sensitivities 
in the region.  End Summary. 
 
FTA's First Year:  A Good Start 
------------------------------- 
 
2.  (U) Ministry of Trade and Industry (MTI) Deputy 
Secretary for Trade Ms. CHAN Lai Fung told Assistant USTR 
 
SIPDIS 
Barbara Weisel that Singapore was very pleased with the 
generally smooth implementation of the U.S.-Singapore FTA 
during its first year.  AUSTR Weisel agreed that positive 
economic and trade data as well as public feedback supported 
this conclusion.  She noted that this was the most 
comprehensive FTA undertaken by both countries and that the 
USSFTA had become the model for other agreements.  Economic 
and trade cooperation between the U.S. and Singapore had 
always been good, Weisel said, and the USSFTA had done much 
to generate even closer ties that would prove invaluable as 
both countries worked together on the WTO Doha Round. 
 
Intellectual Property 
--------------------- 
 
3.  (U) AUSTR Weisel expressed her appreciation for 
Singapore's efforts to engage fully over the past few weeks 
on implementation concerns related to its intellectual 
property (IP) regime.  She expressed her hope, and DepSec 
Chan concurred, that both sides were very close to resolving 
remaining issues, possibly as soon as within the next few 
days.  Asked why Singapore was projecting that it could not 
amend its Copyright Law before May, Ministry of Law Deputy 
Director Mr. CHERN Siang Jye explained that this timeline 
took into account a number of requirements, including: 
finalizing the revisions currently under discussion with 
USTR; drafting the amended legislation; allowing for a 30- 
day comment period and subsequent consideration of this 
input; and presentation of the bill to Parliament when next 
in session. 
 
4.  (U) Asked about the status of implementing regulations 
for internet service providers (ISPs), Intellectual Property 
Office of Singapore (IPOS) Director/Legal Counsel Ms. LEE Li 
Choon said that these should come into force no later than 
early March. 
 
Telecom 
------- 
 
5. (SBU) AUSTR Weisel emphasized that Singapore's 
implementation to date of its telecommunications commitments 
related to leased circuit services constituted the USG's 
issue of greatest concern.  She acknowledged that 
Singapore's regulator, the Infocomm Development Authority 
(IDA), had made progress in trying to make these services 
available to U.S. carriers at more competitive prices, but 
stressed that the technical interconnection specifications 
offered by the dominant carrier, SingTel, made it impossible 
for these companies to take advantage of the new 
regulations.  AUSTR Weisel noted that U.S. carriers felt 
SingTel's requirements were non-competitive, ran counter to 
industry practice in the region and globally, and rendered 
the intended price reductions meaningless.  She stressed 
that the FTA obligated Singapore to provide carriers with 
prices that were not only reasonable, but also non- 
discriminatory.  Deputy AUSTR Elena Bryan said that the USG 
was concerned that SingTel was using technology as a way to 
undermine the prescribed deregulation process.  DepSec Chan 
agreed that, if this were the case, the Singapore government 
would need to take action. 
 
6.  (SBU) IDA Senior Manager Gerald Wee explained that IDA 
had launched an internal investigation of SingTel's 
practices after foreign carriers brought this issue to its 
attention and expected to report its findings within one to 
two months.  In making a final determination, Wee said, IDA 
would need to balance its FTA commitments to ensure that 
local leased circuits (LLCs) were provided at a reasonable 
cost with the needs of SingTel, which had invested millions 
of dollars in infrastructure.  Wee assured Weisel that if 
its findings suggested SingTel was engaging in non- 
competitive behavior, IDA would take all the necessary steps 
to rectify this problem. 
 
7.  (U) AUSTR Weisel said that the USG would appreciate an 
opportunity to weigh in with comments before IDA made its 
decision.  DepSec Chan agreed, but cautioned that this might 
delay IDA's decision-making process.  Weisel explained that 
the FCC had considerable experience with these type of 
issues in the U.S. market and would be willing to share this 
information with the Singapore government.  Wee asked if FCC 
could also provide data available for other 
telecommunications markets. 
 
Competition Law 
--------------- 
 
8.  (U) DepSec Chan said that Singapore was in the beginning 
stages of implementing Phase I -- establishment of a 
Competition Commission -- of its new Competition Law that 
came into effect January 1, 2005.  The Commission currently 
employed 25 staff, and had shortlisted names for Assistant 
Chief Executive level positions, including a number of 
overseas competition experts, Chan explained.  The 
Commission was prepared to begin drafting implementing 
regulations (as part of Phase II), with public consultation 
periods and related enactments targeted for the end of 2005, 
Chan explained.  The Singapore government was also working 
to expand public awareness of the new law's provisions, Chan 
said, and was considering outreach programs similar to those 
launched by IPOS in 2004 on IPR. 
 
Lifting Singapore's Beef Ban 
---------------------------- 
 
9.  (U) In addition to reiterating GOS talking points 
reported in reftels, DepSec Chan said that Singapore's 
decision to lift its ban on U.S. beef and beef products 
should not require any legislative changes.  She noted that 
the BSE issue concerned food safety and not trade, and that 
the Agri-Food and Veterinary Authority (AVA) would therefore 
make the determination whether to lift the beef ban. 
AgCounselor stressed the need to keep discussion and 
evaluation of the issue science-based. 
 
Singapore's Specific FTA-Related Requests 
----------------------------------------- 
 
10.  (SBU) -- Tariffs acceleration (polycarbonates, LCD 
televisions, nutritionals):  AUSTR Weisel explained that the 
USG is developing a process by which to balance tariff 
agreements made in different FTAs, and would follow up with 
the GOS once this information is available. 
 
-- Rules of Origin (electric smoothing irons):  Deputy AUSTR 
Bryan explained that the Singapore company in question that 
was engaged in the manufacture of electric smoothing irons 
would not qualify for a change in the regional value content 
(RVC) rule since key components of its manufacturing process 
were taking place outside Singapore.  She suggested, and 
Chan agreed, that both side's technical experts should 
engage in further discussions related to this request. 
 
-- Electronic Exchanges of Health Certificates:  AUSTR 
Weisel said that the USG would first evaluate the efficacy 
of its pilot project with Australia (Singapore is also 
engaged in a pilot project with Australia) before deciding 
whether to extend this initiative to Singapore. 
 
-- Textiles (more flexible tariff preference level (TPL) 
program; relaxation of "wholly done in Singapore" 
requirement; use of foreign-origin components; improvements 
in de minimis provision):  AUSTR Weisel explained that these 
issues were very sensitive and that changing the USSFTA to 
accommodate them would be extremely difficult. 
 
Enhancement of the Trade Relationship 
------------------------------------- 
 
11.  (U) AUSTR Weisel asked for Singapore's continued 
support for ongoing work in the WTO and other regional fora 
such as APEC and ASEAN.  She said that USTR considered 
Singapore to be a key player in ASEAN and encouraged it to 
take on a coordinating role to push ASEAN's trade agenda 
forward.  Chan acknowledged that this was possible, but 
cautioned that Singapore had to be mindful of various 
sensitivities in the region.  Chan noted that she would be 
in Geneva the week of February 7 and would engage in 
discussions with other WTO representatives about how to 
conclude the Doha Round. 
 
Other Implementation Issues and Follow Up 
----------------------------------------- 
 
12.    (SBU) In reviewing the list of other pending FTA 
implementation requirements, both sides agreed to the 
following: 
 
-- Medical Products Working Group:  Both sides will clarify 
the remaining steps that need to be taken to formally 
establish the working group. 
 
-- Law Schools:  USTR will respond to Singapore's proposed 
list of those four U.S. law schools whose degrees earned by 
Singapore citizens will be recognized for admission to the 
Singapore bar. 
 
-- Financial Services:  DepSec Chan said that Singapore 
stands ready to implement its various phased-in financial 
services commitments, the next of which (lifting the current 
quota on new licenses for full-service banks) comes into 
effect in July 2005.  Chan confirmed that no legislative 
changes, only regulatory revisions, would be necessary for 
implementation.  At USTR's request, Chan offered to provide 
a more detailed written explanation of the procedures that 
would be put in place in order for U.S. financial service 
providers to take advantage of these new provisions. 
 
-- Telecom:  In addition to comments pertaining to the LLC 
issue and related background information, USTR agreed to 
provide the GOS with an explanation of the FCC's new 
regulations concerning unbundled network elements (UNE). 
 
-- Maritime:  The GOS will forward to the USG proposed 
language to correct omissions to its revised requirements 
for the registration of ships. 
 
-- Environmental Cooperation:  The USG will provide the GOS 
a Plan of Action as called for under the Memorandum of 
Intent on Cooperation in Environmental Matters signed in 
2003. 
 
-- Rules of Procedure:  USTR will present a draft Rules of 
Procedure to the GOS for its comments. 
 
FTA Review Participants 
----------------------- 
 
13.  (U) 
 
USG 
------ 
 
Barbara Weisel, Assistant USTR for Southeast Asia, the 
Pacific and Pharmaceutical Policy 
Elena Bryan, Deputy Assistant USTR for Southeast Asia and 
the Pacific 
Peter Fowler, Senior Counsel, Office of Enforcement, 
External Affairs, U.S. Patent and Trademark Office 
Jennifer Ness, Attorney-Advisor, Office of International 
Relations, U.S. Patent and Trademark Office 
Jeff Beller, Economic Officer, Office of Bilateral Trade 
Affairs, Economic and Business Affairs Bureau, Department of 
State 
David Bisbee, Market Access and Compliance Officer, Office 
of the Pacific Basin, Department of Commerce 
Jonathan Gressel, Agricultural Counselor, Embassy Kuala 
Lumpur/Singapore 
Paul Horowitz, Economic Officer, Embassy Singapore 
 
GOS 
------ 
 
Ms. Chan Lai Fung, Deputy Secretary for Trade, Ministry of 
Trade and Industry (MTI) 
Mr. Lionel Yeo, Director, Trade Division 3, MTI 
Ms. Ng Kim Neo, Consultant, Trade Division, MTI 
Mr. Minn Naing Oo, Deputy Director, Trade Division, MTI 
Ms. Lai Jiunn Ning, Assistant Director, Trade Division, MTI 
Ms. Jill Wong, Senior Assistant Director, Trade Division, 
MTI 
Ms. Lyndis Kang, Assistant Director, Trade Division, MTI 
Ms. Cherie Lee, Assistant Director, Trade Division, MTI 
Mr. Chern Siang Jye, Deputy Director, Ministry of Law 
Ms. Valerie D'Costa, Director, International Division, 
Infocomm Development Authority 
Mr. Gerald Wee, Senior Manager, Infocomm Development 
Authority 
Mr. Daren Tang, State Counsel, Attorney General's Chambers 
Ms. Deena Bajrai, State Counsel, Attorney General's Chambers 
Ms. Lee Li Choon, Director/Legal Counsel, Intellectual 
Property Office of Singapore (IPOS) 
Mr. Christopher Cheang, Deputy Director, International 
Economics Directorate, MFA 
Mr. Sharon Chan, Assistant Director, International Economics 
Directorate, MFA 
Ms. Margaret Liang, Consultant, MFA 
Ms. Charlene Chang, Senior Assistant Director, Competition 
Commission of Singapore 
 
14.  (U) AUSTR Barbara Weisel cleared this message. 
 
LAVIN