Tue, Feb 18, 2003 - Page 11 News List

Singapore, Australia ink trade deal

A NEW AGREEMENT The new pact lifts all tariffs on Australia-bound Singapore goods and on Australian imports to Singapore, most notably beer and stout


Singapore and Australia signed a free trade pact yesterday, slashing tariffs and opening up service markets, with both sides hoping the deal would smooth trade to the US.

The pact, signed by Singapore's Minister for Trade and Industry George Yeo and Australia's Trade Minister Mark Vaile, is Canberra's first in 20 years.

The agreement lifts all tariffs on Australia-bound Singapore goods and on Australian imports to Singapore, notably beer and stout.

The two men signed the agreement and exchanged documents in a packed ballroom of a Singapore hotel amid handshakes and applause.

Vaile said the agreement with Singapore doesn't offer Australia much "in terms of market access," because bilateral tariffs between the two countries were already low.

However, the Australian services sector would be a big beneficiary of the agreement, he said.

The new deal is expected to be a springboard for Australia's legal, financial, telecoms, education and environmental services in the city-state.

Singapore investors, too, will have improved access to Australia's telecommunications sector. Australia is pledging to ease the dominance of its national telecommunications company Telstra in the local market.

"The Australian government has undertaken strong pro-competitive disciplines to manage the dominance of [Telstra], which owns and operates a large part of Australia's network services," IE Singapore, the city-state's trade board, said.

That could be good news for Singapore government-linked SingTel, which purchased Telstra rival Optus in 2001 after a much-publicized battle over foreign ownership and whether Singapore might try to use it for intelligence gathering.

The agreement does not require Singapore's government-linked companies to ease its restrictions on foreign ownership.

But Australian companies wanting to bid for government business in Singapore would be given "nondiscriminatory national treatment," the Australian government said.

The agreement also makes it easier for Australian law firms to set up here.

The ministers said they hoped the deal would also smooth the flow of trade between Singapore, Australia and the US.

Both countries are in the process of negotiating their own free-trade pacts with officials in the superpower's capital in Washington.

"The conclusion of this agreement is a very important triangle in building an economic relationship with the largest and most dynamic economy in the world," Vaile said.

The free trade agreement is expected to come into force by the middle of this year and will be periodically reviewed after that, Yeo said.

"This is a living, breathing, dynamic document and it will be reviewed after the first year of implementation and every two years after," said Yeo.

Last year, two-way trade between Singapore and Australia amounted to S$9.9 billion (US$5.7 billion).

Singapore already has free trade deals with the nations of Japan, New Zealand, Switzerland, Iceland, Norway and Liechtenstein. The city-state expects to sign a similar deal with the US sometime this year. Australia is negotiating its own free trade agreement with Thailand.

The official name of the agreement is the Singapore-Australia Free Trade Agreement, or SAFTA, and it was hammered out after more than two years of intense negotiations.

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