US President George W. Bush signed a free trade agreement (FTA) yesterday with Singapore, his first since Congress granted him trade promotion authority last summer and the largest since the North American Free Trade Agreement.
Singaporean Prime Minister Goh Chok Tong joined Bush for an elegant signing ceremony at the White House in a visible display of what Frank Lavin, the US ambassador to Singapore, said was the administration's post-Iraq war policy of "working with friends."
Unspoken was the second part of the policy -- to mete out punishment to those nations that failed to support the US in its war with Iraq.
Originally, Chile had expected to be the first country to sign such an agreement after negotiating for more than a decade to further open its borders to trade with the US. But by refusing to support the US at the UN Security Council where it is a member, Chile lost that honor, senior administration officials said.
"You know, people are disappointed. I'm disappointed," said US Trade Representative Robert Zoellick. "We worked very closely with our Chilean partners. We hoped for their support in a time that we felt was very important."
There is nothing subtle about this policy.
When the president announced the trade agreement signing ceremony from US Marine Corps Base Camp Lejeune, North Carolina, he praised Singapore not for its economic strength and global trading strategy but for being "a strong partner in the war on terrorism and a member of the coalition on Iraq."
Goh said that the agreement marks a "milestone in US-Singapore relations."
"The US-Singapore FTA is also the beginning of a trans-Pacific bridge between the US and East Asia," he said. "I believe that it will catalyze greater trade liberalization in East Asia."
Described as the "gold standard" for free trade agreements, the pact signed on Tuesday guarantees that all US exports to Singapore will enjoy zero tariffs immediately. US tariffs on imports from Singapore will largely disappear, too, with the last tariffs phased out within eight years.
The agreement is subject to approval by the Senate, although the president's trade promotion authority means that Congress can only approve or reject its language -- not alter it.
For Singapore, the agreement helps secure its position as a premier financial and trading nation in the region, and it is especially welcome as it and other nations battle to keep the severe acute respiratory syndrome epidemic under control.
Officials said they also believe that the agreement marks an end of the Asian financial crisis of 1997 and 1998, which had raised huge questions about the East Asian economic miracle and sent investors fleeing from Southeast Asia.
Although a small city state, Singapore is the eleventh-largest trading partner of the US with trade volume of US$33.4 billion last year.