Media info note: Trans-Pacific Strategic Economic Partnership Agreement

Government of Singapore, 3 June 2005

MEDIA INFO-NOTE

Trans-Pacific Strategic Economic Partnership Agreement
(Trans-Pacific SEP)

BACKGROUND

On 3 Jun 05, the trade ministers of Brunei, Chile, New Zealand and
Singapore announced the substantive conclusion of the Trans-Pacific
Strategic Economic Partnership Agreement (“Trans-Pacific SEP”) on the
sidelines of the APEC Ministers Responsible for Trade (MRT) meeting in
Jeju (Korea). The Agreement was first launched in October 2002 at the
APEC Leaders’ Economic Meeting in Los Cabos (Mexico). Prior to Brunei’s
participation as a party to the Agreement, the Trans-Pacific SEP was
known as the Pacific-Three FTA.

2. The Trans-Pacific SEP is the first FTA that spans three different
continents and it is hoped that by deepening the economic linkages
between Brunei, Chile, New Zealand and Singapore, the Agreement will
form one of the building blocks towards increased engagement across
the Asia-Pacific. The Trans-Pacific SEP is Singapore’s first FTA with a
South American country. It also builds on our existing FTA with New
Zealand and both countries have sought, where possible, to improve on
the commitments made under the ANZSCEP.

3. An ambitious and high-standard FTA, the Trans-Pacific SEP will serve
to complement the WTO and hasten progress towards global trade
liberalisation. The accession of like-minded parties such as Brunei to the
Agreement demonstrates the potential of the Trans-Pacific SEP to grow
into a larger strategic agreement for trade liberalisation.

4. The Agreement is slated to be signed in early July 2005, once the

Parties have completed the necessary domestic processes. The Parties
are targeting for the Agreement to enter into force on 1 Jan 06.

KEY ELEMENTS OF TRANS-PACIFIC SEP

5. The Trans-Pacific SEP covers trade in goods, rules of origin, trade
remedies, sanitary and phytosanitary (SPS) measures, technical
barriers to trade (TBT), trade in services, government procurement,
customs procedures, intellectual property, temporary entry of persons,
competition, institutional provisions and dispute settlement. There is
also a chapter covering cooperation in fields such education, primary
industry, culture and science & technology. Negotiations on Investment
and Financial Services remain to be concluded and chapters on these
two areas will be included in the Trans-Pacific SEP upon their
conclusion.

6. In parallel with the negotiations for the Trans-Pacific Strategic Economic
Partnership Agreement, the four countries also discussed and agreed to
have a Memorandum of Understanding on Labour Cooperation and an
Environment Cooperation Agreement.

a. The MOU on Labour Cooperation will enable the countries to
work closely together on labour and HR issues and provide
opportunities for the countries to share views and experiences
on these issues, with the objective of promoting and enhancing
the well-being of workers in the four countries.

b. The Environment Cooperation Agreement will enable the
countries to work closely together on environment issues of
mutual interest and provide opportunities for the countries to
share views and experiences on these issues.

KEY OUTCOMES OF THE TRANS-PACIFIC SEP NEGOTIATIONS

MARKET ACCESS
6. On the whole, the market access package saw the elimination of
duties on the majority of tariff lines upon entry into force of the agreement.
With respect to New Zealand, duties on all tariff lines would be eliminated
with immediate effect, as was the case under the ANZSCEP. With regard
to Brunei, the market access package will complement Singapore’s existing
arrangement under the AFTA. With regard to Chile, tariffs on 89.3% of
domestic exports would be eliminated upon entry into force, with tariffs on a
further 9.57% eliminated in three years. Altogether, 98.87% of all domestic
exports would receive duty-free treatment three years from entry into force,
ie starting from 1 Jan 09, and this figure would increase to 100% in six
years. Key exports that will benefit include processed cocoa powder,
chemicals, pharmaceuticals and plastics.

RULES OF ORIGIN (ROO)
7. The Rules of Origin (ROO) determine products that are eligible for
preferential tariff treatment. In order to promote trade flows, the Parties
have crafted rules which are as outward-looking and trade-facilitative as
possible. Many progressive elements reflecting Singapore’s unique
production patterns have been included in the ROO provisions. Key
sectors that will benefit from the various liberal process rules in the ROO
chapter include the oil, chemicals, plastics, horticultural and
pharmaceuticals industries.

8. The salient features of the ROO chapter are:

a. A product will qualify for preferential treatment if it meets the
specific rule of origin applicable to it (in many cases, this is a
liberal Change of Tariff Sub-Heading rule), or where so stipulated,
if at least 45% of the cost originates from the Party.
Manufacturers that source inputs from Trans-Pacific SEP parties
can include the cost of these inputs towards the 45%, but the total
value of non-originating materials must not exceed 55% of the
value of the good.

b. The Parties recognise certain industrial goods produced from
recovered goods in the territory of a Party as originating. These
goods must have the same life expectancy and meet the same
performance standards as new goods.

c. The Parties also recognise the concept of outward processing as
an integral part of the manufacturing process for certain goods
(such as electric irons). These goods will qualify for preferential
treatment even if they have undergone processes of production or
other operations outside the territory of a Party, provided they are
returned to the Party before export.

COMPETITION
9. These provisions facilitate the maintenance of an environment

supportive of competition so that the gains from trade and investment
liberalisation achieved by the FTA can be maximised. The chapter
provides general principles of competition that Parties will abide by and
encourages cooperation between the respective competition authorities.

TRADE REMEDIES
(Anti-dumping and Safeguards)

10. The Parties have agreed that a Party initiating a global safeguard action
will inform the other Parties of its intent and the reasons for the action.

CUSTOMS PROCEDURES
11. Under Customs Procedures, the Agreement seeks to institutionalise a
platform to facilitate trade amongst the Parties. This includes enhancing
transparency in regulation so that traders would be fully aware of the
Customs requirements and procedures in the respective countries. Key
facilitative commitments under this chapter include:

a. Self-certification for the claiming of preferential tariffs
Using the case of Singapore-originating goods as an example, an
importer would have to prove that the goods are of Singapore origin
via the presentation of a declaration of origin on the export invoice, in
order to claim preferential tariffs on the goods in question. Under the
Agreement, the Singapore exporter or producer can make this
declaration of origin without the need for a formal certificate of origin.
Furthermore, to facilitate the trade in low-value consignments, the
requirement of a declaration of origin is waived if the value of the
consignment is below US$1,000.

b. Risk Management
The Customs Administrations of the Parties have agreed to enhance
the application of risk management to focus on high-risk goods and
facilitate the clearance of low risk consignments.

c. Advance Rulings
The customs authorities in each country will on the request of the
trader provide an advance ruling on the eligibility of originating goods
for preferential tariffs and tariff classification, providing traders with
greater certainty on the status of their goods at the country of import.

SERVICES

12. The Trade in Services Chapter is ambitious, comprehensive, and will
bind Parties to their current levels of liberalization as well as any future
liberalization in most sectors. New Zealand and Chile have significantly
improved on their commitments at the WTO, thus granting Singapore
service suppliers preferential treatment over their competitors from other
countries in sectors like medical services, private education services,
computer and related services, construction services, real estate
services and distribution services.

13. With regard to the Agreement between New Zealand and Singapore on
a Closer Economic Partnership (ANZSCEP) that was concluded in
2000, the agreement locks in and builds upon the benefits that
Singapore and New Zealand service suppliers have been enjoying.

14. The Chapter will initially not apply to Brunei. Instead, it will have 2 years
after entry into force of the agreement, to prepare, negotiate and finalise
its commitments under the Chapter.

15. The other main features of the Chapter are as follows.

16. Beneficiaries. Singapore service suppliers with business operations in
Singapore, provided they are not shell companies, will be able to take
advantage of the benefits under this agreement.
17. Non-discriminatory treatment. New Zealand and Chile are to give
Singapore service suppliers the same treatment that they give their own
suppliers.

18. Sectoral coverage. The Chapter takes a negative list approach, which
starts from the premise that all sectors are open, except for those
measures or sectors which have been expressly reserved. This creates
a more predictable business environment for Singapore businessmen,
who would have a better knowledge of the sectors which are protected
before entering the respective markets.

19. Under this approach, Parties have listed in Annex III existing measures
that do not conform to the agreement but which they intend to maintain.
These measures however cannot become more trade-restrictive and
any future liberalization must be locked in. Listed in Annex IV are the
sectors in which Parties are free to take any measures.

20. Domestic Regulation. There are also disciplines on domestic regulation
to ensure that Parties impose measures in a manner that is reasonable,
objective and impartial. In addition, measures relating to qualification
requirements and procedures, technical standards, and licensing
requirements are required to be

a. based on objective and transparent criteria, such as
competence and the ability to supply the service;

b. not more burdensome than necessary to ensure the quality of
the service; and

c. in the case of licensing procedures, not in themselves a
restriction on the supply of the service.

21. Most Favoured Nation. The Chapter also contains a Most Favoured
Nation clause. Thus, if in the future, a Party grants more favourable
treatment in any sector to any other country, that Party will be required
to extend the same treatment to the other Parties. This means that
Singaporean service suppliers will be able ride on any further
commitments by Chile and NZ in their future FTAs with other countries.

TECHNICAL, SANITARY & PHYTOSANITARY REGULATIONS, AND STANDARDS

22. The Sanitary and Phytosanitary Measures (SPS) and Technical Barriers
to Trade (TBT) chapters serve to facilitate trade by enhancing
cooperation amongst the Parties’ regulatory agencies on issues such as
standards and technical regulations. They also provide a framework to
address the impact of potential barriers to trade posed by such
regulations and standards.

23. Under the SPS chapter, the Parties have agreed to put in place 8
Implementing Arrangements setting out the details of agreed
procedures for trade to take place. These procedures include the
determination of equivalence, audit and verification procedures, import
checks and certification. Under the TBT chapter, the Parties have
agreed on a work programme on the mutual or unilateral recognition of
standards, regulations and test results, and the harmonisation of
standards. The programme includes electrical and electronic goods,
beef grading and shoe labelling.

GOVERNMENT PROCUREMENT

24. This chapter sets out a strong government discipline in the member
Parties to maximise competitive opportunities and to reduce costs of
doing business for both government and industry.

25. Under the chapter, procuring entities in each Party will grant equal and
non-discriminatory access to government tenders in excess of the
agreed monetary thresholds to suppliers from other Parties to the Trans-
Pacific SEP. The agreed threshold for goods and services (excluding
construction services) is Special Drawing Rights (SDR) 50,000
( S$120,000). The threshold for construction services is SDR 5 million
( S$120 million). The Parties have committed to call for an open tender
except for specific situations such as extreme urgency or those
connected with the protection of exclusive rights (such as patents or
copyrights). In calling for open tenders, the government entities should
publish a notice of intended procurement and provide sufficient time for
suppliers to respond to the notice.

26. The coverage of the GP chapter is extensive. Under the chapter, most
Chilean central government agencies and 13 regional governments
have been listed as committed entities. New Zealand has listed all
departments under the NZ Public Service as covered entities. For
Brunei, all central government agencies save for Brunei’s Mini-Tender
Board(*) have been listed as committed entities.

(*) However, Brunei has to give an undertaking to freeze the upper threshold of the mini-tender
board at SDR 110,000 and to try to bring it down to a lower value in subsequent years.

INTELLECTUAL PROPERTY

27. Brunei Darussalam, Chile, New Zealand and Singapore are all
signatories to the World Trade Organisation (WTO) Agreement on
Trade - Related Aspects of Intellectual Property Rights (the TRIPS
Agreement) which sets out the minimum standards of IP protection for
WTO member countries. This IP chapter seeks to provide an enhanced
standard of IP protection beyond that required under the TRIPS
Agreement in areas that are of benefit to all parties.

28. This chapter also aims to increase dialogue and cooperation between
Brunei Darussalam, Chile, New Zealand and Singapore on IP-related
matters.

29. The salient features of this IP chapters are as follows:

a. Brunei Darussalam, Chile and Singapore have hitherto
committed to accede to the World Intellectual Property
Organisation (WIPO) Copyright Treaty (WCT) and the WIPO
Performances and Phonograms Treaty (WPPT) which address
copyrighted works and copyright protection issues arising in a
digital environment. On the part of New Zealand, there is firm
commitment that their Copyright regime will be enhanced to
address such issues.

b. Brunei Darussalam, Chile, New Zealand and Singapore
acknowledge their consensus on specific IP principles such as
the need to strike a balance between the right holders and the
legitimate interests of users.

c. Brunei Darussalam, Chile, New Zealand and Singapore
acknowledge that Geographical Indications (GIs) will be
protected in the respective jurisdictions to the extent permitted
by and according to the terms and conditions set out in their
respective domestic laws.

d. Both New Zealand and Singapore have agreed that the WTO
Agreement on Trade-Related Aspects of Intellectual Property
(TRIPS) will govern all intellectual property issues arising
under the ANZSCEP.

STRATEGIC PARTNERSHIP

30. The Strategic Partnership chapter sets out a framework for cooperation
between two or more Trans-Pacific SEP Parties across five fields -
economic, education, primary industry, cultural, and science, research
and technology. Under the chapter, the Parties agreed to build on
existing cooperative agreements between them and to strengthen
mechanisms for the sharing of information and experiences. The
Implementing Arrangement for the chapter sets out specific activities of
mutual interest which the Parties can initiate collaboration on, such as
R&D in biotechnology and other fields, sharing of best practices and
exploring partnerships for business opportunities in third countries.

DISPUTE SETTLEMENT

31. The Trans-Pacific SEP sets out a robust process for consultation or
settlement of disputes between the Parties.

FINAL PROVISIONS

32. The Parties have agreed to commence negotiations on Investment and
Financial Services no later than two years after entry into force of the
Trans-Pacific SEP with a view to including self-contained chapters on
these issues in the Agreement.

33. The Agreement will be provisionally applied to Brunei from 1 Jan 06 or
30 days after the deposit of an instrument accepting provisional
application of the Agreement, whichever is later. This provisional
application will not apply to the Government Procurement, Trade in
Services and Competition Policy chapters.

ACCESSION BY OTHER ECONOMIES

34. This Agreement is open to accession any APEC Economy, or by any
other country, provided that the signatories to the Trans-Pacific SEP
agree to this accession.

REVIEW OF THE AGREEMENT

35. The Trade Ministers of the Parties will meet two years after the
Agreement enters into force to review and expand on the commitments
under the Trans-Pacific SEP. They will meet at least every 3 years
thereafter for further reviews of the Agreement.

Ministry of Trade and Industry
Singapore
3 June 2005

source: Singapore FTAs