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UNCLAS SECTION 01 OF 06 SINGAPORE 003324 
 
SIPDIS 
 
USTR FOR GLORIA BLUE AND ELENA BRYAN 
STATE FOR EB/MTA/MST 
 
E.O. 12356: N/A 
TAGS: ECON EINV ETRD EFIN SN
SUBJECT: 2006 NATIONAL TRADE ESTIMATE REPORT 
 
REF: STATE 193384 
 
¶1.  Below is the draft chapter on Singapore for the 2006 
National Trade Estimate Report.  We assume that, as in the 
past, Washington agencies will update the trade and 
investment data in the first three paragraphs of the report. 
Per reftel instructions, we have emailed the text of the 
draft report, in MS Word format and showing changes from 
last year's version, to USTR. 
 
¶2.  Begin text of the 2005 National Trade Estimate report: 
 
TRADE SUMMARY 
 
¶3.  The U.S. trade surplus with Singapore was $4.3 billion 
in 2004, an increase of $2.9 billion from $1.4 billion in 
¶2003. U.S. goods exports in 2004 were $19.6 billion, up 18.4 
percent from the previous year. U.S. imports from Singapore 
were $15.3 billion, up 1.1 percent. Singapore is currently 
the 11th largest export market for U.S. goods. 
 
¶4.  U.S. exports of private commercial services (i.e., 
excluding military and government) to Singapore were $6.9 
billion in 2003 (latest data available), and U.S. imports 
were $2.3 billion. Sales of services in Singapore by 
majority U.S.-owned affiliates were $5.3 billion in 2002 
(latest data available), while sales of services in the 
United States by majority Singapore-owned firms were $1.4 
billion. 
 
¶5.  The stock of U.S. foreign direct investment (FDI) in 
Singapore in 2003 was $57.6 billion, up from $52.4 billion 
in 2002. U.S. FDI in Singapore is concentrated largely in 
the manufacturing, wholesale, and information sectors. 
 
FREE TRADE AGREEMENT (FTA) 
 
¶6.  The United States and Singapore signed a free trade 
agreement (FTA) on May 6, 2003; it entered into force on 
January 1, 2004.  In addition to the FTA with the United 
States, Singapore has concluded bilateral FTAs with 
Australia, the European Free Trade Association, Japan, 
Jordan, New Zealand, South Korea, India, and Panama, and a 
trilateral agreement with Chile and New Zealand.  Singapore 
is negotiating FTAs with Bahrain, Canada, Egypt, Mexico, 
Peru, and Sri Lanka.  Singapore is also part of the ASEAN- 
China FTA negotiations. 
 
IMPORT POLICIES 
 
Tariffs 
 
¶7.  Singapore imposes no tariffs on goods imported from the 
United States or elsewhere, having eliminated the last four 
remaining tariff lines covering all imports of beer and 
certain alcoholic beverages when the FTA came into force. 
For social and/or environmental reasons, however, Singapore 
levies high excise taxes, applicable to U.S. and other 
exporters, on distilled spirits and wine, tobacco products, 
motor vehicles (all of which are imported), and gasoline. 
Singapore does not impose any restrictions or duties on 
imports or exports of textiles and apparel.   During the 
Uruguay Round of multilateral trade negotiations, Singapore 
agreed to bind 70.5 percent of its tariff lines.  Singapore 
is a signatory to the WTO Information Technology Agreement 
(ITA). 
 
Import Licenses 
 
¶8.  All imports require an import permit, primarily for 
statistical tracking purposes.  Special import licenses are 
required for certain goods, including designated strategic 
items, hazardous chemicals, films and videos, arms and 
ammunition, as well as agricultural biotechnology products, 
food derived from agricultural biotechnology products, 
prescription drugs, over-the-counter drugs, vitamins with 
very high dosages of certain nutrients, and cosmetics/skin 
care products.  Due to the FTA, Singapore now allows the 
importation of chewing gum with therapeutic value for sale, 
subject to certain provisions. 
 
STANDARDS, TESTING, LABELING AND CERTIFICATION 
 
¶9.  Under the Consumer Protection (Safety Requirements) 
Regulations (2002), 45 categories of electrical, electronic, 
and gas home appliances and accessories are listed as 
controlled goods and require a stamp of approval from the 
Government of Singapore's standards and certification 
authority (SPRING Singapore).  SPRING Singapore recognizes 
test reports issued by accredited testing laboratories and 
national certification bodies, including those in the United 
States.  Labels conforming to standardized formats are 
required on imported foods, drugs, liquors, paints, and 
solvents. 
 
GOVERNMENT PROCUREMENT 
 
¶10.  Government procurement is generally free and open.  The 
FTA provides additional government procurement access to 
U.S. firms by expanding the contracts that are subject to 
FTA disciplines.  However, some U.S. firms have expressed 
concerns that government-owned and government-linked 
companies (GLCs) may receive preferential treatment in the 
government procurement process.  Singapore's government 
denies that it gives any preferences to GLCs or that GLCs 
give preferences to other GLCs.  Singapore has been a party 
to the WTO Government Procurement Agreement (GPA) since 
¶1997. 
 
EXPORT SUBSIDIES 
 
¶11.  Singapore's government does not directly subsidize 
exports, although it offers significant incentives to 
attract export-oriented foreign investments.  In addition to 
tax incentives and reimbursements to exporters for certain 
trade promotion costs, the government also offers grants to 
new service suppliers. 
 
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION 
 
¶12.  In line with its FTA commitments, Singapore has 
developed one of the strongest IPR regimes in Asia. 
Amendments to the Trademarks Act and the Patents Act, a new 
Plant Varieties Protection Act, and a new Manufacture of 
Optical Discs Act came into effect in July 2004.  Amended 
Copyright and Broadcasting Acts came into effect in January 
2005; further amendments to the Copyright Act came into 
effect in August 2005.  Singapore has implemented Article 1 
to Article 6 of the Joint Recommendation Concerning 
Provisions on the Protection of Well-Known Marks of 1999, 
and has signed and ratified the International Convention for 
the Protection of New Varieties of Plants (1991), the 
Convention Relating to the Distribution of Program-Carrying 
Signals Transmitted by Satellite (1974), the WIPO Copyright 
Treaty (1996), and the WIPO Performances and Phonograms 
Treaty (1996).  Singapore is a signatory to three other 
international IPR agreements: the Paris Convention, the 
Patent Cooperation Treaty, and the Budapest Treaty.  The 
WIPO Secretariat opened offices in Singapore in June 2005. 
 
Parallel Imports 
 
¶13.  Under the amended Patents Act, the patent owner has the 
right to bring an action to stop an importer of "grey market 
goods" from importing the patent owner's patented product, 
if the product has not previously been sold or distributed 
in Singapore. 
 
Transshipment 
 
¶14.  Although a major transshipment and transit point for 
sea and air cargo, Singapore does not collect information on 
the contents and destinations of most transshipment and 
transit trade, which account for 80 percent of the cargo 
coming through the port.  This lack of information makes 
enforcement against transshipment or transit trade in 
infringing products virtually impossible.  In addition, 
goods in transit are not subject to seizure under the 
Copyright Act, although it may be possible if a search 
warrant is obtained beforehand.  Under its FTA commitments, 
Singapore passed legislation in November 2003 to provide for 
information sharing with the U.S. customs authority and also 
with those of its other FTA partners. 
 
Internet 
 
¶15.  In accordance with the FTA, Singapore's amended 
Copyright Act provides improved protection for digital 
works, and outlines requirements and procedures for removing 
infringing material from Internet sites. 
 
Enforcement 
 
¶16.  In line with its FTA obligations, Singapore has taken 
steps to improve IPR protection.  Law enforcement efforts 
have contributed to a sharp reduction in the production of 
pirated material and blatant storefront retail piracy. 
According to the Singapore Police, the value of counterfeit 
and pirated goods seized in 2004 was $7.4 million, compared 
to $19 million in 2003, a reflection of fewer infringing 
goods available on the market.  In September 2005, the 
Singapore Police initiated its first corporate end-user 
enforcement action under the amended Copyright Act, raiding 
a private company suspected of using approximately $30,000 
in illegal software. 
¶17.  According to industry estimates, Singapore's music 
piracy rate averaged 9 percent; for movies, it was about 12 
percent.  Software piracy levels in Singapore, while among 
the lowest in the Asia-Pacific region, are almost double the 
estimated level in the United States; business software 
losses were estimated at nearly $96 million in 2004. 
 
¶18.  Over the past few years, a number of local educational 
institutions (the majority government-operated) have signed 
agreements to come into compliance with their legal 
obligations to pay royalty fees to publishers in exchange 
for the right to duplicate copyrighted printed works for use 
in course materials.  Some commercial copy centers, however, 
continue to routinely take orders to copy entire textbooks. 
While the police have conducted some raids, their 
effectiveness has been limited. 
 
SERVICES BARRIERS 
Basic Telecommunications 
 
¶19.  On April 1, 2000, Singapore began removing all barriers 
limiting foreign entry to the telecommunications sector. 
Any foreign or domestic company can provide facilities-based 
(fixed line or mobile) or services-based (local, 
international, and callback) telecommunications services. 
Under the Telecoms Competition Code 2000 (Competition Code), 
the former monopoly (and 62.0 percent government-owned) 
telecommunications service provider, Singapore 
Telecommunications (SingTel), faces competition in all 
market segments, including fixed-line, mobile, and paging 
services.  Its main competitors, MobileOne and StarHub, are 
also government-linked companies.  The Infocomm Development 
Authority (IDA) finalized its triennial review of the 
Competition Code, which aims to enhance market transparency, 
in March 2005.  SingTel has implemented most decisions in 
the Code, including making public its prices for 
interconnection services. 
 
¶20.  In October 2005, in accordance with its FTA commitments 
to reduce wholesale prices for local leased circuits, IDA 
amended SingTel's Reference Interconnection Offer (RIO) to 
provide for an appropriate, open-standard technical 
interface.  Prior to these changes in technical 
specifications, U.S. and other companies were unable to take 
advantage of the more competitive pricing structure 
initially mandated by IDA in December 2003.  Under the FTA, 
Singapore also agreed that dominant licensees (SingTel and 
StarHub) must offer cost-based access to submarine cable- 
landing stations and allow sharing of facilities.  The 
interpretation of this commitment has, in some cases, 
differed from U.S. companies' understandings. 
 
¶21.  In April 2005, IDA announced its decision to accept 
SingTel's proposal to exempt eight of the ten services that 
come under its Dominant Licensee obligations, with 
provisions to review three of these services in 2007. 
SingTel is no longer required to file tariffs on these 
particular services, and has more flexibility in packaging 
and bundling them. 
 
Audiovisual and Media Services 
 
¶22.  Singapore's local free-to-air broadcasting, cable and 
newspaper sectors are effectively closed to foreign firms. 
Section 47 of the Broadcasting Act restricts foreign equity 
ownership of companies broadcasting to the Singapore 
domestic market to less than 49 percent, although the Act 
also gives the Media Development Authority (MDA) authority 
to waive this requirement.  The government also limits 
individual equity stakes in broadcasting companies to no 
more than five percent of issued shares. 
 
¶23.  MediaCorp TV is the only free-to-air TV broadcaster; it 
is 80 percent owned by the government and 20 percent by 
publicly-listed Singapore Press Holdings (SPH).   Under MDA 
rules, MediaCorp TV must outsource at least 285 hours of 
local content production to independent television 
production companies per year.  The sole subscription TV 
provider, StarHub Cable Vision (SCV), is a 100 percent-owned 
subsidiary of a majority government-owned publicly listed 
company.  Free-to-air radio broadcasters are mainly 
government-owned, with MediaCorp Radio Singapore being the 
largest operator.  BBC World Service is the only foreign 
free-to-air broadcaster in Singapore.  MDA is considering 
imposition of restrictive regulations governing the 
relationships between content/channel providers and pay TV 
operators in Singapore, i.e., SCV. 
 
¶24.  Singapore restricts the use of satellite receiving 
dishes and has not authorized direct-to-home satellite 
television services.  MDA must license the installation and 
operation of broadcast-receiving equipment, including 
satellite dishes.  Satellite broadcasters that want to 
operate their own uplink facility must get a special license 
from MDA.  Satellite broadcasters lacking their own facility 
are restricted to using one of four available uplink 
facilities. 
 
¶25.  The Newspaper and Printing Presses Act restricts equity 
ownership (local or foreign) to five percent per 
shareholder, unless the government approves a larger 
shareholding, and requires that all the directors of a 
newspaper company be Singapore citizens.    Newspaper 
companies must issue two classes of shares, ordinary and 
management, with the latter available only to citizens of 
Singapore or Singapore companies that have been approved by 
the government. 
 
¶26.  Media businesses or professionals must be licensed by 
MDA in order to provide services or apparatus and equipment. 
Printed and audio material are no longer subject to prior 
vetting, but licensees are advised to abide by MDA 
guidelines.  MDA requires all film and video material for 
distribution and screening to be certified and classified. 
The government can deny or revoke permits without warning or 
without giving a reason.  Some foreign news publications are 
"gazetted," i.e., numerically limited by the government. 
 
Legal Services 
 
¶27.  U.S. and other foreign law firms with offices in 
Singapore face certain restrictions.  They cannot practice 
Singapore law, employ Singapore lawyers to practice 
Singapore law or litigate in local courts.  Since June 1, 
2004, U.S. and other foreign lawyers have been allowed to 
represent parties in arbitration in Singapore without the 
need for a Singapore attorney to be present.  U.S. law firms 
can provide legal services in relation to Singapore law only 
through a Joint Law Venture (JLV) or Formal Law Alliance 
(FLA) with a Singapore law firm, subject to the Guidelines 
for Registration of Foreign Lawyers in Joint Law Ventures to 
Practice Singapore Law.  Singapore relaxed some of these 
guidelines for U.S. law firms under the FTA.  As of October 
2005, 16 of the 62 foreign law firms in Singapore were from 
the United States.  Additionally, there was one U.S. JLV. 
 
¶28.  With the exception of law degrees from certain 
Australian, New Zealand and British universities, no foreign 
university law degrees are recognized for the purpose of 
admission to practice law in Singapore.  Under the FTA, 
Singapore committed to recognizing law degrees from four 
U.S. law schools.  The list of schools is pending final 
approval. 
 
Engineering and Architectural Services 
 
¶29.  Engineering and architecture firms can be 100 percent 
foreign-owned.  In line with FTA provisions, and also 
applicable to all foreign firms, Singapore has removed the 
requirement that the chairman and two-thirds of the firm's 
board of directors must comprise engineers, architects or 
land surveyors registered with local professional bodies. 
Practicing engineers and architects must register with the 
Professional Engineers Board and the Architects Board, 
respectively.  Under amended legislation, local and foreign 
job applicants, including U.S. degree holders, will be 
required to have at least four years of practical experience 
in engineering or architectural works and pass an 
examination set by the respective Board. 
 
Accounting and Tax Services 
 
¶30.  The major international accounting firms all operate in 
Singapore.  Public accountants and at least one partner of a 
public accounting firm must reside in Singapore.  Only 
public accountants who are members of the Institute of 
Certified Public Accountants of Singapore and registered 
with the Public Accountants Board of Singapore may practice 
public accountancy in the country.  The Board recognizes 
U.S. accountants registered with the American Institute of 
Certified Public Accountants. 
 
Banking and Securities 
 
Retail Banking 
 
¶31.  Singapore maintains legal distinctions between offshore 
and domestic banking units, and the type of license held 
(full, wholesale or offshore).  Except for retail banking, 
Singapore laws do not distinguish operationally between 
foreign and domestic banks. 
 
¶32.  In 1999, Singapore embarked on a five-year banking 
liberalization program to ease restrictions on foreign banks 
and supplemented this with phased-in provisions under the 
FTA.  Since then, the government has removed a 40-percent 
ceiling on foreign ownership of local banks and a 20-percent 
aggregate foreign shareholding limit on finance companies. 
It has granted  "qualifying full bank" (QFB) or full service 
licenses to six foreign banks, including two U.S. banks. 
Since January 2004, under the FTA, U.S. licensed full- 
service banks have been able to operate at up to 30 customer 
service locations (branches or off-premise ATMs); non-U.S. 
foreign full-service banks have been allowed to operate at 
up to 25 locations since January 2005, up from 15 
previously.  These full-service banks can also relocate 
freely existing branches, and share ATMs among themselves. 
They also can provide electronic funds transfer, point-of- 
sale debit, and Central Provident Fund (Singapore's 
compulsory pension fund) related services. 
 
¶33.  The FTA obligates Singapore to further improve market 
access for U.S. banks.  In June 2005, Singapore lifted its 
ban on new licenses for full-service banks, and will do the 
same for wholesale banks by January 1, 2007.  Licensed full- 
service banks will able to operate at an unlimited number of 
locations commencing January 1, 2006.  Locally incorporated 
subsidiaries of U.S. full-service banks can apply for access 
to local ATM networks beginning June 30, 2006; non-locally 
incorporated subsidiaries of U.S. full-service banks can 
begin doing so January 1, 2008. 
 
¶34.  Despite liberalization, foreign banks, including U.S. 
banks, in the domestic retail banking sector still face 
barriers.  Local retail banks do not face similar 
constraints on customer service locations or access to the 
local ATM network.  Foreign charge card issuers are 
prohibited from allowing their local card holders to access 
their accounts through the local ATM networks.  Customers of 
foreign banks are also unable to access their accounts for 
cash withdrawals, transfers, or bill payments at ATMs 
operated by banks other than their own. 
 
¶35.  The Minister of Finance must approve acquisition of 5 
percent, 12 percent, and 20 percent or more of the voting 
shares of a local bank.  Although it has lifted the formal 
ceilings on foreign ownership of local banks and finance 
companies, the government has indicated that it will not 
allow a foreign takeover of a local financial institution. 
Foreign penetration of the Singapore banking system is 
comparatively high, with foreign banks holding about 40 
percent of non-bank deposits; the government has stated 
publicly that it wants local banks' share of total resident 
deposits to remain above 50 percent. 
 
Restricted and Offshore Banking 
 
¶36.  Since 2001, Singapore's licensing regime has shifted 
away from distinguishing between on-shore and offshore 
banking activities to one that distinguishes between retail 
and wholesale activities.  Over time, the Monetary Authority 
of Singapore (MAS) intends to upgrade all offshore banks to 
wholesale bank status, thus enabling them to conduct a wider 
range of activities.  New foreign bank entrants are also 
eligible to apply for wholesale banking licenses.  Unless 
otherwise approved by MAS, wholesale banks can operate in 
only one location. 
 
Restrictions on Singapore Dollar Lending 
 
¶37.  Non-residents can borrow local currency freely if the 
proceeds are used in Singapore.  Non-resident financial 
entities may borrow local currency freely for use in or 
outside Singapore if the amount does not exceed S$5 million; 
if it does, the amount must be swapped or converted into 
foreign currency upon drawdown.  There are no controls on 
the borrowing of Singapore dollars by residents.  MAS 
requires banks to report their monthly aggregate outstanding 
Singapore dollar lending to non-resident financial 
institutions. 
 
Securities 
 
¶38.  In January 2002, Singapore removed all trading 
restrictions on foreign-owned stockbrokers.  Aggregate 
investment by foreigners, however, may not exceed 70 percent 
of the paid-up capital of dealers that are members of the 
Singapore Exchange Limited (SGX).  Foreign funds may be 
registered directly, provided the prospectus is from an 
entity registered as a foreign company in Singapore, and the 
fund is approved by MAS. 
 
Distribution Services 
 
¶39.  Beginning January 2002, the Ministry of Trade and 
Industry implemented a Multi-Level Marketing and Pyramid 
Selling (Excluded Schemes and Arrangements) Order to clarify 
which kinds of multi-level and direct marketing/selling 
arrangements, be they local or foreign, were legal in 
Singapore.  The order prohibits compensation for recruitment 
of participants.  It prohibits any Singapore-registered 
company or citizen/resident from promoting any overseas 
pyramid selling marketed through the Internet.  Insurance 
businesses licensed under the Insurance Act and its 
subsidiary legislations, master franchise schemes, and 
direct selling schemes that meet conditions listed in the 
Order are exempted from the Act. 
 
INVESTMENT BARRIERS 
 
¶40.  Singapore has a generally open investment regime and no 
overarching screening process for foreign investment. 
Singapore places no restrictions on reinvestment or 
repatriation of earnings and capital.  Singapore maintains 
limits on foreign investment in broadcasting, the news 
media, domestic retail banking, property ownership, and some 
government-linked companies.  The FTA requires Singapore not 
to impose performance-related requirements in connection 
with the establishment, acquisition, expansion, management, 
conduct, operation, sale or other disposition of an 
investment. 
 
ELECTRONIC COMMERCE 
 
¶41.  Singapore has no significant barriers hindering the 
development and use of electronic commerce. The FTA contains 
state-of-the-art provisions on electronic commerce, 
including national treatment and most-favored-nation 
obligations for products delivered electronically, 
affirmation that services disciplines cover all services 
delivered electronically, and permanent duty-free status of 
products delivered electronically. 
 
¶42.  Singapore considers the Internet to fall within the 
scope of its Broadcasting Act.  Internet Service Providers 
(ISPs) must channel all Internet traffic through Internet 
Access Service Providers (IASPs) that function as main 
"gateways" to the Internet.  Internet Service Resellers, 
Internet Content Providers (ICPs), individuals who put up 
personal web pages, software developers and providers of raw 
financial information, and news wire services do not have to 
register with the MDA. 
 
OTHER BARRIERS 
 
Competition 
 
¶43.  The FTA contains specific conduct guarantees to ensure 
that commercial enterprises in which the Singapore 
government has effective influence will operate on the basis 
of commercial considerations and will not discriminate in 
their treatment of U.S. firms.  In accordance with its FTA 
commitments, Singapore enacted the Competition Act 2004. 
Singapore is implementing the Act in three phases.  Phase I 
established the Competition Commission of Singapore in 
January 2005. Phase II involves implementation of provisions 
on anti-competitive agreements, decisions and practices, 
abuse of dominance, enforcement, and the appeals process. 
These will come into effect during the first half of 2006. 
Phase III provisions will address mergers and acquisitions 
and will come into effect in 2007. 
 
¶44.  The FTA also includes obligations for greater 
transparency among government enterprises with substantial 
revenues or assets.  Singapore has an extensive network of 
GLCs that are active in many sectors of the economy.  Some 
sectors, notably telecommunications, power 
generation/distribution, and financial services, are subject 
to sector-specific regulatory bodies and competition 
regulations, typically less rigorous than those being 
implemented under the Competition Act.  Some observers have 
raised concerns that GLCs may act in anticompetitive ways, a 
charge government officials strongly deny. 
 
Transparency 
 
¶45.  The United States welcomes actions by Singapore to 
circulate more draft laws and regulations for public 
comment, including those relating to the implementation of 
the FTA, in keeping with the FTA's transparency obligations. 
 
FERGIN