VZCZCXRO0022
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #0943/01 0830431
ZNY CCCCC ZZH
R 240431Z MAR 06
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 9296
INFO RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 2140
RUCPDOC/DEPT OF COMMERCE WASHDC

C O N F I D E N T I A L SECTION 01 OF 03 SINGAPORE 000943 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS COMMERCE FOR U/S LAVIN 
USTR FOR DUSTR BHATIA AND AUSTR BWEISEL 
 
E.O. 12958: DECL: 03/22/2016 
TAGS: ECON ETRD EINV KIPR PREL PGOV EFIN PTER EAIR
SN 
SUBJECT: COMMERCE U/S LAVIN'S MEETINGS WITH SINGAPORE'S 
LEADERSHIP 
 
 
Classified By: Ambassador Patricia L. Herbold for reasons 
1.4 (b) and (d) 
 
¶1.  (C) Summary.  Commerce Under Secretary for 
International Trade Frank Lavin assured Singapore's top 
leadership that the United States was pursuing a vigorous 
free trade agenda in the Asia region despite 
protectionist sentiment in Washington.  Although a Malaysia 
FTA would help ASEAN integration, Senior Minister Goh Chok 
Tong questioned whether the GOM fully grasped what a "gold 
standard" FTA with the United States entailed.  Minister 
Mentor Lee Kuan Yew doubted that Malaysia would be willing 
to dismantle its bumiputra-related ownership and labor 
requirements.  Although Thailand Prime Minister Thaksin 
wanted an FTA, he lacked the support among the established 
elite, MM Lee said.  Foreign Minister George Yeo surmised 
that, even if Thaksin won a solid majority at the polls, he 
would have to wait at least six months before trying to 
seek approval for the FTA.  MM Lee observed that Indonesia 
was "creeping back" slowly to economic and political 
health; President Yudhoyono was decisive, but he "wasted 
time" soliciting and weighing different viewpoints.  Both 
SM Goh and FM Yeo voiced their concerns about the Dubai 
ports decision, asking whether Singapore would have 
engendered the same reaction had it made the acquisition 
instead of Dubai.  PM Lee worried about what Dubai meant 
for ongoing U.S. free trade initiatives and progress on the 
Doha round.  With regard to Chinese President Hu Jintao's 
upcoming visit to the United States, Singapore's leaders 
noted the need for China to make political gestures on the 
trade front.  On Iraq, MM Lee said that the ruling parties 
needed to find a way to bring the Sunnis back into the 
fold, at a minimum by striking a deal for sharing oil 
revenues.  SM Goh asked for U.S. support in encouraging 
Australia to conclude an open skies agreement with 
Singapore (Note:  Singapore is particularly interested in 
rights to fly from Singapore through Australia to the United 
States.  End note).  U/S Lavin raised Singapore,s view of 
antidumping with Trade Minister Lim, noting that Singapore,s 
participation in the &Friends of Anti-dumping8 was 
inconsistent with its genuine friendship with the United 
States.  End summary. 
 
¶2.  (U)  On March 21, U/S Lavin met with Prime Minister Lee 
Hsien Loong, Senior Minister Goh Chok Tong, Minister Mentor 
Lee Kuan Yew, Foreign Minister George Yeo, and Minister for 
Trade and Industry Lim Hng Kiang. 
 
U.S.-Malaysia FTA 
------------------- 
 
¶3.  (C) FM Yeo said he was pleased that Malaysia had agreed 
to pursue FTA negotiations with the United States.  He 
noted that Malaysia's concerns with its declining level of 
foreign direct investment compelled it to make this 
decision.  SM Goh questioned how serious Malaysia was about 
concluding an FTA, and asked if the GOM fully grasped what 
a "gold-standard" FTA with the United States actually 
entailed.  MM Lee wondered why Malaysia would want an FTA 
if it meant having to dismantle its bumiputra (ethnic 
Malay) ownership and labor requirements.  U/S Lavin 
expressed his hope that Malaysia Trade Minister Rafidah 
Aziz would be able to navigate domestic resistance; 
otherwise, Malaysia's FTA negotiations could stall like 
Thailand's had done in recent weeks.  SM Goh observed that 
a successful FTA with Malaysia would help breathe life into 
Thailand's FTA.  MTI Minister Lim said this in turn would 
bode well for ASEAN integration.  U/S Lavin said that an 
FTA with Malaysia would benefit Singapore by increasing the 
overall level of economic activity with its largest trading 
partner. 
 
U.S-Thailand FTA 
---------------- 
 
¶4.  (C) MM Lee said that Prime Minister Thaksin wanted an 
FTA with the United States, but doubted his administration 
and the "old elite" supported one, given the domestic 
interests they wanted to protect.  The King was not a 
supporter and his privy council "disliked Thaksin 
intensely," MM Lee observed.  Noting the large 
demonstrations recently in Bangkok, MM Lee said that 
Thailand was in danger of going the "Corazon Aquino People 
Power" route.  FM Yeo said that PM Thaksin was in a 
"tricky" position.  He was "too arrogant and acerbic, and 
quick to reveal his true nature when pushed up against the 
 
SINGAPORE 00000943  002 OF 003 
 
 
wall," Yeo asserted.  Thaksin would need to do well at the 
polls during the upcoming elections to shore up support for 
the FTA.  Even then, however, he would need to wait at 
least six months before trying to push it through 
parliament for approval, he said. 
 
Indonesia 
--------- 
 
¶5.  (C) MM Lee said that Indonesia was "creeping back" 
slowly to economic and political health: President 
Yudhoyono knew what to do, but he was cautious, taking his 
time to solicit and weigh differing viewpoints.  The good 
news was that, when he finally made a decision, he acted, 
MM Lee said; time might be lost, but Yudhoyono was moving 
in the right direction.  FM Yeo said that he had just 
returned from Batam, Indonesia, where he met with GOI Vice 
President Kalla to discuss investor issues in Batam's 
special economic zone.  He emphasized that the two 
countries needed to sort out the customs facilitation 
process. 
 
¶6.  (C) FM Yeo agreed with U/S Lavin that terrorists were 
on the defensive in recent months, but cautioned that the 
Muslim Brotherhood appeared to be gaining strength and was 
still a formidable force.  FM Yeo held out good prospects 
for the Aceh peace agreement, noting that Aceh's leader was 
not corrupt and was close to President Yudhoyono.  If 
Indonesia succeeded in solving the Aceh problem, this would 
create an environment conducive to solving other problems 
in the country, FM Yeo concluded. 
 
Dubai Ports Deal 
---------------- 
 
¶7.  (C) With regard to the recent Dubai Ports decision, 
both SM Goh and FM Yeo asked if the U.S. reaction would 
have been the same if Singapore instead of Dubai were 
making the acquisition.  U/S Lavin said that the U.S. 
response, if any, would have been much more muted, perhaps 
eliciting only some rumblings about loss of jobs or 
purported links to China.  He pointed out that the real 
question hinged on how well Dubai understood the Washington 
political process, not to mention U.S. public sentiment 
more broadly.  Singapore would have lobbied more 
effectively, he ventured.  FM Yeo lamented the "great harm" 
that this decision created globally: it sent the wrong 
message to friendly governments in the Middle East.  He 
noted that Singapore stood to benefit from the increasing 
amounts of money that would flow its way rather than to the 
United States.  FM Yeo said that Singapore was engaging the 
Middle East more vigorously than in the past, in part 
"because we need to protect ourselves." 
 
Whither Free Trade? 
------------------- 
 
¶8.  (C) PM Lee expressed concern that the recent 
protectionist backlash against Dubai Ports might have 
serious repercussions for ongoing U.S. FTA negotiations and 
progress in the WTO.  In terms of promoting free trade, the 
United States was the "only good guy out there; we cannot 
rely on the EU," PM Lee said.  MTI Minister Lim echoed 
these points, adding that he was skeptical current WTO 
negotiations would succeed unless the United States and the 
EU began cooperating on key issues.  Asked about the 
implications of increasing protectionism on U.S. trade 
policy in Asia, U/S Lavin noted the rising frustrations in 
Congress over China.  Confronted with a huge and growing 
trade deficit, U.S. government leaders were finding it 
increasingly difficult to indulge the Chinese, he said. 
The imbalance of Chinese companies enjoying excellent 
access to the U.S. market and U.S. companies facing 
numerous trade barriers (e.g., steel, beef, films, etc.) 
and IPR-related theft in the Chinese market was striking, 
U/S Lavin said. 
 
Chinese President Hu's Visit to the United States 
--------------------------------------------- ---- 
 
¶9.  (C) FM Yeo said that during their recent visit to 
Singapore, Zheng Bijian, China's (Communist) Party School 
Executive Vice President, and Dai Bingguo, Vice Minister 
for Foreign Affairs, solicited GOS views about how best to 
position the upcoming visit of Chinese President Hu Jintao 
to the United States.  Singapore advised them that, with 
 
SINGAPORE 00000943  003 OF 003 
 
 
President Bush challenged politically and rising 
protectionist sentiment in Congress, President Hu must be a 
"good guest" and "make it easy" for President Bush (by 
increasing market access and reducing trade barriers).  U/S 
Lavin said that the USG had been making a similar point 
over the past few months, but the Chinese were taking a 
minimalist approach that fell far short of what was 
necessary to assuage Washington's concerns.  Both PM Lee 
and SM Goh said that it was important for China to make a 
political gesture.  PM Lee noted that China's economic 
team, including Vice Minister Ma, consisted of capable 
technocrats, but that they lacked the authority to make the 
tough decisions to push necessary reforms.  FM Yeo advised 
U/S Lavin to find a way to assist Vice Minister Ma.  She 
may appear unhelpful, but she was under instructions to 
deliver a good visit for President Hu, he said. 
 
India 
----- 
 
¶10.  (SBU) SM Goh said that India was serious about reform 
and that its recent rapid growth did not constitute a 
bubble.  India needed to move forward with economic reform 
-- and infrastructure investment -- as fast as the 
political left would allow, he stated.  The government 
needed to ensure that the benefits of India's growth 
trickled down quickly to ensure a broad base of support for 
further economic liberalization. 
 
Iraq 
---- 
 
¶11.  (C) MM Lee noted that the United States had set the 
highest possible targets for Iraq's democratization, the 
economy, and overall stability.  The Sunnis appeared to 
have been cut out of the deal, which only made these 
objectives more difficult to achieve, he said.  The Sunnis 
had been "used" by the Ottomans, the British, and finally 
by Saddam Hussein to counter the influence of the Shia 
majority and the Kurds, but no longer, he observed.  At a 
minimum, the ruling parties should strike a deal whereby 
the Sunnis were entitled to their fair share of the oil 
revenues, he said.  Iraq was not another Vietnam, MM Lee 
emphasized.  The United States must have the resolve to see 
it through: U.S. withdrawal from Iraq would only swell the 
ranks of the Islamic fundamentalists. 
 
Australia and Open Skies 
------------------------ 
 
¶12.  (C) SM Goh asked U/S Lavin for U.S. support in 
encouraging Australia to conclude an open skies agreement 
with Singapore.  U/S Lavin agreed that all countries would 
benefit from opening up the Australian aviation market. 
Noting that the U.S. had gradually lowered its foreign 
ownership caps for U.S. carriers, he suggested that Singapore 
could partially achieve its goal by investing in a U.S. 
carrier.  As a U.S.-owned entity, this airline could take 
advantage of the more liberal U.S-Australia aviation regime 
to fly Singapore-Australia routes. 
 
¶13.  (U) U/S Lavin cleared this message. 
HERBOLD