VZCZCXRO7493
RR RUEHCHI RUEHDT RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHNH RUEHPB
DE RUEHGP #0961/01 2520950
ZNR UUUUU ZZH
R 080950Z SEP 08
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 5720
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION

UNCLAS SECTION 01 OF 02 SINGAPORE 000961 
 
SENSITIVE 
 
SIPDIS 
 
STATE PASS USTR 
 
E.O. 12958: N/A 
TAGS: ETRD ECON APEC SN
 
SUBJECT:  SINGAPORE ENCOURAGES U.S. INVOLVEMENT IN P4, HOPES FOR P8 
NEGOTIATIONS IN 2009 
 
¶1.  (SBU) Summary:  Singapore MTI Minister Lim Hng Kiang told Deputy 
USTR Veroneau, joined by the Ambassador, that a window had opened to 
broaden the multilateral "P4" trade agreement to other countries, 
and that U.S. participation would energize the process.  Lim 
stressed the high value that Singapore places on establishment of a 
regional architecture that includes the United States and a blend of 
large and small, developed and developing economies.  Lim also 
echoed the U.S. view that any regional architecture should be based 
on high standard agreements such as the U.S.-Singapore FTA, while 
acknowledging that such a broad undertaking with a diverse set of 
countries would necessarily temper ambition.  He said Singapore 
hopes to use the P4 agreement as a pathway to a broader Free Trade 
Agreement of the Asia/Pacific, and that it would ultimately balance 
economic goals with the considerable political/strategic benefits an 
expanded P4 would produce.  He cautioned that without U.S. 
engagement in a regional agreement, the architecture would follow 
China's "model," based on an overtly political agenda.  Lim 
considers Japan to be a good candidate to join the agreement, but 
was unsure the Japanese could soon commit to serious negotiations. 
Australia, Thailand, Peru and Vietnam may show interest in joining 
the negotiations later this year if the U.S. makes a decision this 
September to participate.  End Summary. 
 
¶2.  (SBU) In an August 21 meeting, Minister of Trade and Investment 
Lim Hng Kiang told Deputy USTR John Veroneau, joined by the 
Ambassador, that Singapore was fully supportive of U.S. 
participation in the Trans-Pacific Strategic Economic Partnership 
Agreement, a free trade agreement among Singapore, Chile, New 
Zealand and Brunei also known as the P4 agreement.  Lim said that 
U.S. participation would change the dynamic of the agreement, 
turning it from a relatively minor trade agreement into a 
potentially much broader multilateral agreement.  Lim said that 
Singapore attached great importance to the United States joining the 
agreement and promised that a Singaporean government Minister would 
be available for further discussions with the United States prior to 
our finalizing our decision. 
 
¶3.  (SBU) Ambassador Veroneau told Minister Lim that the U.S. wanted 
the P4 to "take off" and become something larger that would stretch 
across the Pacific.  However, the initial reaction among many U.S. 
stakeholders was that the trade benefits from joining an FTA with 
the P4 countries would be relatively small, and that the "gold 
standard" FTAs already in place with Singapore and Chile could be 
weakened.  There was stronger interest among stakeholders in a 
broader agreement that would include other significant trading 
partners.  Amb. Veroneau said that the USG was aware of the 
challenges posed by U.S. demands for gold standard FTAs, but was 
confident this exercise would lead to a high standard agreement. 
 
¶4.  (SBU) Lim confirmed that Singapore shares the U.S. goal of high 
standard trade agreements, whether they are bilateral, regional or 
large multilateral undertakings.  Lim acknowledged that elements of 
the existing P4 Agreement would need to be strengthened to meet the 
definition of gold standard.  Lim offered a frank assessment of 
Singapore's views on the economic, and political/strategic 
importance of shaping the P4 agreement into an alternative 
architecture, including the United States and other Pacific Rim 
countries, in order to balance the existing China-led approach 
through the ASEAN Plus 3.  Lim posited that broadening the P4 to 
include other countries would inevitably lower the ambition of the 
agreement from an economic standpoint, but said Singapore placed 
great weight on the strategic and political benefits such an 
agreement would bring to the country and the region.  "We can't just 
be rich and not safe," Lim said.  At the outset of the meeting Lim 
was very forthcoming that Singapore believes that APEC members 
should not wait too long before taking steps to realize the vision 
set out in the Free Trade Agreement of the Asia/Pacific (FTAAP). 
Singapore sees the P4 Agreement as a viable precursor to the FTAAP. 
 
 
¶5.  (SBU) Lim said that without strategic leadership by the United 
States on arrangements like the P4, China would begin to dominate 
the region in an ASEAN Plus Three framework that would include Korea 
and Japan, but with China in the lead.  Lim said that although 
Singapore worked well within the ASEAN Plus Three framework, it 
preferred to include the United States, Japan, Australia and 
eventually India in an ASEAN framework.  In Lim's opinion, China 
viewed trade agreements primarily through a political lens, pursuing 
early harvest agreements and then slowly broadening them to include 
more goods and later services, "giving everyone a little slice of 
salami."  Korea and Japan struggle to keep up with China, and in 
reality, Lim said, Singapore faced an ASEAN Plus One -- China. 
 
Broadening the P4 
----------------- 
 
 
SINGAPORE 00000961  002 OF 002 
 
 
¶6.  (SBU) Lim said that the APEC timetable gave P4 participants a 
convenient window to broaden the agreement.  With possible partner 
Peru as APEC host this year, followed by Singapore, Japan and the 
United States, there would be opportunities to build momentum and 
move the process along.  Lim hoped that if the United States 
committed in September to join negotiations, other countries could 
be lined up in November during APEC meetings in Lima.  Within six to 
nine months Lim believed there would be varying levels of commitment 
from other countries, sufficient for a P8 to begin negotiating 
seriously.  Ambassador Veroneau suggested using the APEC schedule to 
set deadlines for more definitive responses from other potential P4 
participants. 
 
¶7.  (SBU) Ambassador Veroneau said that interest in participation by 
Japan was unclear and surmised the Japanese might be interested in 
being involved in the negotiation process but without fully 
committing.  Lim said that he considers Japan to be a good candidate 
for inclusion in a wider P4 agreement but that Japanese enthusiasm 
was not high.  Japan's business lobbies and other concerns 
outweighed the political and strategic advantages in joining the 
agreement.  Lim said that Minister Nikai of the Ministry of Economy, 
Trade and Industry would be in Singapore in late August and that he 
would discuss the agreement further with him.  However, he believed 
Japan would not be able to make a decision on the P4 before 
December.  Lim said that Japan needed time to work through political 
issues, but would need to show a strong level of commitment to begin 
negotiating seriously, and couldn't simply "dip their toes in the 
pool to see if the temperature was right."  Ambassador Veroneau 
responded that if the U.S. commits to the P4 process soon it would 
expect Japan to be ready to "jump in the pool" within six to nine 
months. 
 
¶8.  (SBU) Lim suggested that without firm Japanese commitment, "Plan 
B" would be to include an announcement by Australia during the 
November Lima APEC Leaders' meeting.  Australian participation would 
provide fewer gains in market access, since Singapore and the United 
States already have FTAs with Australia.  However, Australian 
participation would also raise the ambition of the P4 more than 
would Japan, and would still add another APEC member to the P4.  Lim 
said that other APEC economies, developed and developing, should 
also be considered for inclusion.  Lim specifically mentioned 
Vietnam, Thailand and Peru.  Singapore had discussed the agreement 
with Vietnam, but saw the Vietnamese as currently distracted by 
other economic problems including high inflation.  Lim believed the 
Thais were too distracted by ongoing political difficulties to focus 
on the P4.  In a separate meeting, MTI PermSec Peter Ong said Peru 
could be willing to announce participation in the P4 in November 
during its hosting of APEC meetings in Lima. 
 
¶9.  (U) Ambassador Veroneau cleared this cable. 
HERBOLD