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RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHGP #1168/01 3090735
ZNR UUUUU ZZH
R 040735Z NOV 08
FM AMEMBASSY SINGAPORE
TO RUEHC/SECSTATE WASHDC 5955
RUCNASE/ASEAN MEMBER COLLECTIVE
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RUEHRC/USDA FAS WASHDC

UNCLAS SECTION 01 OF 05 SINGAPORE 001168 
 
STATE PASS USTR FOR AUSTR WEISEL, DBELL, JMCHALE, EGROVES, AND 
AMATTICE 
COMMERCE FOR MHOGGE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EFIN EINV ECPS SENV EAGR KTEX KIPR SN
 
SUBJECT:  FTA REVIEW HIGHLIGHTS BENEFITS, UNRESOLVED ISSUES 
 
¶1.  Summary/Action Items:  Assistant U.S. Trade Representative 
Barbara Weisel praised the U.S.-Singapore Free Trade Agreement (FTA) 
during an annual review of the agreement held via digital 
videoconference (DVC) October 10, citing its contribution to 
increased bilateral trade and investment in the nearly five years 
since it was implemented.  However, several bilateral issues remain 
in areas such as telecommunications, intellectual property rights 
(IPR), textiles, and market access for U.S. beef, despite efforts to 
resolve them in previous reviews of the FTA and in interim 
discussions on specific issues.  AUSTR Weisel noted that the recent 
U.S. decision to begin negotiations to join the Transpacific 
Partnership (TPP) trade agreement, which includes Singapore, would 
increase focus on the bilateral FTA.  She called for both sides to 
redouble efforts to resolve outstanding issues and make progress on 
areas such as environmental cooperation, which is likely to be a 
priority in the TPP negotiations.  AUSTR Weisel and Ms. KOH Lin-Net, 
Deputy Secretary of the Ministry of Trade and Industry (MTI), led 
the respective delegations during the DVC discussion. 
 
-- Environment:  The USG and GOS agreed to continue work under the 
Plan of Action, and to further discuss a regional dialogue on 
illegal logging once the USG provides a proposal in 2009.  USTR and 
the GOS may also explore a regional conservation initiative for 
endangered arowana fish. 
 
-- Agriculture:  The GOS is to provide a timeline for the completion 
of its risk assessment of U.S. bone-in beef. 
 
-- Dispute Settlement:  The U.S. will provide proposed procedures 
for setting up a contingent list of panelists. 
 
-- Textile Short-Supply Request:  USTR will move expeditiously to 
process Singapore's second short supply request.  The GOS will 
submit a third short supply request directly to textile negotiator 
Scott Quesenberry. 
 
-- Intellectual Property:  The USG will provide industry feedback 
and suggest language to amend Singapore's Copyright Law in order to 
enhance protections for Internet sound rebroadcasts (simulcasts). 
The USG will also provide suggestions to include a process for 
agents of copyright owners to request pre-discovery information 
about copyright infringers. 
 
-- Telecom:  USTR and Embassy Singapore will follow up with industry 
and the GOS to clarify whether telecom providers can interconnect to 
SingTel's lines via a tandem exchange. 
 
End Summary/Action Items. 
 
FTA Driving Trade and Growth 
---------------------------- 
 
¶2.  In the fourth annual review of the U.S.-Singapore Free Trade 
Agreement (FTA) held October 10 via digital videoconference (DVC), 
Ms. KOH Lin-Net, Deputy Secretary of the Ministry of Trade and 
Industry (MTI), and Assistant USTR Barbara Weisel agreed that nearly 
five years after implementation, the FTA continues to create 
partnerships in many areas of the bilateral relationship.  Strong 
trade and investment flows have been one of the few bright spots 
during the current difficult economic situation in the United 
States, and AUSTR Weisel credited the U.S.'s many free trade 
agreements for keeping U.S. GDP growth positive.  Bilateral trade 
with Singapore rose seven percent in the first half of 2008, and 
Singapore's investment in the U.S. has doubled in the past two 
years. 
 
¶3.  AUSTR Weisel suggested that the FTA had helped solidify an 
already strong bilateral relationship and cooperation in 
multilateral fora like APEC and the latest round of the World Trade 
Organization.  The success of the FTA had helped the United States 
make the decision to begin negotiations to join the Transpacific 
Partnership (TPP) trade agreement, of which Singapore is a member 
along with Chile, New Zealand and Brunei.  However, AUSTR Weisel 
warned that U.S. participation in TPP negotiations will increase 
domestic scrutiny of the bilateral FTA and sharpen focus on areas of 
particular concern, such as environmental cooperation.  Singapore 
and the United States should therefore move quickly to effectively 
address outstanding FTA issues to ensure they do not negatively 
affect TPP negotiations.  DepSec Koh welcomed the recent USG 
announcement to join the TPP and noted the importance of reaffirming 
our commitment to free trade and open markets. 
 
Environmental Cooperation 
------------------------- 
 
-- Review of environmental cooperation work plan (USG/GOS) 
 
SINGAPORE 00001168  002 OF 005 
 
 
-- Combating illegal logging (USG) 
-- Arowana Dragonfish market access (GOS) 
 
¶4.  The USG summarized the status of bilateral environmental 
cooperation, highlighting the 2007 review of the Memorandum of 
Intent (MOI) on environmental cooperation, and approval of a 
2008-2010 work plan.  Zeenat Syed, International Relations Officer 
in the State Department Bureau of Oceans, Environment and Science, 
cited joint activities initiated under the MTI in the last year, 
including a 2007 Ramin wood identification workshop for Singapore 
Customs officers and bilateral consultations in 2008 between 
Singapore's Agri-Food and Veterinary Authority (AVA) and the U.S. 
Fish and Wildlife Service on implementation of the Convention on 
International Trade in Endangered Species (CITES).  The GOS and USG 
have agreed to future activities under the work plan that would 
address oil discharge and air emissions from ships, watershed safety 
and combating trafficking of endangered species.  GOS officials 
expressed regret that they had to postpone planned recent study 
tours to the United States on terrain decontamination and energy 
efficient laboratories and indicated they would like to reschedule 
the trips for early 2009. 
 
¶5.  AUSTR Weisel and DepSec Koh concurred that the overall scope of 
interaction between Singapore and U.S. environmental agencies had 
increased and progress has been made under the MOI, but Weisel said 
that more must be done to address issues such as illegal logging. 
DepSec Koh emphasized that Singapore has no forestry industry of its 
own, and she conveyed the GOS view that it would be more effective 
to combat illegal logging at the source of the timber or on the 
demand side at the point of import rather than at a transshipment 
point like Singapore.  However, she said that the GOS stands ready 
to support regional efforts to combat the trade of endangered 
timber. 
 
¶6.  Given the complex supply chain involved in illegal logging, 
DepSec Koh recommended that the joint dialogue under the MOI be 
broadened to bring in other parties to discuss the issue.  USTR said 
that the U.S. bilateral agreement with Indonesia on illegal logging 
had shown constructive benefits over the past two years.  The USG 
hoped to table a proposal in early 2009 to expand the agreement into 
a larger dialogue that would include a range of Singaporean 
officials covering trade, Customs and forestry issues. 
 
¶7.  DepSec Koh reasserted Singapore's request to export captive-bred 
Arowana dragonfish to the United States, highlighting that the issue 
remains unresolved since first raised in 2001.  She appealed to USTR 
to facilitate discussions with the U.S. Fish and Wildlife Service. 
USTR reminded DepSec Koh that the U.S. Endangered Species Act has a 
strict standard for trade in wildlife, requiring that imports of 
endangered species directly contribute to conservation of the 
species in the wild.  USTR noted that most efforts to conserve 
Arowana fish in the wild are actually taking place outside of 
Singapore in other parts of Asia, and a joint Singapore-U.S. 
commitment on Arowana fish conservation in the region could 
ultimately improve access to the U.S. market.  The issue could be 
creatively explored under the MOI and current environmental work 
plan. 
 
Agriculture 
----------- 
 
-- Imports of bone-in cuts of U.S. beef (USG) 
 
¶8.  AUSTR Weisel emphasized that gaining market access for U.S. 
bone-in beef is a priority and a high-profile issue in Congress that 
will be scrutinized as the TPP negotiations continue.  DepSec Koh 
pointed out that the FTA does not include sanitary/phytosanitary 
provisions, but nevertheless welcomed the discussion on beef.  The 
U.S. Department of Agriculture's (USDA) representative said that the 
USG had been working with trading partners to reopen trade in beef 
by moving to internationally accepted guidelines from the World 
Organization for Animal Health (OIE).  USDA acknowledged Singapore's 
right to establish guidelines stricter than international standards, 
but pointed out that a risk assessment is required to do so and 
urged Singapore to complete an assessment in a timely fashion.  A 
representative of Singapore's Agri-Food and Veterinary Authority 
(AVA) said its risk assessment of U.S. bone-in beef was ongoing but 
that it could not provide a timeline for completion.  In addition, 
Singapore disagrees with the OIE risk classification system for 
Bovine Spongiform Encephalopathy (BSE) and other OIE safety 
guidelines and control measures.  USDA noted that OIE codes were 
international guidelines reached in consensus with all its members 
and encouraged Singapore to reexamine the collected science on the 
issue that has accumulated over the past 20 years since BSE was 
first observed.  DepSec Koh said she would ask AVA to look into 
providing a timeline for completion of the assessment. 
 
SINGAPORE 00001168  003 OF 005 
 
 
 
Financial Services 
------------------ 
 
¶9.  AUSTR Weisel said that a separate financial services committee 
would undertake a review of the FTA's financial services 
commitments, but indicated that four issues would be raised:  access 
to ATM networks for locally issued credit cards from foreign banks; 
participation of non-banks in Singapore's Credit Bureau; the 
implications of Singapore's draft money lending act; and the lack of 
transparency in the licensing of Qualified Foreign Banks.  DepSec 
Koh requested information on specific cases in advance of the 
upcoming review, in particular with respect to the issue of access 
to the ATM network for credit cards. 
 
Customs 
------- 
 
-- Customs record keeping requirements (GOS) 
 
¶10.  DepSec Koh requested the USG to consider reducing from five 
years to three its requirement to maintain Customs records.  The GOS 
believes that a three-year limit is conducive to more efficient 
business transactions and would be consistent with the provisions of 
Singapore's other bilateral FTAs and the TPP.  AUSTR Weisel 
explained that the U.S. Congress is currently moving to strengthen 
Customs-related regulations and any move that appeared to weaken 
Customs provisions would be controversial.  The five-year 
requirement is standard in all U.S. FTAs and USTR would likely have 
to re-examine the issue during TPP negotiations. 
 
Dispute Settlement 
------------------ 
 
-- Establishment of dispute settlement panel (USG/GOS) 
 
¶11.  DepSec Koh noted that the United States and Singapore had yet 
to establish a contingent list of five panelists for a dispute 
settlement panel as called for in the FTA.  Although no disputes 
awaited settlement, she suggested progress needed to be made in 
setting up a panel. AUSTR Weisel confirmed that USTR would follow up 
quickly to resolve the issue. 
 
Textiles 
-------- 
 
-- Short supply request (GOS) 
-- Tariff preference levels (GOS) 
-- Customs inspections (GOS) 
 
¶12.  AUSTR Weisel informed DepSec Koh that USTR had agreed in 
substance to Singapore's second short supply request, filed in 2005. 
 Deputy Special Textile Negotiator Caroyl Miller said USTR would 
move forward to process the request expeditiously but that USTR was 
required to follow certain procedures, including an International 
Trade Commission (ITC) review of the 19 products under the request. 
USTR did not know how long the ITC review would take and said it has 
no ability to influence the timing of the review. 
 
¶13.  DepSec Koh pointed out that the U.S.-Central America FTA 
(CAFTA) included a short supply process that lasted a maximum of 44 
days.  She requested a similar time frame for Singapore's requests. 
Miller explained that the CAFTA is structured differently and its 
provisions do not require an amendment to the agreement.  In the 
U.S.-Singapore FTA, the changes tabled by Singapore would require a 
formal review process in both the United States and Singapore and an 
amendment of the FTA.  According to MTI, Singapore's legal procedure 
does not require review by Parliament, and entails only an exchange 
of letters, publication of the change on Customs' website and 
issuance of a Customs circular.  Singapore noted that it has 
submitted a third short supply request.  USTR requested that it be 
submitted directly to Special Textile Negotiator Scott Quesenberry. 
 
¶14.  DepSec Koh requested a modification to the FTA's tariff 
preference level on textile products, saying that the FTA's 
yarn-forward rule was too restrictive for many companies to utilize. 
 USTR said that other U.S. FTAs did not have textile tariff 
preference levels and given their unpopularity with industry the 
United States would not be able to accommodate the request.  DepSec 
Koh said she understood the issue was complicated and recommended 
that technical experts take up the issue at future reviews. 
 
¶15.  DepSec Koh requested that the onsite customs inspection 
requirement be reduced from twice to once yearly.  She highlighted 
that Singapore's textile industry had consolidated to about 50 
companies, and customs compliance among the textile and apparel 
 
SINGAPORE 00001168  004 OF 005 
 
 
manufacturers had been excellent.  She noted that the U.S. had not 
conducted inspections since 2004, presumably in recognition of the 
high level of compliance.  Miller expressed gratitude for the 
ongoing cooperation between Singapore and U.S. Customs and urged 
that it continue.  Textiles continue to be a sensitive trade issue 
in the United States, particularly with transshipment concerns and 
the recent phase out of textile quotas on Chinese exports.  AUSTR 
Weisel noted that changes to U.S. textile rules and customs 
inspection requirements in this environment would be very 
difficult. 
 
Market Access 
------------- 
 
-- Rules of origin for optical components (GOS) 
 
¶16.  DepSec Koh requested alternative rules of origin requirements 
for export of optical lenses.  Koh said that industry had found the 
requirement for at least 45 percent value-added component too high 
and numerous manufacturers were unable to export.  She suggested a 
35 percent requirement would be a rule industry could work with. 
AUSTR Weisel responded that as this issue was newly added to the 
agenda that she would have to examine the issue more closely. 
 
Intellectual Property Rights (IPR) 
--------------------------------- 
 
-- Remuneration for simulcasting (USG) 
-- Deterrent penalties for IPR violations (USG) 
-- Enforcement against infringement on the Internet (USG) 
 
¶17.  USTR and the GOS reviewed the outcome of a DVC held over the 
summer to discuss section 107B of Singapore Copyright law that 
appears to provide an exception to remuneration for copyright owners 
in the case of sound rebroadcasts over the Internet, also known as 
simulcasting.   The two sides acknowledged continuing disagreement 
over whether Singapore copyright law violates the FTA by failing to 
adequately protect copyright owners and allowing an exemption for 
simulcasting.  However, the GOS reiterated its willingness to 
consider suggestions from USTR on how to potentially amend its 
copyright law to protect sound rebroadcasts over the Internet.  USTR 
reaffirmed it would provide suggested language for the amendment and 
convey the industry feedback used to develop the suggested 
language. 
 
¶18.  USTR reiterated USG concerns that penalties for copyright 
violations are insufficient to serve as a deterrent, citing one case 
in which a Singapore company pled guilty to pirating business 
software worth S$78,000 (US$54,000), an amount well in excess of 
Singapore's maximum penalty.  Copyright violators had more to gain 
than lose from piracy.  Representatives from the Ministry of Law and 
MTI pointed out that Singapore is one of few countries to 
criminalize IP violations and dole out prison sentences.  They 
expressed reluctance to prescribe what penalties judges should 
impose or to change the penalty system based on one case, but would 
undertake to monitor the situation to see if there was a pattern of 
insufficient penalties and revisit the issue if necessary.  USTR 
encouraged the GOS to raise the limit on maximum penalties for IPR 
violations to allow judges the discretion to levy higher penalties 
if warranted. 
 
¶19.  USTR raised concerns about Singapore regulations that require 
copyright holders to obtain a court order to request information on 
Internet copyright violators and a restriction preventing agents of 
copyright owners from filing such requests.  Ministry of Law 
representatives indicated that they follow existing Singapore court 
processes for pre-discovery and seemed reluctant to consider 
introducing a separate process for agents of copyright owners. 
However, they agreed to consider proposals from the USG on how such 
a process might work.  USTR noted as well that representatives from 
the music industry complained that the Singapore Police IPR Branch 
failed to pursue Internet file-sharing cases, purportedly because 
the law requires violators' actions to be "significant" and 
"willful", terms that are ill-defined.  The Ministry of Law agreed 
to look into the definitions of those terms as they pertain to 
Internet piracy and peer-to-peer file sharing. 
 
Telecommunications 
------------------ 
 
-- Status of broadband network (USG) 
-- Access to local leased lines (USG) 
 
¶20.  Telecoms Deputy Assistant USTR Jonathan McHale began a review 
of the telecommunications market by asking for a status update on 
Singapore's rollout of an island-wide broadband network.  An 
 
SINGAPORE 00001168  005 OF 005 
 
 
Infocomm Development Authority (IDA) representative said IDA had 
issued the first contract at the end of September to construct the 
passive infrastructure for the network.  IDA planned to issue 
licenses in the first quarter of 2009 to another company to operate 
the network.  There would be no limit on additional licensees, but 
the first would receive a subsidy.  DepSec Koh said the objective 
was to provide an infrastructure that would create an environment 
for open competition at the operating level.  The infrastructure is 
scheduled to be 50-percent complete by 2010 and 95-percent by 
mid-2012, though the timing of the actual operation of the network 
would depend on individual operators. 
 
¶21.  McHale questioned the FTA compatibility of local telecom 
provider SingTel's continued unwillingness to allow full access to 
its local leased lines, specifically the company's insistence that 
other telecom providers connect at end-office points rather than at 
a more economically efficient aggregation point.  USTR proposed that 
other providers be allowed to interconnect at a tandem exchange that 
would give access to all local exchanges.  IDA insisted that no such 
tandem exchange system existed in Singapore, despite industry 
claims.  USTR said it would gather input from U.S. operators on the 
issue and promised to relay the information to IDA. 
 
¶22.  USTR continued that SingTel's announced plan in 2006 to close 
approximately half its local exchanges forced other telecom 
providers to gamble on building out their network to an exchange 
without certainty that it would remain open.  USTR recommended that 
IDA require SingTel to provide a "safe harbor", a list of exchanges 
that would not be closed.  IDA responded that outside providers are 
not required to build out to every exchange, only those where its 
customers are located.  IDA mentioned that SingTel is required to 
provide 18-months notice before closing an exchange, a time frame 
USTR said is insufficient to recoup the investment in building the 
network to an individual exchange. 
 
Conclusion 
---------- 
 
¶23.  In conclusion, AUSTR Weisel observed that overall the FTA was 
holding up well and relatively few problems had arisen, but 
reiterated that it was important to follow up and resolve 
outstanding issues.  She said she would provide Singapore a summary 
in writing of those issues and planned actions.  In addition, AUSTR 
Weisel said USTR would be following up later on additional issues 
related to pharmaceuticals and Singapore's criteria for including 
drugs on its Standard Drug List, and access to natural gas 
infrastructure for energy suppliers. 
SHIELDS