WASHINGTON — President Bush and Singapore Prime Minister Goh Chok Tong signed a bilateral free-trade agreement Tuesday, bringing to a close more than two years of negotiations that began in the Clinton administration, and setting the stage for a vote on Capitol Hill.
It is the first trade agreement signed by the Bush administration. Singapore now joins Canada, Mexico, Israel and Jordan as U.S. free-trade partners.
“The agreement that the Prime Minister and I signed today is the first of its kind between the United States and an Asian Pacific country,” Bush said in a White House transcript of the ceremony, noting that the agreement will help Singapore — America’s 12th largest trading partner — as well as the U.S
Goh called the FTA ambitious and comprehensive.
“It removes barriers in the goods and services trade, and in investments,” he said. “It breaks new ground in emerging areas like e-commerce and it also establishes high standards in intellectual property, transparency and customs.”
After today’s signing, the president has 60 days to notify Congress of what federal legislation must be amended or enacted in order to implement the trade legislation. The President will then submit implementing legislation to both the House and Senate, which have a set time to vote on the bill.
Under the President’s trade promotion authority, Congress can only vote up or down on the trade deal and cannot make any changes to it. The trade agreement is expected to pass both the House and Senate without much opposition.
Industry groups voiced strong opposition, however, when the negotiations concluded. The bill contains a strict yarn-forward rule of origin, which requires apparel to be made of yarn and fabric sourced within the free-trade area.
To the surprise of some domestic industry groups, the pact also contains tariff preference level provisions, which will allow Singapore to use a certain amount of cotton and man-made fiber from any country in the world and still receive the trade breaks.
Under the terms of the TPL provision of the agreement, 25 million square meters equivalent of cotton and man-made fiber from any country can be used in apparel production in Singapore in the first year. However, the 25 million SME will be phased out in equal increments over eight years.
In addition, duties on the 25 million SME will be phased out over five of the eight years so that in the first-year duties on apparel entering the U.S. made of third-country components will be reduced to 80 percent. By the fifth year, these goods will be able to enter the U.S. duty-free.
Meanwhile, duties on apparel that is made in Singapore with U.S. yarn and fabric will be dropped immediately. The same would hold true if Singapore made fabric and yarn, though the country does not have a well-developed textile industry.
“We are very disappointed in the rule of origin in the Singapore FTA,” said Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel. “It is very restrictive and will limit the ability to attract new business to Singapore.”
“We have always had free access to the Singapore market,” said Charles Bremer, vice president of international trade at the American Textile Manufacturers Institute. “There is nothing in this agreement for the domestic textile industry.”
Jock Nash, Washington trade counsel for Milliken & Co., said the TPLs were “not necessary or warranted.”
“This is just a little island nation that is three times as big as Washington, D.C., so that is not a problem,” Nash said. “But the agreement establishes an awful precedence for TPLs, although they do go away over time.”