United States, Singapore Sign Historic Trade Pact


By James A. Morrissey, Washington CorrespondentUnited States, Singapore Sign Historic Trade

The United States and Singapore have signed a historic free trade agreement that for the
first time will permit duty- and quota-free access to the US market for textiles and other products
made in an Asian nation. And, as has been the case with other recent trade agreements, the pact
does not satisfy either textile manufacturers or importers. The importers are upset because the
agreement has a yarn-forward rule of origin that requires apparel products eligible for the special
treatment to be made of yarn and fabric made in the participating countries. They say such a rule
will sharply restrict their ability to do business with Singapore. Textile manufacturers don’t like
the agreement because it says 25 million square meters of apparel in the first year can be made
with yarn and fabric from countries other than the US and Singapore. Those imports, known as Tariff
Preference Levels, will be reduced each year until they are phased out in five years. Since
Singapore has limited textile manufacturing capacity, the industry fears it will become a source
for illegal transshipments from other Asian nations.The agreement is historic in another sense in
that President Bush personally signed it, saying it “breaks significant new ground” and could
become a model for future trade agreements with other Asian nations. That sends shock waves
throughout the US textile industry. Under the agreement, Singapore agrees to eliminate all of its
duties on US products immediately and further agrees not to reimpose them. The United States will
phase out its duties over 10 years, with duties on the least sensitive products dropped first. The
agreement still has to be approved by Congress, but apart from some high-powered rhetoric from
textile state lawmakers, it is not likely to run into any difficulties.

June 2003