RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/67
29 February 2000
(00-0693)
Trade Policy Review Body
TRADE POLICY REVIEW
SINGAPORE
Report by the Secretariat
This report, prepared for the third Trade Policy Review of Singapore, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from  the Government of Singapore on its
trade policies and practices.
Document WT/TPR/G/67 contains the policy statement submitted by the
Government of Singapore.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Singapore.Singapore WT/TPR/S/67
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS ix
(1) I NTRODUCTION ix
(2) E CONOMIC ENVIRONMENT ix
(3) T RADE AND INVESTMENT POLICY FRAMEWORK x
(4) T RADE AND TRADE -RELATED MEASURES x
(5) O THER MEASURES AFFECTING TRADE xi
(6) S ECTORAL POLICIES xii
(7) T RADE POLICIES AND TRADING PARTNERS xiii
(8) O UTLOOK xiii
I. ECONOMIC ENVIRONMENT 1
(1) I NTRODUCTION 1
(2) R ECENT ECONOMIC DEVELOPMENTS 1
(3) M ACROECONOMIC INDICATORS 7
(i) Fiscal policy 7
(ii) Monetary policy 8
(iii) Balance-of-payments and exchange rate movements 9
(4) S TRUCTURAL AND REGULATORY POLICIES 11
(i) Economic development policies 11(ii) Regulatory reform 12
(5) D
EVELOPMENTS IN TRADE 13
(i) Composition of trade 13
(ii) Direction of trade in goods and services 14
(6) D EVELOPMENTS IN FOREIGN INVESTMENT 17
(i) Trends in inward and outward investment 17
(7) O UTLOOK 18
Annex I.1 Tax reform and incentives in the 1998/99 budget 20
Annex I.2 Changes in labour market policy 22
II. TRADE AND INVESTMENT POLICY REGIME 24
(1) I NTRODUCTION 24
(2) I NSTITUTIONAL FRAMEWORK 24
(i) The Executive and Government 24(ii) The legislative process 25(iii) The judiciary 25
(3) D
EVELOPMENT AND ADMINISTRATION OF TRADE POLICY 26
(i) Policy formulation and implementation 26
(ii) Main trade laws 27(iii) Trade policy objectives 27WT/TPR/S/67 Trade Policy Review
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Page
(4) T RADE RELATIONS 29
(i) The World Trade Organization 29(ii) Regional and bilateral trade relations 32
(5) F
OREIGN INVESTMENT REGIME 36
(i) Introduction 36(ii) Legislation 37
(iii) Incentive measures 37
(iv) International agreements 38
III. TRADE POLICIES AND PRACTICES BY MEASURE 39
(1) I
NTRODUCTION 39
(2) M EASURES DIRECTLY AFFECTING IMPORTS 40
(i) Customs procedures 40
(ii) Customs valuation, clearance, and inspection 41
(iii) Rules of origin 42(iv) Tariffs 42(v) Other charges levied on imports 45(vi) Import prohibitions and licensing 47
(vii) Anti-dumping, countervailing and safeguard measures 51
(viii) Government procurement 53(ix) State trading 54(x) Import surveillance 54(xi) Standards, sanitary, and phytosanitary measures 55(xii) Other measures 60
(3) M
EASURES DIRECTLY AFFECTING EXPORTS 62
(i) Registration and documentation procedures 62(ii) Export taxes and other charges 62(iii) Export prohibitions, restrictions and licensing 62(iv) Export restraints 63(v) Export-processing zones 63
(vi) Export assistance 63
(vii) Measures maintained by importing countries 65
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 65
(i) Registration and licensing procedures for establishment 65(ii) Taxation 66(iii) Industrial strategy and the public sector 68
(iv) Assistance 72
(v) Trade-related investment measures 76(vi) Intellectual property rights 77(vii) Competition and regulatory issues 82
Annex III.1 Anti-dumping and countervailing procedures in Singapore 84Singapore WT/TPR/S/67
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Page
IV. TRADE POLICIES BY SECTOR 86
(1) I NTRODUCTION 86
(2) A GRICULTURE AND FISHERIES 86
(i) General features 86
(ii) Assistance 88
(iii) Trade policy measures 88
(3) M ANUFACTURING 89
(i) Structure and recent economic performance 89(ii) Policy measures 93
(4) S
ERVICES 94
(i) Introduction 94(ii) Commitments under the General Agreement on Trade in Services (GATS) 95(iii) Policy objectives 96(iv) Financial services 97(v) Transport 107
(vi) Telecommunications 115
(vii) Electronic commerce 120(viii) Tourism 121(ix) Professional services 123(x) Energy and water 125
REFERENCES 127
APPENDIX TABLES 131
CHARTS
I. ECONOMIC ENVIRONMENT
I.1 Trade in goods and non-factor services as share of GDP, 1990-98 5
I.2 Labour productivity and cost indices, 1990-98 7
I.3 Exchange rates of the Singapore dollar, 1992-98 11I.4 Trade by product group, 1995 and 1998 15I.5 Direction of merchandise trade, 1995 and 1998 16I.6 Foreign direct and portfolio investment, 1992-98 17
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Share of bound tariff lines by HS section, 1999 44
III.2 Average bound tariff rates by HS section, 1999 46
IV. TRADE POLICIES BY SECTOR
IV.1 Value added in manufacturing, 1995 and 1998 89
IV.2 Manufacturing trade by product groups, 1998 90IV.3 Trade in electronics, 1995-98 92IV.4 Structure of the services output, 1995 and 1998 94WT/TPR/S/67 Trade Policy Review
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TABLES
Page
I. ECONOMIC ENVIRONMENT
I.1 Economic performance, 1995-99 2
I.2 Basic economic and social indicators, 1995-99 6
I.3 Fiscal balance, 1995-2000 8
I.4 Balance-of-payments, 1995-99 10I.5 Net investment commitments in manufacturing, by country, 1995-99 18
II. TRADE AND INVESTMENT POLICY REGIME
II.1 Ministerial responsibility for trade-related issues 26
II.2 Main trade-related laws in Singapore 28II.3 Status of selected notifications by Singapore to the WTO, as at December 1999 30
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Singapore's preferential rules of origin 42
III.2 Applied MFN tariffs, 1999 43III.3 Bound tariff rates, 1999, 2000 and 2005 45III.4 Tax revenue, fiscal years 1995-99 47
III.5 Scope of restrictions affecting imports, 1995 and 1998 48
III.6 Import prohibitions, 1996 and 1999 48III.7 Products covered by automatic and non-automatic licensing 50III.8 Anti-dumping measures, 1996 to 30 June 1999 52III.9 Standards in Singapore, 1995-99 56
III.10 Alignment of Singapore standards with international standards, 1997-99 56
III.11 Technical regulations in Singapore 58III.12 Free-trade zones in Singapore, 1999 61III.13 Incentives provided by the Trade Development Board 64III.14 Singapore's exports under the Generalized System of Preferences, 1995-99 65III.15 Anti-dumping measures maintained on exports from Singapore, 1996 to October 1999 65
III.16 Major trade-related statutory boards in Singapore 68
III.17 Incentives offered by the Economic Development Board 73III.18 Non-tax assistance for industrial development 75III.19 Summary of intellectual property rights protection in Singapore corresponding
to its TRIPS obligations 78
IV. TRADE POLICIES BY SECTOR
IV.1 Production of agricultural and fisheries, 1995-99 87
IV.2 The electronics industry in Singapore, 1995-99 91IV.3 Trade in services, 1995-99 95IV.4 Incentives offered by the Monetary Authority of Singapore 100
IV.5 Air transport services, 1995-99 110
IV.6 Shipping and maritime transport services, 1995-98 113IV.7 The telecommunications sector in Singapore, 1995, 1998 and end July (1999) 116IV.8 Singapore's tourism industry, 1995-99 122Singapore WT/TPR/S/67
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APPENDIX TABLES
Page
I. ECONOMIC ENVIRONMENT
AI.1 Foreign direct investment in Singapore, 1993-97 133
AI.2 Foreign direct investment in Singapore by industry, 1993-97 133AI.3 Foreign direct investment by Singapore, 1993-97 134AI.4 Foreign direct investment abroad by Singapore, 1993-97 134
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Concessional duties and end-use concessions 135
AIII.2 Excise tax rates, 1999 136AIII.3 Value of annual Government procurement, 1995-99 138
IV. TRADE POLICIES BY SECTOR
AIV.1 Taxes applied to motor vehicles 139Singapore WT/TPR/S/67
Page ix
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Since its previous Trade Policy
Review in 1996, Singapore has continued to
pursue liberal trade and investment policies,while deepening internal reforms, especially in
key services sectors.  The economy remains
relatively free of trade barriers and, indeed,
notwithstanding the repercussions of the Asian
economic crisis, the percentage of tariff linessubject to import prohibitions and licensing
has declined. Foreign investment is allowed in
most sectors of the economy, with restrictions
in only a few services sectors.  Since the
previous Review, reform has been pursued inseveral services sectors, for example, financial
services, transport, and utilities, and
restrictions on foreign investment have been
lifted in many instances. Singapore retains few
other border measures.  It has also shown an
increased tendency to align standards with
international norms, where appropriatestandards exist, and measures such as those in
the sanitary and phytosanitary area apply
equally to imported and locally produced
goods.
2. Along with a liberal trade and
investment regime, the Government has sought
to support Singapore's economic development
by implementing policies to encourage certain
activities.  In the past, this included direct
government involvement in key sectorsthrough government-linked companies, which
are currently managed by a holding company
(Temasek).  In addition, the Government
created statutory boards to implement its
policies;  their present role consists primarilyof regulating and promoting economic
activities that are thought to have high growth
potential, as well as providing technical and
marketing assistance.  In order to encourage
investment in the desired activities, a number
of tax incentives have been provided.  Most
recently, with rising unit labour costs relativeto other countries in the region, Singapore's
trading advantage appear to be moving
towards higher value-added manufacturing
and services sectors; the Government hasresponded to this by establishing long-term
development programmes, including tax
incentives, to encourage investment in higher
value-added activities.
(2) E
CONOMIC ENVIRONMENT
3. During the review period, economic
growth in Singapore was strong until
mid-1997, when the effects of the Asian
economic crisis began to be felt.  Between
1995 and 1997, real GDP growth averaged
over 8% annually. Real GDP growth fellsharply to 0.3% in 1998, however, mainly as a
result of both weaker demand in the region
and in demand for Singapore's main exports
outside the region.  Slower economic activity
pushed unemployment up from 1.8% in 1997to 3.2% in 1998.
4. Economic growth in Singapore is
underpinned by a stable macroeconomic
environment.  A history of prudent fiscal and
monetary policy enabled the Government to
respond swiftly to the economic crisis that hit
the region in 1997, giving temporary tax cutsto businesses in the 1998 and 1999 budgets to
tide them over the crisis.  As a consequence,
the previously surplus budget is expected to
register a deficit of 3.5% of GDP in
1999/2000.  In addition, monetary policy wasloosened to allow the exchange rate to
fluctuate within a wider band, reducing
pressure on the currency.  The outcome is that
the Singapore dollar has depreciated against
major international currencies, although themore substantial regional currency
devaluations have eroded the external
competitiveness of Singapore's lower
value-added exports.
5. As a result, inter alia, of the
Government's budgetary measures, improved
demand in Singapore's major export markets
for electronics, and signs of economic
recovery in the Asian region, the Singapore
economy appears to be making a rapid
recovery.  Overall real GDP growth
projections for 1999 are currently around 5%,substantially higher than 0.3% in the previous
year.WT/TPR/S/67 Trade Policy Review
Page x
6. The economic crisis in Asia and
subsequent currency devaluations in
neighbouring countries has, nevertheless,
highlighted concerns about the export
competitiveness of some sectors, particularly
lower value-added manufactures, where lowercost regional producers are making in-roads.
Singapore's relative unit labour costs,
especially with respect to other countries in
the region, have continued to rise for much of
the period under review.  While the recenttemporary budgetary measures have helped
cut costs, longer term measures, including
programmes such as Industry 21, Information
Technology 21, and Manpower 21, have also
been taken to increase value-added productionin manufacturing and services.
(3) T
RADE AND INVESTMENT POLICY
FRAMEWORK
7. Singapore's economic success owes
much to its high degree of openness.
International trade is equivalent to 300% of
GDP, while foreign direct investmentcurrently accounts for around 70% of total
investment in the manufacturing sector.  Trade
and trade-related policies are the
responsibility of the Ministry of Trade and
Industry, which coordinates policy with otherMinistries and statutory bodies, and are
implemented by the Trade Development Board
(TDB).  Policies are generally formulated
upon consultation with Singapore's business
community and other interested parties.  Inaddition, national committees are formed from
time to time to address specific issues, most
recently on competitiveness; the committees
include participants, and solicit advice, from a
range of interests.
8. Singapore strongly supports the
multilateral trading system and has been an
active participant in both the WTO and its
predecessor, the GATT.  In general, Singapore
extends most-favoured-nation (MFN)
treatment to all its trading partners;  in some
aspects of intellectual property rights,non-members of the WTO are granted less
than MFN treatment.  Singapore has amended
its legislation in the light of its obligationsundertaken in the context of the Uruguay
Round, including in the areas of intellectual
property rights and customs valuation ahead
of the transition period available to
developing country Members of the WTO.
Since its previous Review, Singapore hasnotified the WTO of changes to its legislation
on trade remedies under the Countervailing
and Anti-Dumping Duties Act.  Singapore
became a member of the WTO Government
Procurement Agreement in September 1997.
9. Singapore's foreign investment regime
is liberal, the exception being some services
sectors and real estate, where there are limits
on foreign investment.  However, several of
these restrictions are being gradually reducedor removed.  Recent examples of this include
the financial services sector, where a 40%
limit on foreign investment in any locally
incorporated bank has been abolished and the
limit on foreign ownership of companies listed
on the Singapore Stock Exchange raised from
49% to 70%; the previous cumulative 73.99%limit on foreign investment in the
telecommunications sector was abolished in
January 2000.
(4) T
RADE AND TRADE -RELATED
MEASURES
10. Singapore's openness to international
trade is reflected in the fact that border
measures are, with few exceptions, confined to
those related to health and safety concerns.
Apart from four tariff lines at the HS 9-digitlevel involving alcoholic products, Singapore's
applied tariff is zero;  the four tariff lines
carry specific rates of duty.  Excise taxes are
levied on a number of products, including
motor vehicles, alcohol products, motorspirits, and motor oil, a large percentage of
which are not produced domestically.
Together, customs and excise duties accounted
for 7.4% of total tax revenue in 1999, down
from 8.1% in 1995.  Singapore did not raise
tariffs in the wake of the Asian economic
crisis, despite the considerable scope allowedfor doing so within its existing bindings;  on
the contrary, the Government removed tariffs
on high-speed diesel in 1998.  While tariffSingapore WT/TPR/S/67
Page xi
concessions are provided for under the
ASEAN's CEPT scheme, as Singapore's MFN
tariff rate is virtually zero, no tariff
concessions are granted in practice to ASEAN
products under CEPT.
11. As a result of the Uruguay Round,
Singapore bound 70.5% of its tariff, a level
below the developing country average.  The
average bound tariff rate was 9.7% in 1999,
and is projected to decline to 6.9% in 2005.
Bindings by individual HS chapters rangefrom 100% for agriculture to 10% and below
for transport equipment and mineral products.
Given that the current applied tariff is zero for
the large majority of products, the decision to
keep bound tariffs higher and to bind only70% of tariff lines lends a degree of
uncertainty to the tariff regime, although this
is presumably for future negotiation purposes
in the WTO.
12. Between 1995 and 1998, Singapore
trimmed down the percentage of tariff lines
subject to import prohibitions (from 0.7% to0.5%) and to automatic and non-automatic
import licensing (from 19.7% to 19.2%).  In
general, Singapore maintains import and
export licensing for environmental or health
and safety reasons;  however, licences arerequired for rice imports, for food security
reasons.  In addition, a prohibition is
maintained on imports of motor vehicles that
are three years or older, on  environmental
grounds.  But given the relatively stringentenvironmental and roadworthiness standards
applied by Singapore to older cars, the need
for an outright ban on cars of three years and
over is unclear.  In order to control traffic
congestion, motor vehicles under three yearsare subject to an import quota, which is
increased by around 3% annually, as well as
to high internal taxes.
(5) O
THER MEASURES AFFECTING
TRADE
13. In conjunction with its overall policy
to unilaterally reduce and eliminate bordermeasures, the Government provides a certain
guidance to the economy.  While economicdevelopment in Singapore has, by and large,
been private-sector driven, the Government
has, nonetheless, played, and continues to
play, an important role in providing private
business with strategic guidance.  Government
policy is implemented mainly by statutoryboards, which regulate and promote economic
activities whose potential for strong economic
growth is thought to be particularly promising.
Assistance is provided, to a large extent,
through tax incentives for investors andthrough grants for small and medium sized
local enterprises.  In addition, during the
1960s, the Government invested directly in
sectors believed to be of strategic interest for
economic development, and in which privateinvestment would prove to be insufficient, by
taking a direct stake in companies involved in
these sectors.  Management of these
government linked companies (GLCs) was
transferred to a government holding company,
Temasek Holdings, in 1970.
14. Singapore has no over-arching
competition policy legislation.  In services,
where competition has been introduced more
recently than in the goods sector, Singapore
has opted for a sectoral competition policy
framework, establishing regulatory authoritiesand rules in each sector to ensure competition
between the incumbent service providers, often
a public sector monopoly, and newer
competitors.
15. In the goods sector, a liberal
market-based policy has been sufficient to
ensure competition, although of late there has
been some debate about the role of
government involvement in the economy
through Temasek and the government-linkedcompanies.  The companies, some of which are
the largest in Singapore and account for
around 25% of the market capitalization of the
Stock Exchange of Singapore, appear to be
largely independent and compete directly with
private sector companies.  Temasek does,
however, play a role in appointingmanagement, such as the Chief Executive
Officer and the Chairman.  Concerns have
also been raised about possible advantages
enjoyed by these companies in raising financeWT/TPR/S/67 Trade Policy Review
Page xii
or competing with smaller local firms, through
the Temasek group.  Temasek has attempted to
address these concerns by recently changing
its policy on the appointment of the Chairman
and Chief Executive Officer in the GLCs so as
to improve corporate governance.  TheGovernment has also indicated in Parliament
that it may be willing to sell its stake in "non-
strategic" GLCs to a single or group of
shareholders to ensure that they "remain in
good hands".  Policies to improve corporategovernance are also being pursued in the
financial services sector, with improved
disclosure requirements being a key factor in
recent banking reforms.
(6) S
ECTORAL POLICIES
16. In 1998, manufacturing accounted for
22% of GDP.  Singapore aims to maintain the
share of manufacturing at around 25% of
GDP and has actively promoted the
development of high value-added
manufacturing activities.  This policy has been
largely successful, with electronics dominatingboth manufacturing output and merchandise
exports.  Notwithstanding a cyclical decline in
export demand in 1998,  electronics and
electronic products accounted for 43% of
value added in manufacturing; officemachines, including electronic products and
telecommunications equipment accounted for
almost 62% of merchandise exports.
17. As in the case of manufacturing,
government policies in services haveencouraged investment in high value-added
sectors.  Currently, services account for
around 64% of GDP and provide employment
to around 70% of Singapore's workforce.  The
importance of services in the economy and theneed to encourage the development of higher
value-added activities has highlighted the need
for accelerated liberalization in this sector.
Reform in services has been deliberately
gradual, however, so as not to cause
unnecessary disruption and to ensure an
orderly transition to full competition.Liberalization is most advanced in financial
and telecommunications services.  In other
sectors, such as energy and water, which areimportant business inputs to manufacturing
and services activities, reform is taking place
more gradually.
18. In general, services reform has been
carried out unilaterally and has gone beyond
that scheduled by Singapore under theGeneral Agreement on Trade in Services
(GATS) in the WTO.  Under the GATS,
Singapore made commitments in 7 of the 12
sectors;  commitments were not made in
distribution services, education services,environmental, health-related and social
services, and other services.  In addition, only
partial commitments were made in some
sectors, notably transport, where commitments
were made only in maritime transport, whileno commitments were made in certain
professional services, such as legal services.
Since the previous Review, Singapore has
signed the Fourth Protocol to the GATS
(Agreement on Telecommunications Services)
and the Fifth Protocol (Agreement on
Financial Services).  Under the FourthProtocol on basic telecommunications services
Singapore committed to grant licences for up
to two additional operators for public
switched services and leased circuit facilities
from 1 April 2000; this replaced the previousoffer, under which exclusivity was granted to
Singapore Telecommunications (SingTel) until
2007.  Under the Agreement on Financial
Services, Singapore's commitments include an
offer to increase offshore bank lending limitsto residents of Singapore from S$100 million
per bank to S$200 million, and to allow up to
49% aggregate foreign equity ownership in
locally owned insurance companies.
19. In practice, Singapore has moved well
ahead of its WTO GATS commitments.  For
example, recent reforms have abolished
foreign ownership restrictions in banking
services, previously restricted to 40%, and
strengthened bank disclosure requirements to
improve transparency.  Similarly, while
Singapore planned to introduce competition bymeans of a duopoly in basic
telecommunications until April 2002, in
January 2000 the Government announced its
decision to abolish all restrictions on foreignSingapore WT/TPR/S/67
Page xiii
investment and to introduce full competition in
April 2000 rather than April 2002, as planned
originally.
(7) TRADE POLICIES AND TRADING
PARTNERS
20. A strong supporter of the multilateral
system, Singapore also believes that
accelerating trade liberalization through
regional fora benefits, rather than impedes,
multilateral negotiations and liberalization
undertaken within the multilateral framework.As a founding member of the Association of
South East Asian nations (ASEAN), and a
member of the Asia Pacific Economic
Cooperation (APEC) forum, Singapore
participates actively in reducing trade andnon-trade barriers between the member
countries of these fora.
21. Within ASEAN, in theory Singapore
offers tariff preferences under the CEPT;  in
practice, however, as Singapore's applied
tariff is largely zero, its ASEAN partners
receive no such preferences.  Singapore alsopursues trade links through participation in
efforts to harmonize ASEAN customs
procedures and valuation.  Cooperation
between the member countries is also being
pursued through:  the ASEAN FrameworkAgreement on Services (AFAS), which
includes seven services sectors;  the
Framework Agreement of the ASEAN
Investment Area (AIA), which will extend
national treatment in investment to investorsfrom ASEAN countries by 2010 and
subsequently to all investors by 2020;  and the
ASEAN Framework Agreement on Mutual
Recognition Agreements.
22. In the APEC forum, Singapore plans
to meet the deadline agreed for developed
country members to liberalize trade and
investment, by 2010.  Singapore was also a
participant in APEC's Early Voluntary
Sectoral Liberalization (EVSL) and
Accelerated Tariff Liberalization (ATL)
initiatives, covering 15 and 9 sectors,respectively.23. In addition to regional agreements,
Singapore's size and resource constraints have
led to the formation of regional alliances such
as the Indonesia-Malaysia-Singapore growth
triangle, formed in 1994, which allows all
three countries to benefit from each others'resource complementarities.  A free-trade
agreement is also currently being negotiated
with New Zealand and feasibility studies for
free-trade agreements with Mexico and Japan
are being conducted.  In addition, Singapore isexamining the possibility of setting up a
tri-party agreement with New Zealand and
Chile.
(8) O
UTLOOK
24. Singapore has weathered the recent
economic crisis in the region well mainly due
to its stable and sound macroeconomic
policies as well as its open trade and
investment regime;  the Government's rapid
reaction to the crisis through the introduction
of short-term cost cutting measures also
assisted businesses in adjusting to increasedprice competition as a result of currency
devaluations in the region.  These measures,
together with Singapore's strong economic
fundamentals, have helped it to emerge from
the economic downturn more rapidly thanmany of its neighbours, with growth expected
to be 5% in 1999, lower than 8% achieved
during 1997, but considerably higher than the
1998 level of 0.3%.
25. In the longer term, however, one of
Singapore's main challenges remains
competition with relatively low-cost producers
in the region.  In recent years there has been
concern that Singapore's relative unit labour
costs have been rising, putting pressure on theexternal competitiveness of lower value-added
exports.  To address these concerns, the
Government established the Committee on
Singapore's Competitiveness (CSC), which
made its recommendations in November 1998.
The Committee found that in comparison with
several of its neighbours, unit labour costs inSingapore, especially in manufacturing, had
been rising more rapidly in recent years.  It
concluded that there was a need to upgradeWT/TPR/S/67 Trade Policy Review
Page xiv
capabilities to keep ahead of competition by
ensuring that productivity gains were not
outstripped by growth in business costs.  The
Government's response to the decline in
external competitiveness has been to establish
programmes such as Industry 21, InformationTechnology 21, Manpower 21, and tax
incentives aimed at attracting investment to
higher value-added activities.
26. Given the strong role played by
Singapore's open trade and investment regimein fostering its economic development by, inter
alia, facilitating a shift towards higher value-
added activities, the stability and
predictability of this regime could be much
enhanced by Singapore undertaking greater
bindings at the WTO.  More specifically,Singapore might usefully increase its tariff
bindings from the current level of 70.5% of
tariff lines and bring bound tariff rates more
into line with applied rates; Singapore could
also extend its GATS commitments to the fivesectors not yet covered in its Schedule.