RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG127/M/1
21 January 2003
(03-0316)
Committee on Regional Trade Agreements
Thirty-Third Session
EXAMINATION OF THE CLOSER ECONOMIC PARTNERSHIP BETWEEN NEW
ZEALAND AND SINGAPORE
Note on the Meeting of 12 November 2002
Chairman:  Dr. V. Notis (Greece)
1. The meeting was convened in document WTO/AIR/1955.
2. Under Agenda Item B.VI of its Thirty-Third Session, the Committee on Regional Trade
Agreements (CRTA) took up the examination of the Closer Economic Partnership (CEP) between
New Zealand and Singapore (goods and services .)  The following topics were discussed:
A. General Remarks
Goods aspects:
B. Section I – Background Information on the Agreement
C. Section II – Trade Provisions
D. Section III – General Provisions of the Agreement
Services aspects:
E. Section I - Background Information on the Agreement
F. Section II – Provisions Affecting Trade in Services
3. The Chairman noted that this was the first round of examination of the CEP between New
Zealand and Singapore.  The notifications of the Agreement had been distributed in documents
WT/REG127/N/1 and S/C/N/169, and the text of  the Agreement in document WT/REG127/1.  He
proposed to organize the examination by first asking the Parties and other Members for general
comments, and then would turn to the specifics of the Agreement looking first at the goods aspects,followed by the services aspects, using the St andard Formats (WT/REG127/3) and (WT/REG127/4),
respectively, to guide the debate.  Before giving the floor to the Parties for their general statements, he
recalled that the terms of reference for the examination of the goods aspects had been adopted on 5
October 2001 by the Council for Trade in Goods as contained in document WT/REG127/2 and that
the decision to refer the services aspects of the Ag reement for examination in the CRTA had been taken
on 3 December 2001 by the Council for Trade in Services, as containe d in document S/C/M/56.
A. G
ENERAL REMARKS
4. The representative of Singapore, speaking also on behalf of his counterpart from New
Zealand, informed the Committee that the CEP had been conceived with the aim of enhancing the
already excellent bilateral relationship between Singapore and New Zealand, promoting economicgrowth for both Parties, contributing to the wider liberalisation process in APEC, and complementing
the WTO's efforts to create a more predictable, freer and open global trading environment.  The CEP,WT/REG127/M/1
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which had been signed on 14 November 2000 and had entered into force on 1 January 2001, had been
notified to the WTO on 19 September 2001.  He said that the CEP was a comprehensive free trade
agreement (FTA), built upon the fundamental principles of the multilateral trading system such as
national treatment and transparency, and was in conformity with GATT Article XXIV:8(b) and GATS
Article V.  Turning to the goods component of the CEP, which the Parties considered to be fullyconsistent with GATT Article XXIV:8(b), he indicated that tariffs on all goods originating in either
Party had been abolished on the CEP's entry into force.  Both Parties had also undertaken not to adopt
or maintain any import and export prohibition or restriction.  The CEP covered all trade in goods
between the Parties that met the rules of origin criteria.  To facilitate trade between them, the Parties
had agreed to fairly simple rules of origin: wholly  produced or obtained goods would enjoy zero-tariff
benefits; partly manufactured goods would also enjoy benefits if they met an area content threshold of
40 per cent ex-factory cost.  The CEP also included the text of a mutual recognition agreement forelectrical/electronic equipment.  The Parties had agreed to other priority sectors such as
telecommunications equipment, chemicals and the food sectors for further work.  To further facilitate
trade between them, the CEP required the customs administrations of both Parties to simplify customs
procedures and develop mutually beneficial solutions to minimise risks and facilitate clearance.  To
this end, on 12 October 2002 the New Zealand Customs Service and the Singapore Customs andExcise Department had signed a set of Administrative Guidelines Relating to Provision of Mutual
Assistance to Verify Origin of Goods Under the ANZSCEP.  The Pa rties had agreed not to impose
safeguard measures on goods originating from the other Party, which went beyond provisions in the
WTO.  The CEP also contained anti-dumping provisions which were tighter, with respect to
thresholds, than the corresponding provisions in the WTO Agreement on Implementation of ArticleVI of the GATT 1994 (WTO Anti-Dumping Agreement).  Significantly, the de minimis margin had
been raised from two to five per cent and the margin of dumped imports normally regarded as
negligible had been increased from three to five per cent.  The CEP also prohibited all export
subsidies on goods, including agricultural products.  That too went beyond the WTO.
5. Turning to the services component of the CEP, which as with the goods aspects, the Parties
considered to be fully consistent with the provisions of GATS Article V, the representative of
Singapore said that the CEP provided for comprehensive sectoral coverage in accordance with GATS
Article V:1.  No services sector had been a priori  excluded from the scope of the CEP other than
services supplied in the exercise of governmental authority.  The CEP had adopted a positive list
structure and specific commitments covered the four modes of supply akin to the GATS.  Like the
GATS, the CEP covered measures affecting the production, distribution, marketing, sale and delivery
of a service, the purchase, payment or use of a service, and the access to and use of, in connectionwith the supply of a service.  The CEP had adopted the market access and national treatment
disciplines of the GATS.  The initial commitments taken by New Zealand and Singapore on these
disciplines were contained in their respective services schedules, and expanded substantially on both
Parties' GATS commitments.  He said that both Parties would review their respective services
schedules at least every two years as part of the CEP's general review with the intention to addprogressively to their initial commitments, thus expanding the market access and national treatment
concessions between the two Parties.  The CEP extended benefits to "natural" persons and "legal"
persons of the other Party and services supplied by them.  The Agreement also provided for legal
persons of a non-Party to benefit from the CEP if they engaged in "substantive" business operations in
the territory of one or both Parties.  The CEP also had in place a framework for experts to developmutual recognition of professional qualifications and registration.  At the first Ministerial review of
the CEP in November 2001, the Parties had agreed to a priority list of ten sectors (such as engineers
and doctors) for which professional bodies and regulatory agencies of the Parties were encouraged to
work towards mutual recognition of qualifications and registration.  Another liberal feature of the
CEP was that it did not contain any specific safeguard provision.  With regard to disciplines ondomestic regulations and subsidies, both Parties had agreed to review the outcome of the GATS
negotiations on GATS Articles VI and XV with a view to their incorporation into the CEP.  That
made the CEP a dynamic rather than a static Agreement, in line with the Parties' ambition ofWT/REG127/M/1
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complementing the multilateral trading system.  W ith regard to commercial presence (Mode 3), the
CEP went beyond the GATS and contained provisions  on subrogation and also provided for investor-
state dispute settlement in addition to state-to-state dispute settlement.  That was contained in the
investment chapter of the CEP, which set out a fr amework of investment rules to promote and protect
bilateral investment.  He added that since its entry into force, bilateral trade covered by the CEP hadtaken place smoothly.  The CEP provided a simple and rigorous dispute settlement mechanism to
address problems that may arise in the future, although thus far there had been no need for such
recourse.  The intention of the Parties was for the CEP to serve the dual purpose of promoting
economic growth for the Parties, and of promoting greater international trade liberalisation as part of
the WTO and APEC liberalisation processes.  The CEP provided for both Parties to undertake
progressive liberalisation through successive reviews, in order to achieve economic efficiency,
innovation, wealth creation and consumer welfare.  He said that the Parties also saw the CEP as adynamic living Agreement which complemented the WTO process.  He referred to the fully
comprehensive investment chapter of the Agreement that achieved both investment promotion and
protection as an example of the CEP going beyond the traditional WTO realm of trade in goods and
services.  Further, he said, WTO-plus elements had been enshrined in the chapter on government
procurement whereby Parties had agreed to establish a single government procurement market tomaximise competitive opportunities and to reduce costs of doing business for both government and
industry.
6. The representative of New Zealand reiterated that the statement made was a joint one on
behalf of the governments of Singapore and New Zealand and emphasized that his delegation fully
concurred with what had been said.
7. The representative of Australia congratulated the Parties for the conclusion of the CEP.  She
said that the elimination of tariffs on trade in goods in all sectors as provided for in the CEP set a good
example for the comprehensiveness of free-trade areas and met the requirement of GATT Article
XXIV for the elimination of duties on substantially all trade between the parties.  The representative
of the United States concurred.
B. SECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
8. With respect to trade data, the representative of the United States sought confirmation from
the Parties of the percentage of tariff lines, both ad valorem  and specific, covered by the Agreement.
9. The representative of the New Zealand confirmed that the Agreement covered 100 per cent of
tariff lines and that those tariff lines not yet at zero duties had been reduced to zero on entry into force
of the Agreement.  He emphasised that for New Zealand, that had meant the elimination of tariffs on a
range of product sectors, which included plastics, some processed food, textiles, clothing, andfootwear, with tariffs ranging from five to 19 per cent and in some particular cases as high as 30 or 40
per cent.  He reiterated that all of those tariffs had been eliminated as of the entry into force of the
Agreement and had been bound at zero.
C. S
ECTION II - T RADE PROVISIONS
10. The representative of the United States asked th e Parties to confirm that the rules of origin of
the CEP were different from those applied by the individual Parties to other WTO Members.  She also
sought confirmation that the area content threshold of 40 per cent ex-factory cost did not apply to
countries other than Singapore and New Zealand.
11. The representative of New Zealand replied that his country had preferential rules of origin for
a small number of preferential trade agreements.  As for the CEP with Singapore, he confirmed that
the area content threshold of 40 per cent ex-factory cost referred only to the Parties to the Agreement:WT/REG127/M/1
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in other words to goods manufactured in either of the Parties or the two Parties together.  He added
that both Parties concurred on the importance of keep ing rules of origin simple for their respective
businesses, and thus had striven in the CEP for one set of rules applying to all goods rather than
complex product-specific rules of origin.  The representative of Singapore said that with respect to
non-preferential rules of origin, Singapore had notif ied the WTO that it had none.  As for preferential
rules of origin, he indicated that in the context of regional trade agreements (RTAs) with other Asian
countries, Singapore had a 40 per cent free on board (f.o.b.) threshold value.
12. The representative of the United States reiterated her delegation's interest in knowing the
difference between the rules of origin principles applying in the CEP and those ordinarily used with
respect to imports from other WTO Members and indicated that she would submit the question in
writing.  The representative of New Zealand, wish ing to partially answer the US representative's
question at that stage, stressed that New Zealand had preferential rules of origin only for those limited
preferential trade agreements to which it was party.  He said that under circumstances of single-tariff
MFN such as theirs, there was no need to differentiate the origin of goods from Members unless of
course they were entering New Zealand under preferential trade agreements, in which case
preferential rules of origin would apply.  The representative of Singapore drew delegates' attention to
Article 5:6 of the CEP which provided for the review of the rules of origin with a view to improving
bilateral trade flows between the Parties.  He empha sized that that was an innovative, forward looking
feature of the Agreement.
13. The representative of the European Communitie s, referring to the introductory statement
made by the Parties, sought confirmation that no third country could potentially benefit from the area
content threshold of 40 per cent ex-factory cost.  Additionally he asked the Parties whether there wasa list of minimal processes which did not qualify for the last process of manufacturing criterion
indicated in Section II:3 of the Standard Format.  Referring to that same section of the Standard
Format, he asked the Parties to elaborate on which products and what rules would determine quality
control and testing as a last process of manufacture.
14. The representative of New Zealand reiterated that the rules of origin of the CEP had been
designed to be simple and forward looking.  Turning to the specific questions posed by the
representative of the European Communities, he said that for goods partly manufactured in New
Zealand or Singapore and partly manufactured in another country it was entirely possible that the 40
per cent ex factory costs may include content from a third party in the form of 'antecedent' content.
He indicated that it was a highly technical issue but that his delegation would be happy to provide an
illustration of how it worked should that be necessary.  With respect to the question on minimal
process, he said that he would be happy to provide the EC representative with a list of minimalprocesses that New Zealand and Singapore did not recognize as a last process of manufacture.  With
regards to quality control checking and testing, he no ted that the Parties' drive to be forward looking
had led them to test new ground in terms of rules of origin and to recognize quality control checking
and testing as a last process of manufacture under defined rules which could be found in Annex 1 to
the Agreement as noted in Section II:3 of the Stan dard Format.  According to these, quality control
checking and testing would be regarded as a last process of manufacture when equivalent to at least
eight per cent of the factory or works cost of the final product.  In respect of products not containing
any other qualifying area content, quality control ch ecking and testing would have to comprise no less
that 50 per cent of the factory or works cost of the final product in order to be regarded as origin
conferring.  He added that the quality control checking and testing provisions applied to all goodsexcept those listed in Section II:3(a) of Annex 1, principally textiles and some clothing and footwear
products.  He offered to provide a written answer should that be deemed necessary.
15. Referring to the safeguard provisions of the CEP, the representative of the United States
sought confirmation from the Parties that it was their intention to exempt each other's imports from
any safeguard actions they might take on a product that was causing material injury under the WTOWT/REG127/M/1
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Agreement on Safeguards, regardless of whether imports from each other might be contributing to
that injury.  The representative of New Zealand, quoting Article 8 of the CEP, confirmed that it was
the intention of the Parties not to take safeguard measures against each other's imports, but heemphasized that the provision applied to originating goods.
16. The representative of India noted that Article 9 of the CEP provided for an increase in the de
minimis dumping margin from two to five per cent, and for the increase in the volume of dumped
imports from three to five per cent.  He asked the Secretariat to provide information on whether any
other RTAs notified to the CRTA contained provis ions on anti-dumping and countervailing measures
which expressly deviated from the WTO Anti-Dumpi ng Agreement.  His final question concerned
Article 9:1(c) of the CEP which affirmed the continued application of existing cumulation provisions
under Article 5:8 of the WTO Anti-Dumping Agreement, which stated that the volume of dumped
imports from individual countries accounting for less than three per cent would be neglected unlessthe countries which individually accounted for less than three per cent collectively accounted for more
than seven per cent of imports.  In the case of the CEP, he wondered whether the increased figure of
five percent for the volume of dumped imports would be taken into account when calculating the
cumulation figure of seven per cent.
17. The representative of the Secretariat was not able at that stage to reply to the question posed
by the Indian representative but indicated that a reply would be provided at the next Committee
meeting.  The representative of Singapore indicated that negotiations of anti-dumping provisions in
the context of the CEP had been geared towards an outcome that could serve as a model for the WTO.Thus, the Parties had tightened some of the provisions they regarded as regressive under the WTO
Anti-Dumping Agreement.  As such he was of the opinion that rather than a deviation from the WTO,the provisions on anti-dumping as contained in the CEP were WTO plus.  Turning to the specific
question posed by the Indian representative on cumulation, he considered the point as not relevant for
the purpose of the examination of the FTA since as the CEP was a bilateral agreement no account
would be taken of cumulation as it applied to other WTO Members.  The representative of New
Zealand endorsed the comments made by the representative of Singapore and emphasized that the
tightening of the provisions on anti-dumping in th e CEP had been aimed at minimising the scope for
anti-dumping harassment.  In addition, he drew de legations' attention to a related aspect which was
Article 3 of the CEP on competition.  He was of the opinion that the importance of creating and
maintaining open and competitive markets was directly related to the issue of anti-dumping  Although
the Standard Format did not expressly provide for a paragraph on competition, the Parties considered
that it was important to establish a link between competition and anti-dumping.  The fact that the
provisions on competition appeared under Article 3 of the Agreement was an indication of thesignificance the Parties attached to this issue.
18. The representative of India requested further clarification on the issue of cumulation.  If for
example, some products were being dumped from th ree countries which included Singapore or New
Zealand, would that lead to separate investigations for those products, one for the bilateral Agreement
and one for the other countries.  The representative of Singapore agreed to respond in writing once a
written question had been received.
D. SECTION III - G ENERAL PROVISIONS OF THE AGREEMENT
19. The representative of the United States, quoting Section III:4 of the Standard Format
"Relation with other Trade Agreements", sought a clarification of the wording employed in respect of
the non-automatic extension of the benefits negotiated under the CEP to each Party's other RTApartners.  She wondered about the meaning of "automatically" since normally in an FTA the benefits
would not extend to third parties.  The representative of Singapore indicated that Article 81 of the
Agreement precluded any MFN obligation to extend the benefits of the CEP to other countries.  Hereferred to Article 68 of the Agreement which provided for the regular review of the FTA andWT/REG127/M/1
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indicated that it was in that context that the Parties could eventually discuss the possibility of
extending concessions made in the CEP to other RTA partners.  He recalled that both Singapore and
New Zealand were negotiating other FTAs and th at they wanted to keep the CEP a dynamic
Agreement including the flexibility to extend concessions to other partners.
20. The Chairman considered that the first round of examination of the goods aspects of the
Closer Economic Partnership between New Zealand and Singapore had been completed and that the
examination of the Agreement would continue at the forthcoming Committee meeting.  He asked
delegations with further questions to forward them to the Secretariat by 22 November 2002 at the
latest and for the Parties to provide replies in writing no later than 10 January 2003.
21. The Committee took note of the comments made.
E. SECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
22. The representative of the European Communities asked the Parties where she could find the
schedules of commitments contained in Annex 2 of the Agreement as that would allow her delegation
to analyse the Agreement in more detail.  Additionally, she asked the Parties whether the first review
of the CEP, which had been scheduled to be held within two years of the date of entry into force of
the Agreement, had or was about to take place, and wondered whether the Parties could provide an
indication of the sectors that would be covered.  The representative of the United States informed the
Parties that, like the EC representative, her delegation had some broad questions on coverage,
particularly with regards to information about sectors currently excluded and those covered, the
volume of trade and so forth, which she would submit in writing.
23. The representative of Singapore informed delegations that the next review of the CEP was
scheduled to be held in late 2003 at which stage the issue of further sectoral liberalization would be
considered.  As indicated in the opening statement, at the CEP's Ministerial Review held in November
2001, Ministers from the Parties had agreed that all services sectors should be considered for review
even though they had instructed the negotiators to focus on certain specific sectors such as
telecommunication, postal services and other sectors which had been mutually agreed upon.  With
respect to Annex 2, he indicated that it could be found on both Trade Ministries' websites. He addedthat for Singapore, all information on FTAs was available at http://www.mti.gov.sg.
24. The representative of Australia having regard to the provisions on services and with respect to
the GATS requirement that services agreements have substantial sectoral coverage, asked whether the
Parties had done any analysis on the number of sectors liberalized by each of them.  The
representative of Singapore replied that no services sector had been a priori  excluded from the scope
of the CEP  and that the commitments entered into by th e Parties under the Agreement were certainly
GATS plus.  In fact, he added, more sectors and subsectors had been committed in the FTA and morewould follow in future reviews.  He was thus confident that the Agreement met the substantial
sectoral coverage criterion.
F. S
ECTION II – P ROVISIONS AFFECTING TRADE IN SERVICES
25. The representative of the United States asked whether the Parties could identify all provisions
in the Agreement that provided for the absence or elimination of discrimination among the Parties, in
the sense of GATS Article XVII, in each of the sectors that were covered.  If any of those provisions
had not been effective upon entry into force of the Agreement, she wondered when they would
become effective.  The representative of Singapore replied that the services Agreement was very
much informed by the GATS model and that whatever was in GATS had been codified in the CEP,including GATS' provisions on National Treatment.  He said that the wording "none" under thecolumn on national treatment in the Schedule of Commitments in Annex 2 to the Agreement meant noWT/REG127/M/1
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limitation on national treatment.  He added that he did not think that their Schedule of Commitments
contained phase-out periods for any of the national treatment inputs.
26. The representative of the United States informed the Parties that given the complexity of rules
of origin she would submit a written question on the issue.
27. The Chairman considered that the first round of examination of the services aspects of the
Closer Economic Partnership between New Zealand and Singapore had been completed and that the
examination of the Agreement would continue at the forthcoming Committee meeting.  He asked
delegations with further questions to forward them to the Secretariat by 22 November 2002 at the
latest and for the Parties to provide replies in writing no later than 10 January 2003.
28. The Committee took note of the comments made.
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