WORLD TRADE  
ORGANIZATION  WT/REG161/5 
28 April 2005 
 (05-1742) 
Committee on Regional Trade Agreements Original:   English 
  
UNITED STATES - SINGAPORE FREE TRADE AGREEMENT 
 
Questions and Replies
 
 
 The following communication, dated 22 April 2005,  is being circulated at the request of the 
Delegations of United States and Singapore. 
 
 This document reproduces the questions addressed  to the Parties and the responses submitted. 
The questions and replies set out below are or ganized in accordance with document WT/REG161/3 
for the goods aspects of the Agreement, and WT/R EG161/4 for the services aspects of the Agreement. 
 
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GOODS ASPECTS  
  II. TRADE-RELATED PROVISIONS 
 
1. Import Restrictions
 
 
 1.1 Duties And Charges  
Under the Agreement, it would seem to us  that the US authorities waive their 
merchandise processing fee, MPF, on certain goods that actually originate in parts of Indonesia 
rather than Singapore.  Imports of the same good s from elsewhere in Indonesia, or from third 
countries, remain subject to the fee.  The EC would like to know what WTO legal basis the US 
has for allowing such exemptions from the MPF for territories outside the scope of the FTA? 
The Agreement exempts only originating goods, as defined in the rules of origin chapter, 
from the MPF.  The MPF is not waived for non-originating goods.   
 1.2 Quantitative Restrictions 
 
TRQs (US - Annex 2B, Singapore Annex 2C) 
- What have been the fill rates since implementation? 
- Have these increased in line with increases specified in the text? 
- How do these preferential TRQs impact on third parties? 
- Is there a process for re-allo cation of unused quotas? 
 
During 2004, the fill-rates on the Singapore FTA preferential TRQs for Singapore’s 
agriculture products entering the Un ited States was zero percent.   WT/REG161/5 
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 The annual increases in quantities available under each FTA preferential TRQ are specified in 
the schedules set out in the Agreement.  The TRQs  set out in the Agreement represent opportunities 
for exports, but are not minimum purchase requirements.   
For products where the United States has TR Qs as part of WTO obligations, the access 
provided by FTA TRQs is additional to the WTO TRQ access.  In such cases, it is possible that 
Singapore could use the FTA preferential TRQs for its exports to the United States rather than access 
allowed on an MFN basis for WTO TRQs.  If this  occurred, additional volumes under WTO TRQs 
could be available to third parties.   
There is no process for re-allocating unused TR Qs to other countries under the Singapore 
FTA since the FTA TRQs are only available to Singapore.   
3. Rules Of Origin
 
 
Can the Parties explain the meaning of Article 3.2 "treatment of certain products":  
"Each party shall provide that a good listed in A nnex 3B -integrated sourcing initiative- is an 
originating good when imported into its territory from the territory of the other party."  Is this 
meaning that for the products of the list normal  ROO do not apply? Instead of the concept of 
"country of origin" do the Parties appl y a concept of "country of export"? 
The products set out in Annex 3B are alr eady MFN duty-free.  Under the provision in 
question, in order to achieve “originating” status  under the FTA there is only a direct shipment 
requirement, rather than a preferential rule of origin. 
Article 3.17 special ROO for apparel goods seems to only apply when importing into the 
US from Singapore but not when importing in  Singapore from US.  The EC would therefore 
like to ask:  which is the relationship between availability of inputs in the importing country and 
the concept of origin? 
There is a specific relationship in Article 3.17 between the commercial availability of inputs 
in the United States and the concept of origin.  In particular, both the United States and Singapore 
recognized that there may be situations in which pr oducers wish to make apparel products from fabric 
or yarn that is not commercially available in the United States.  In order to promote apparel 
production under the FTA, this paragraph creates an ex ception to the usual rule that fabric and yarn 
must originate in an FTA party in order for the appa rel it is incorporated into to receive preferential 
tariff treatment under the FTA.  This exception a llows apparel made in Singapore from designated 
"short supply" fabric or yarn that comes from th ird countries to qualify as originating under the FTA 
when imported into the United States.   
Annex 3B:  Integrated Sourcing Initiative 
According to this Annex, for a limited number of products and medical devices that 
already face zero tariffs, the initiative eliminat es the requirement that these products meet 
specific "rules of origin".   
Could the Parties explain the rational behind this rule and indicate whether a product 
which is shipped from a non FTA party to Singapore and then re-exported without further working in Singapore to the USA, is consid ered as an originating product under the FTA. 
The products are MFN duty-free in both Singapore and the United States.  Under the 
provision in question, in order to achieve “originating” status under the FTA there is only a direct shipment requirement, rather than a preferential rule of origin.  WT/REG161/5 
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 Annex 3:  Remanufactured Products 
According to this Annex, a limited num ber of remanufactured industrial goods are 
considered as "originating". 
Could the Parties explain the rational behind this rule.  
The provisions related to remanufacturing a nd “recovered goods” are recognition that the 
processes involved are economically significant, much  like other processes cons idered to be “wholly 
obtained.” 
Our first concern is about what criteria will be applied in the selection of products 
under consideration for inclusion in Annex 3B to the Agreement.  The question of whether or not any quantitative restrictions would be imposed on the import of such goods of the other 
Party as a ceiling when applying Article 3.2.1 woul d need to be clarified.  According to Article 
3.18.2, factors including developments in tec hnology, production processes, and “other related 
matters” shall be taken into account with a view  to covering more products in the exceptions 
subsequently.  We would therefore appreciate further clarification of the term “other related matters.”  Furthermore, we are interested in knowing whether the aforementioned ceiling, if 
any, will be applicable to the additional products as such? 
The Parties do not plan to add add itional products to Annex 3B.   
5. Safeguards (Article 7)
 
Have any safeguards measures been invoked? What are the significant differences 
between the safeguards chapter and the WTO Safeguards Agreement? 
No safeguard measures have been invoked.  Significant differences between the WTO 
Safeguard Agreement and the b ilateral Safeguards mechanism in the US-Singapore FTA include: 
- The agreement foresees only increases in tari ff rates, and not other types of measures 
such as quotas; 
- Notification requirements are simpler; 
- The maximum time period that a safeguard measure may remain in place is four 
years, which is shorter than under the WTO Safeguards Agreement; 
- Measures may not be imposed twice on the same good or after the end of the 
transition period without consent of the other Party; 
- There is a maximum length of one year for investigations; 
- If the Party applying a safeguard measure does not provide adequate compensation, 
the other Party is not required to wait three years to take action;  and 
- The use of the “substantial cause” standard gives greater clarity to the analysis of 
whether increased imports cause serious inju ry or the threat of serious injury. 
Art. 5.9 (bilateral textile and apparel safegu ard actions) describes the conditions for the 
application of the safeguard during the transition period.   WT/REG161/5 
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 According to para 1 of this article, "... m ay suspend the tariff reduction or increase the 
duty ... if a textile or apparel good of a Party is  imported in such increased quantities, in 
absolute terms or relative to the domestic market  for that good ... constitute a substantial cause 
of serious damage or actual threat thereof, to a domestic industry producing a like or directly 
competitive good ... . 
Could the Parties explain what is meant by "relative to the domestic market for that 
good" and indicate the percentages which coul d threaten or seriously damage a domestic 
industry producing a like or competitive good.   
The term "relative to the domestic  market for that good" is includ ed to refer to whether, even 
if imports are not increasing in absolute terms, th ey are capturing an increasing share of the domestic 
market.  In either case, increasing imports must caus e serious damage or actual threat thereof, which 
is a fact-intensive, case-by-case analysis c onducted in accordance with Article 5.9.2. 
 
IV. OTHER 
3. Intellectual Property Rights
 
As to the issue of the requirement for most-favoured-nation status to be applied to all 
WTO Members in matters of intellectual property rights as set out in the TRIPS agreement, our particular concern is about how the Parties to the Agreement would fulfil this provision when affording the preferential treatment on intell ectual property rights to each other under the 
Agreement.  It would be most helpful if the Pa rties could provide their views on whether the 
interests of third countries arising from the non-discrimination provided for in the TRIPS 
Agreement could be maintained. 
The FTA does not affect any obligations the Parties have vis-à-vis other WTO Members, 
including the MFN obligation under Article 4 of th e TRIPS Agreement.  The Parties therefore will 
continue to meet their MFN obligation under Article 4 of the TRIPS Agreement.   
4. Government Procurement
 
Article 13.2.2 c) of the FTA extends the scope of US - Singapore commitments under the 
WTO Agreement on Government Procurement (GPA) to “build-operate-transfer” (BOT) 
contracts.  What are the rules applying to the bidding and contract award process for BOT 
contracts? 
The rules that apply to “build-operate-transfer”  (BOT) contracts are the same rules that apply 
to any procurement covered by the Government Procurement Chapter of the FTA. 
Article 13.3 of the FTA incorporates most of provisions of the GPA.  Amongst the 
provisions listed there is no reference to Article XVII of the GPA.  How is transparency in the 
tender process ensured for procurement covered by  the FTA? What transparency rules apply to 
procurement covered by the FTA and not covered by the GPA? 
Transparency is ensured by the numerous provisions  of the GPA that are incorporated into the 
FTA and apply to procur ements covered by the FTA.  These provisions include qualification of 
suppliers (Article VIII), invita tion to participate in procurem ents (Article IX), and tender 
documentation (Article XII).    WT/REG161/5 
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 The note to Article 1, paragraph 1 of the GPA related to tied aid to developing countries 
is not incorporated into the FTA.  What commitments have the Parties undertaken on procurement related to internatio nal aid to developing countries? 
All procurement above specified thresholds and undertaken by entities listed by each Party is 
covered by the Government Procurement chapte r unless expressly excluded.  The United States does 
not cover procurement by the United States Agency for International Development “for the direct 
purpose of providing foreign assistance.” 
6. Anti-Competitive Behavior
 
 
On the issue of anti-competitive behavior, covered in Section IV of the communication, 
it would be appreciated if the Parties could explain whether the anti-competitive provisions 
adopted by the Parties would also be applicable to  non-parties.  In addition, it would be helpful 
to know whether the existing competition policy of the Parties needs to be adjusted or modified 
for intra-trade under the regional agreement.  
Regarding the first question, each Party’s measures proscribing anti-competitive business 
conduct apply, per the text of the agreement, to  anticompetitive conduct irrespective of the nationality 
of the persons engaging in such conduct.   Regard ing the second question, it is not clear what is meant 
by “intra-trade under the regional agreement.”  U pon receiving clarification, the Parties would be 
happy to address the question.  For your info rmation, Singapore enacted general competition 
legislation on October 19, 2004. 
 
SERVICES ASPECTS  
  
II. PROVISIONS AFFECTING TRADE IN SERVICES 
 1. Elimination Of Discriminatory Restrictions
 
According to Articles 8.7, 10.9 and 15.12, the liberalization provisions concerning 
investment and cross-border trade in services do not apply to non-conforming measures 
maintained by a Party at local level of gov ernment in all circumstances and at central and 
regional levels of government, when they are listed in specific schedules.   
Taking into account that: 
(a) Many services are normally regulat ed at local or regional level 
(b) Any reallocation of competences between the different levels of government in 
the context of a decentralisation process may have an impact on the level liberalization committed and on the legal predictability of those commitments 
(c) As regards measures at the regional leve l of government, the United States has 
listed in its schedules all existing non-co nforming measures of all States, DC and 
Puerto Rico.   
Could the Parties and, in particular the USA, indicate exhaustively which are the 
discriminatory measures that they can impose on services suppliers from other WTO members 
in accordance with their current GATS commitments and that can no longer be imposed on the 
services suppliers from the other Party of the FTA? WT/REG161/5 
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 The cited “Non-conforming Measures” articles do not exclude measures at the local or at the 
regional level of government.  Instead, certain liste d obligations do not apply to local level measures 
existing upon entry into force of the FTA.  We th ink it unlikely that any such measures would have a 
major impact on the supply of services.  Existi ng non-conforming measures at the regional level of 
government are included in the relevant annexes.  Within these annexes, the U.S. includes a specific 
non-conforming measure relating to the U.S. States, the District of Columbia and Puerto Rico.  
Certain listed obligations do not apply to measures existing upon entry into force of the FTA.  Given 
the relative openness of the U.S. States to fore ign service suppliers, this was a good means to 
guarantee existing access opportunities. 
The scope of the FTA is very broad (“ne gative listing”—everything liberalized unless a 
specific non-conforming measure is taken).  It is difficult to draw specific comparisons with the 
GATS since the GATS schedules are structured on a positive listing basis. 
What are the intentions with respect to the liberalization of the non-conforming 
measures (set out in Annexes 8A and 8B of the FTA) being liberalized? 
The Parties do not have any particular plans regarding the liberalization of the non-conforming 
measures set out in Annexes 8A and 8B.  That said,  Article 8.7, “Non-conforming measures” includes an 
automatic mechanism (a “rachet”) to bind any libera lization of any existing m easure listed in Annex 8A. 
In accordance with its GATS commitments on  Mode 4, the USA has committed to allow 
the entry and temporary stay of up to 65 000 fash ion models and specialty occupations annually 
on an MFN basis.  In appendix 11.A.3 of the FTA, the USA commits to annually approve as many as 5.400 applications of business persons of Singapore seeking temporary entry to engage 
in a business activity at a professional level. 
Could the Parties confirm that fashion mode ls and specialty occupations of other WTO 
Members can still make full use of the 65.000 MFN quota on a “first come, first served” basis 
and that their applications will not be rejected on the grounds that 5.400 permits have been 
reserved for Singaporean nationals?  
The United States confirms that it continues to grant at least 65,000 visas under the referenced 
category to WTO Member nationals. 
2. Rules Of Origin
 
With respect to the clause on denial of benefits, Article 8.11(a) states that a Party may 
deny the benefits in Chapter 8 to the service su pplied by an enterprise owned or controlled by 
nationals of a non-party.  We would like to know more about how the terms of “owner” and 
“control” were interpreted in actual cases. 
To our knowledge, there have not been any actual cases.  The terms themselves are not 
further defined in the FTA. 
3 Standards/Recognition  
In accordance with Article 8.9, subject to certain requirements, one Party may recognize 
the education obtained or certificate granted by the other Party.  We would like to know your 
views on whether this provision would apply equa lly to the measures at both the central and the 
local level of governments, or would its scope of application be limited to either the central or 
the local level of government only?  Please refer to  the definitions of “central” and “local” level 
government in Article 8.1.1 and 8.1.5, respectively.  WT/REG161/5 
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 One Party (for example, the United States) may recognize the education obtained or 
certificate granted by the other Party (for example, Singapore).  There is nothing in the Article that 
further defines or circumscribes what level of gove rnment (central, regional or local) is responsible 
for regulating the particular service.   
5 Subsidies And State-Aid  
Regarding the subject on subsidies and state-aid mentioned in paragraph 5 of 
WT/REG161/4, why is such discipline only applicable to financial services? 
The Parties decided that it was appropriate to  develop a specific approach for the financial 
services sector.  Article 1.3 of the FS chapter reads in part: 
This Chapter does not apply to measures adopt ed or maintained by a party relating to: 
(a) activities or services forming part of a public retirement plan or statutory system of 
social security;  or 
(b) activities or services conducted for the account  or with the guarantee or using the 
financial resources of the Party, including its public entities, 
except that this Chapter shall apply if a Party allows any of the activities or services referred 
to in subparagraphs (a) or (b) to be conducted in its financial institutions in competition with a public 
entity or a financial institution. 
 
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