RESTRICTEDWORLD TRADE
ORGANIZATIONWT/REG140/M/1
24 December 2003
(03-6765)
Committee on Regional Trade Agreements
  Thirty-Fifth Session
EXAMINATION OF THE AGREEMENT FOR A NEW-AGE ECONOMIC PARTNERSHIP
BETWEEN JAPAN AND SINGAPORE
Note on the Meeting of 2 December 2003
Chairman:  Mr. J. Meetoo (Mauritius)
1. The meeting was convened in document WTO/AIR/2217/Rev.1.
2. Under Agenda Item D.VI of its Thirty-Fifth Session, the Committee on Regional Trade
Agreements (CRTA) took up the examination of the goods and services aspects of the Agreement
between Japan and Singapore on a New-Age Economic Partnership (JSEPA).  The following topics
were discussed:
A. General Remarks
Goods aspects:
B. Section I – Background Information on the Agreement
C. Section II – Trade Provisions
Services aspects:
D. Section I - Background Information on the Agreement
E. Section II – Provisions Affecting Trade in Services
3. The Chairman said that this was the first round of examination of the JSEPA.  The Agreement
had been signed in January 2002 and had entered into force in November 2002.  It had been notified
to the WTO in November 2002 as document WT/REG 140/N/1.  The text of the Agreement could be
found in document WT/REG140/1.  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 theAgreement looking first at the goods aspects, foll owed by the services aspects, using the Standard
Formats (WT/REG140/3) and (WT/REG 140/4), respectively, to guide the debate.  Before giving the
floor to the Parties for their general statements.
A. G
ENERAL REMARKS
4. The representative of Singapore, speaking on behalf of the Parties, said that the JSEPA had
been conceived with the aim of reaffirming the commitment of Japan and Singapore to create and
maintain open and competitive markets, contribute to the wider liberalisation process in APEC, and
complement the WTO’s efforts to create a more predictable, free and open global trading
environment.  The JSEPA had been signed by the Prime Ministers of both countries on 13 January
2002 in Singapore, and had entered into force on 30 November 2002, following the completion ofdomestic ratification procedures. The JSEPA had been notified to WTO Members on 8 NovemberWT/REG140/M/1
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2002.  He added that the JSEPA was a comprehensive free trade Agreement, in conformity with
GATT Article XXIV and GATS Article V and built upon the fundamental principles of the
multilateral trading system such as national treatment and transparency.
5. Turning to the goods component of the JSEPA, which the Parties considered to be fully
consistent with GATT Article XXIV, he explained that customs duties on goods representing 98.5 percent of total bilateral trade in 2000 had been elimin ated immediately upon entry into force, or would
be eliminated in accordance with Annex I to the Agreement.  This accounted for about 93.8 per cent
of Singapore’s exports to Japan and 100 per cent of Japan’s exports to Singapore.  The JSEPA
covered trade in agricultural and industrial goods between the Parties that met the rules of origin
criteria.  Products that were deemed to have met the product-specific rules of origin, fully expanded
upon in Annex II, would qualify for preferential tariff treatment.  Generally, the rules of origin criteria
were based on a change in tariff classification approach.  For 264 products of interest to Singapore,preferential tariff treatment would apply if the qualifying value content was at least 60 per cent of the
f.o.b. price.  The JSEPA ensured that non-tariff barriers (NTBs) minimized trade distortions to the
maximum extent possible and were not inconsistent with obligations under the WTO Agreement.
Further, permitted NTBs should be fully transparent.  The NTBs obligation was wholly in line with
the intention to liberalize and facilitate the free fl ow of trade in goods between both Parties.  To
further facilitate trade, JSEPA committed both Parties to improve national customs administrations,
through information exchange of their best practices, simplification of customs procedures and use of
modern management tools, such as risk management for cargo clearance processes.  The JSEPA also
included a Mutual Recognition Chapter with Annexes covering telecommunications terminal
equipment and radio equipment, and electrical products.  This Chapter allowed for mutual recognitionof conformity assessment procedures, as specified in the two sectoral Annexes.  To date, both Parties
were in the process of their registration of conformity assessment bodies for electrical products and
would continue to expedite implementation of  the mutual recognition agreement (MRA) for
telecommunications equipment.
6. Turning to the services component of the JSEPA, which the Parties considered to be fully
consistent with the provisions of GATS Article V, the representative of Singapore said that in
accordance with GATS Article V:1, the JSEPA had comprehensive sectoral coverage.  Both Parties
had substantially improved their market opening commitments.  In terms of the sectors covered, Japan
had made commitments on 134 services subsectors (87 per cent of a total of 155 sectors), and
Singapore had commitments on 139 subsectors (89.7 per cent).  This went significantly beyond each
country’s WTO commitments, where Singapore and Japan had committed 61 and 103 sectors,
respectively.  A positive list structure had been adopted in the JSEPA and specific commitmentscovered all four modes of supply as defined by the GATS.  The JSEPA adopted the market access and
national treatment disciplines of the GATS.  The initial commitments taken by Japan and Singapore
on these disciplines were contained in their respective services schedules.  Both Parties would review
these schedules in 2005, and thereafter, every five years, as part of the general review under JSEPA.
The JSEPA also extended benefits to “natural” persons and “judicial” persons of the other Party andservices supplied by them.  Further, the Agreement also provided for individual persons of a non-
party to benefit from the JSEPA if they were constituted or organized under the laws of either Party
and engaged in “substantive business operations" in the territory of one or both Parties.  With regard
to the movement of natural persons (Mode 4), JSEPA allowed for the free movement of business
visitors, investors and intra-corporate transferees that went beyond both Parties’ commitments underthe GATS.  Specific commitments were expanded under Annex VI of the Agreement.  The Chapter
on the Movement of Natural Persons covered not only services but also the Investment Chapter.  With
regard to commercial presence (Mode 3), the JSEPA went beyond the GATS; it contained provisions
on subrogation and provided for investor-state dispute settlement, in addition to state-to-state dispute
settlement.  This was contained in the Investment Chapter of the JSEPA, which set out a frameworkof investment rules to promote and protect bilateral investment.  The JSEPA contained a
comprehensive set of dispute settlement procedures, to ensure that if differences arose as to theWT/REG140/M/1
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interpretation or the implementation of rights and obligations under the Agreement, a predictable,
effective framework was in place to resolve the dispute as quickly as possible.  In closing, he said that
the JSEPA had laid a solid foundation for further growth in bilateral trade in goods, services and
investment for the coming years.  It had to date provided an excellent platform for both Parties to
explore areas of mutual interest and benefit for co-operation and collaboration. To this end, theJSEPA was of value in promoting greater international trade liberalisation as part of the WTO and
APEC liberalization processes and provided for both Parties to undertake liberalization through
successive reviews.  Thus, the JSEPA was a dynamic Agreement, which complemented the WTO
process.
7. The representative of the European Commun ities thanked the Parties for the information
provided in documents WT/REG140/3 and WT/REG140/4.   As his colleagues in the capital were still
studying these documents and not yet in a position to formulate questions on the Agreement, hewished to reserve the right to come b ack to the Agreement at a future date.
B. S
ECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
8. The Chairman recalled that the terms of reference for the examination of the goods aspects
had been adopted on 23 January 2003 by the Council for Trade in Goods as contained in document
WT/REG140/2.
9. The representative of Australia said that the Standard Format stated that that Agreement
covered 100 per cent of Japan's goods exported to Singapore and 93.8 per cent of Singapore's goods
exports to Japan.  But her delegation had noted that the Agreement included significant carve outs for
exports to Japan for the vast majority of agricultural tariff lines listed in Chapters 1-24 of the
Harmonized System.  Thus her delegation questioned whether the coverage described by the Parties interms of current trade gave an accurate account of the real coverage of the Agreement.  Based on the
limited coverage of such a major sector as agriculture, her delegation was concerned about the
compliance of the Agreement with the requirement of  Article XXIV that RTAs cover substantially all
trade.
10. The representative of the United States supported the previous speaker and requested
information on tariff line coverage of the agricultural sector.  The representative of New Zealand
echoed the same concerns expressed by the representative of Australia and said that while his
delegation did not yet have detailed questions he would like to revert to the Agreement at a later stage.
The representative of Malaysia said that his delegation was still studying the Agreement, but was
concerned about the coverage of agricultural goods.
11. The representative of Japan took the opportunity to provide additional information on the
topic of coverage.  Although Section I.3 of the Stan dard Format stated that all goods were covered by
the Agreement, this did not mean that the tariff on all goods would become zero.  As shown by the
data in Section I.4 of the Standard Format, customs duties on goods representing 98.5 per cent of total
bilateral trade had been eliminated upon entry into force or would be eliminated in accordance with
Annex I of the Agreement.  In the case of Singapore's exports to Japan, 93.8 per cent was covered by
the Agreement.  Only 3.3 per cent of Singapore's exports to Japan were agricultural products, so thefigures of trade covered were not surprising.  In terms of conformity with WTO provisions, he
referred to discussions held in the Committee regarding the quantitative and qualitative criteria used
to define coverage.  In terms of the quantitative criteria, the figures he had already cited clearly
showed that this Agreement  met the requirements.  In terms of the qualitative criteria, there had been
much discussion on this topic, but no consensus.  The common feeling was that no major sectorshould be excluded from coverage of an agreement.  As regards the tariff line coverage of agricultural
products, he pointed out that 21.5 per cent, or 375 items out of a total of 1,745 items, were considered
to be agricultural products under the WTO definition.WT/REG140/M/1
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C. SECTION II - T RADE PROVISIONS
12. The representative of the United States asked if the Secretariat would distribute the
introductory remarks of the representative of Singapore which she had found interesting.  On
standards, her delegation had further questions as regards mutual recognition procedures applied to
conformity assessment.  She asked if the Parties could expand upon the provisions applying toelectrical products and telecommunications equipmen t. (for example, what recognition was provided
and on what basis).
13. The Chairman said that the introductory remarks made by the representative of Singapore
would be part of the minutes of the meeting, but the texts of these remarks could be made available in
advance if the Parties cared to provide them.
14. The representative of Korea asked what sectors would be covered by the mutual recognition
of conformity assessment procedures and which body had the right to designate the relevant authority
for these procedures.  He requested additional information on the distinction between mutual
recognition in Chapter 6 of the JSEPA and the mutual recognition agreement procedure.
15. In response, the representative of Japan said that he would attempt to give a general idea of
how it worked, but that the Parties would provide a written response.  The arrangement which Japan
had with Singapore was very similar to the one that Japan had with the European Communities (EC)in four areas.  It essentially recognized the test ing procedures of the conformity assessment bodies of
both countries for the safety of certain products.  In general, the independent conformity assessment
body, which was usually a private company, was registered by the decision of the Committee of the
two countries.  Once this company had been registered, it was allowed to produce the testing results
on the safety of the products concerned in conformity with the laws and regulations of the other Party.For instance, if a Japanese company was registered by the Committee of the two countries, then this
company could test products produced in Japan for export to Singapore in accordance with the safety
regulations of Singapore.  Two areas had been selected:  telecommunications and radio equipment;
and electrical products.  As the representative of Singapore had mentioned, the registration process
was ongoing with regard to electrical products, while the Parties had yet to come up with detailed
implementation arrangements for telecommunications terminal equipment and radio equipment.  For
the sake of accuracy, he agreed to provide further information as required.
16. The Chairman said that although the meeting had allowed the Committee to clarify a number
of questions on the goods aspects of the JSEPA between Japan and Singapore, a number of issues
remained pending.  The examination of the JSEP A would continue at a future Session of the
Committee.  He asked delegations wishing to submit written questions to do so by 31 January 2004
and for the Parties to provide written responses by 31 March 2004.
17. The Committee took note of the comments made.
D. SECTION I - B ACKGROUND INFORMATION ON THE AGREEMENT
18. Moving to the services aspects of the Agreement, the Chairman reminded the Committee that
the JSEPA had been considered by the Council for Trade in Services on 6 December 2002 which had
adopted its terms of reference and referred the JSEPA to the CRTA.  The minutes of that meetingcould be found in document S/C/M/64.  A joint notification from Japan and Singapore (document
S/C/N/206) had been ma de under GATS Article V.
19. The representative of the United States asked if the Parties could explain the relationship
between the Services and Investment Chapters as they pertained to services provided through
establishment or commercial presence.  She asked how a service provided through establishmentWT/REG140/M/1
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might be covered by the disciplines contained in each of these Chapters.  Further, she wondered if
there were any differences in sectoral coverage between services provided through commercial
presence under the Services Chapter as compared with services provided through establishment under
the Investment Chapter.
20. The representative of Japan said that this was a complicated issue, as the services negotiations
had been based on GATS, while the Investment Chapter had been based on the approach taken in the
OECD.  In principle there were several differences between the Chapters in terms of the disciplines.
Certain disciplines did not appear in the Services Chapter, for instance prohibition, performance
requirements, compensation or expropriation.  The Investment Chapter had an independent value in
particular in terms of those higher level principles and disciplines which were applied.  Differences
existed in terms of the exceptions and the way that commitments were made in the two Chapters.  The
Parties had tried as much as possible to ensure that the two Chapters did not contradict each other andhe was of the opinion that they had been reasonably successful in this.  He expressed his willingness
to answer further questions in this area and asked the representative of the United States to submit any
additional questions in writing.
E. S
ECTION II – P ROVISIONS AFFECTING TRADE IN SERVICES
21. The representative of the United States thanked the representative of Japan for his explanation
and confirmed that her delegation would follow up with written questions.  With respect to Section
II.1 of the Standard Format, Provisions of the Agr eement relating to the Elimination of Article XVII
Inconsistent Measures, she asked the Parties to identify all sectors covered by the Agreement and to
describe the reasons for any sectoral coverage that differed from that in GATS, especially for
financial services and telecommunications services.  With regard to Annexes IVa and IVb, she askedthe Parties for information on supplementary provisions with respect to measures affecting
telecommunications services.  Her delegation was interested in knowing how the access to the use of
telecommunications networks and services, and the WTO Reference Paper obligations, were related
to major suppliers covered in JSEPA.
22. With regard to the Annex on financial services, the representative of Japan explained that  the
Parties had negotiated on the basis of the WTO Annex on Financial Services and developments in that
regard.  As a result, new financial services elements had been incorporated into the Agreement.  As
regards the Annex on telecommunications, the Parties had negotiated on the basis of the WTO
Reference Paper and had strengthened the disciplines in the Reference Paper by clarifying and
increasing transparency of the disciplines, particularly in terms of anti-competitive actions and
asymmetric regulations. He asked the representative of the United States to submit specific questions
if more detailed information was required.
23. The representative of Japan wished to clarify something for the record.  GATS Article V:2
stated that in evaluating whether the conditions under Article V:1(b) were met, consideration should
be given to the relationship of an agreement to a wider process of economic integration or trade
liberalization among the countries concerned.  He pointed out that the JSEPA between Singapore and
Japan contained a number of elements. (for exampl e, investment, the movement of natural persons,
provisions for cooperation between the countries in areas such as information, communication,
technologies, and financial services) which shou ld be considered in evaluating the Agreement.
24. With respect to the Standard Format, the representative of Korea asked whether the part on
the Movement of Natural Persons which appeared under Section IV.1, Other, applied to areas in
which specific commitments in services in Chapter 7 had been undertaken and whether it was moreappropriate to place the item in Section IV or in the Section relating to the scope of services trade.WT/REG140/M/1
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25. The representative of Japan responded that the Parties had included this element in Section
IV, Other, since the movement of natural persons in the JSEPA concerned not only the movement of
people due to business purposes in services, but also the movement of people for manufacturing
purposes, making speeches and so on.  Given that the scope of the movement of natural persons was
much wider than services, it had been included in Section IV.
26. The representative of Korea wondered if there was any difference between Annex IV,
Movement of Natural Persons, and the specific commitments undertaken under Chapter 7, Services.
If Annex IV related only to the specific commitments undertaken under Chapter 7, he thought that it
would be better to move this subsection to the general scope of the services trade rather than leaving it
where it was.
27. The representative of the United States, while not wishing to comment on whether Chapters
of the Agreement were services-related or not, recalled that when the Standard Formats had been
developed there was a recognition that there were provisions of free trade agreements which related to
immigration and which might or might not have anything to do with services.  She was not sure that
immigration provisions fell within services as such, as they were broader than services.
28. The representative of Japan replied that the relationship between the Chapter on Services and
the Chapter on the Movement of Natural Persons had been considerably discussed in the negotiation
of the JSEPA   All commitments made in the Chapter on the Movement of Natural Persons had been
copied in the horizontal commitments of the Services  Chapter.  In fact the Chapter dealing with the
Movement of Natural Persons talked about immigration measures, as pointed out by the
representative of the United States, and the Agreement provided for temporary stay, inter-corporate
transferees, investors and engineers.  These commitments were applicable horizontally in services.Any sector-specific restrictions had been described in the Annex to the Services Chapter.
29. The Chairman said that although the meeting had allowed the Committee to clarify a number
of questions on the services aspects of the JSEPA between Japan and Singapore, a number of issues
remained pending.  The examination of the JSEPA would continue at a future Session of the
Committee.  He asked delegations wishing to submit written questions to do so by 31 January 2004and for the Parties to provide written responses by 31 March 2004.
30. The Committee took note of the comments made.
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