19–006

108TH CONGRESS REPT. 108–225 " HOUSE OF REPRESENTATIVES ! 1st Session Part 1

UNITED STATES-SINGAPORE FREE TRADE AGREEMENT 

IMPLEMENTATION ACT

JUNE 21, 2003.—Ordered to be printed 

Mr. THOMAS, from the Committee on Ways and Means, 

submitted the following 

R E P O R T 

together with 

DISSENTING AND ADDITIONAL VIEWS 

[To accompany H.R. 2739] 

[Including cost estimates of the Congressional Budget Office] 

The Committee on Ways and Means, to whom was referred the 

bill (H.R. 2739) to implement the United States-Singapore Free 

Trade Agreement, having considered the same, report favorably 

thereon without amendment and recommend that the bill do pass.

CONTENTS 

Page 

I. Introduction .................................................................................................... 2 

A. Purpose and Summary .................................................................... 2 

B. Background ....................................................................................... 2 

C. Legislative History ........................................................................... 3

II. Section-by-Section Summary ........................................................................ 4

A. Title I: Approval and General Provisions ....................................... 4

B. Title II: Customs Provisions ............................................................ 7

C. Title III: Relief from Imports .......................................................... 10

III. Vote of the Committee ................................................................................... 13

IV. Budget Effects of the Bill .............................................................................. 14

A. Committee Estimates and Budgetary Effects ................................ 14

B. Budget Authority and Tax Expenditures ....................................... 14

C. Cost Estimate Prepared by the Congressional Budget Office ...... 14

V. Other Matters to be Discussed Under the Rules of the House .................. 17

A. Committee Oversight Findings and Recommendations ................ 17

B. Statement of General Performance Goals and Objectives ............ 17

C. Constitutional Authority Statement ............................................... 17

VI. Changes in Existing Law Made by the Bill, as Reported ........................... 17

VII. Executive Correspondence ............................................................................ 20

VIII. Views ............................................................................................................... 22

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I. INTRODUCTION 

A. PURPOSE AND SUMMARY

H.R. 2739 would implement the May 6, 2003 Agreement establishing a free trade area between the United States and Singapore. 

B. BACKGROUND

The United States-Singapore Free Trade Agreement (FTA), 

signed May 6, 2003, is one of the first trade agreements, together 

with the United States-Chile FTA, to be considered by the Congress under the ‘‘fast-track’’ procedures outlined in the Bipartisan 

Trade Promotion Authority Act (TPA), which was approved by the 

107th Congress and signed into law in August 2002 as part of the 

Trade Act of 2002 (P.L. 107–210). 

Negotiations for a U.S.-Singapore FTA were launched in December 2000. The final round of negotiations was held in November 

2002, and the formal Agreement was concluded on January 15, 

2003. Pursuant to requirements established under TPA, President 

Bush formally notified the Congress on January 30, 2003, of his intention to sign the Agreement. On May 6, 2003, President Bush 

and Singaporean Prime Minister Goh Chok Tong signed the FTA 

during a visit to Washington, D.C. by Prime Minister Goh. The 

U.S.-Singapore FTA is the first U.S. FTA with an Asian nation. 

The Agreement establishes standards for trade that mirror U.S. 

law and sets a precedent for future agreements. The U.S.-Singapore FTA will serve as the foundation for other possible FTAs in 

Southeast Asia. It will also enhance and strengthen the strong 

U.S.- Singapore trade relationship. Currently, Singapore is the 

11th largest trading partner of the United States, with two-way 

trade approaching $40 billion in 2002. Singapore is the United 

States’ largest trading partner in Southeast Asia. 

The Committee believes that the Agreement meets the objectives 

and priorities set forth in the Trade Act of 2002. Specifically, when 

the Agreement enters into force, most tariffs will be eliminated immediately, with the remaining tariffs phased-out over a three- to 

ten-year period. As most trade in goods with Singapore is already 

tariff-free, the FTA focuses on removing restrictions in trade in 

services, an important sector in the United States, accounting for 

around 80 percent of U.S. gross domestic product. The Agreement, 

through use of a ‘‘negative list’’ approach, benefits U.S. service providers by offering new opportunities for these service providers in 

the form of barrier-free market access, a transparent regulatory environment, and non-discriminatory treatment across many service 

sectors. Services firms will not only enjoy equal treatment in crossborder supply of services but will gain the right to invest and establish a local services presence. 

Additionally, by binding all of its tariffs at zero, Singapore will 

open its markets to American agricultural products and create new 

opportunities for American farmers to sell their produce to a nation 

whose small size prevents it from being able to grow enough food 

for consumption by its citizens. Trade in agricultural products represents a net trade surplus for the United States. In 2002, American farmers exported around $259 million worth of food products 

to Singapore. 

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The U.S.-Singapore FTA will create a secure and predictable 

legal framework for U.S. investors operating in Singapore; they will 

be treated fairly and equitably and will have access to meaningful 

dispute settlement. These protections cover key sectors such as agriculture, manufacturing, and services. In addition, the Agreement 

makes improvements to the NAFTA investor-state dispute settlement (‘‘Chapter 11’’) model called for in TPA by providing more 

transparency, public input into dispute settlement, mechanisms to 

improve the investor-state process by eliminating frivolous claims, 

and a place marker for a future appellate body or similar review 

mechanisms. The Financial Services chapter provides strong protections for existing and future U.S. investors and investments in 

Singapore. The Agreement also contains obligations under which 

each government commits to enforce its domestic labor and environmental laws. 

The Agreement additionally contains state of the art protection 

for U.S. intellectual property, which is increasingly vital in the digital age. The FTA includes specific commitments regarding the conduct of Singapore’s government enterprises; reinforced commitments to strong and transparent disciplines on government procurement procedures; strong, simple, and transparent rules of origin; commitments to combat illegal transshipments of traded goods 

and to prevent circumvention of disciplines pertaining to trade in 

textiles and apparel; and requirements to ensure effective enforcement of domestic labor and environmental laws. 

As noted above, this legislation is being considered under the Bipartisan Trade Promotion Authority Act of 2002. Under TPA, new 

trade pacts that the President negotiates in close consultation with 

Congress can be approved and implemented through legislation 

that Congress considers using streamlined procedures. Pursuant to 

TPA procedures, the President is required to provide written notice 

to Congress of the President’s intention to enter into the negotiations. Throughout the negotiating process, and prior to entering 

into an Agreement, the President is required to consult with Congress regarding the ongoing negotiations. 

The President must notify the Congress of his intent to enter 

into a trade Agreement at least 90 calendar days before the Agreement is signed. Within 60 days after entering in the Agreement, 

the President must submit to the Congress a description of those 

changes to existing laws that the President considers would be required in order to bring the United States into compliance with the 

Agreement. After entering into the Agreement, the President must 

also submit to the Congress the formal legal text of the Agreement, 

draft implementing legislation, a statement of administrative action proposed to implement the trade Agreement, and other related 

supporting information as required under section 2105(a) of TPA. 

Following submission of these documents, the implementing bill is 

introduced, by request, by the Majority Leader in each chamber. 

The House then has up to 60 days to consider the bill (the Senate 

has up to an additional 30 days). No amendments to the legislation 

are allowed under TPA requirements. 

C. LEGISLATIVE HISTORY

On November 16, 2000, the President provided notification to 

Congress of his intent to negotiate an FTA with Singapore. The 

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President provided formal notification to Congress of the negotiations with Singapore as required under TPA (which was enacted 

subsequent to the start of the U.S.-Singapore FTA negotiations) on 

August 22, 2002. During and after the negotiations, the President 

continued his consultations with Congress pursuant to the letter 

and spirit of the TPA requirements. 

Following the May 6, 2003 signing of the U.S.-Singapore FTA, in 

accordance with TPA requirements, President Bush submitted to 

Congress on July 3, 2003 a description of the changes to existing 

U.S. laws that would be required to bring the United States into 

compliance with the Agreement. 

On June 10, 2003, the Subcommittee on Trade of the Committee 

on Ways and Means held a hearing on the United States-Chile and 

United States-Singapore FTAs. The Subcommittee received testimony supporting these Agreements from the Administration and 

Members of Congress. The Subcommittee also heard testimony 

from numerous U.S. private sector companies and organizations. 

On July 10, 2003, the Committee on Ways and Means considered 

in an informal markup session draft proposals of the implementing 

legislation for the Singapore and Chile FTAs concerning matters 

within the jurisdiction of the Committee. 

On July 15, 2003, President Bush formally transmitted to Congress the formal legal text of the U.S.-Singapore FTA, draft implementing legislation, a statement of administrative action proposed 

to implement the trade Agreement, and other related supporting 

information as required under section 2105(a) of TPA. Following 

this transmittal, on July 15, 2003, Majority Leader DeLay and 

Congressman Rangel introduced, by request, H.R. 2739 to implement the U.S.-Singapore FTA. The bill was referred to the Committee on Ways and Means and the Committee on the Judiciary. 

On July 17, 2003, the Committee on Ways and Means formally 

met to consider H.R. 2739. The Committee ordered H.R. 2739 favorably reported to the House of Representatives by a roll call vote 

of 32–5. Under the requirements of TPA, amendments were not 

permitted. 

II. SECTION-BY-SECTION SUMMARY 

TITLE I: APPROVAL AND GENERAL PROVISIONS

Section 101: Approval and entry into force 

Current law 

No provision. 

Explanation of provision 

Section 101 states that Congress approves the U.S.-Singapore 

Free Trade Agreement and the Statement of Administrative Action 

and provides that the Agreement enters into force when the President determines that Singapore is in compliance with its Agreement obligations and has exchanged notes with the United States. 

Section 101 provides that the date of entry into forced will be no 

sooner than January 1, 2004. 

5

Reason for change 

Approval of the Agreement and the Statement of Administrative 

Action is required under the procedures of section 2103(b)(3) of the 

Bipartisan Trade Promotion Authority Act of 2002. The remainder 

of section 101 provides for entry into force. 

Section 102: Relationship of the Agreement to U.S. and state law 

Current law 

No provision. 

Explanation of provision 

Section 102 provides that U.S. law is to prevail in a conflict between the Agreement and such law. It also states that the Agreement does not preempt state law that may conflict with the Agreement. Only the United States is entitled to bring a court action to 

resolve a conflict between a state law and the Agreement. 

Reason for change 

Section 102 is necessary to make clear the relationship between 

the Agreement and federal and state law, respectively. 

Section 103: Consultation and layover for proclaimed actions 

Current law 

No provision.

Explanation of provision 

Section 103 provides that where the President is given proclamation authority subject to consultation and layover, he may proclaim 

action only after he has: obtained advice from the International 

Trade Commission and the appropriate private sector advisory 

committees; submitted a report to the House Ways & Means and 

Senate Finance Committees concerning the reasons for the action; 

and consulted with the Committees. The President may proclaim 

the proposed action after 60 days have elapsed. 

Reason for change 

The bill gives the President certain proclamation authority but 

requires extensive consultation with Congress before that authority 

may be exercised. The Committee believes that such consultation 

is an essential component of the delegation of authority to the 

President and expects that such consultations will be conducted in 

a thorough manner. 

Section 104: Implementing actions in anticipation of entry into force 

and initial regulations 

Current law 

No provision. 

Explanation of provision 

Section 104(a) provides that after the date of enactment, the 

President may proclaim actions and agencies may issue regulations 

as necessary to ensure that any provision of this Act that takes efVerDate Jan 31 2003 14:22 Jul 22, 2003 Jkt 019006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR225P1.XXX HR225P1
6

fect on the date that the Agreement enters into force is appropriately implemented, but not before the effective date. 

Section 104(b) establishes that regulations necessary or appropriate to carrying out the actions proposed in the Statement of Administrative Action shall, to the maximum extent feasible, be 

issued within one year of entry into force of the Agreement or the 

effective date of the provision, as the case may be. 

Reason for change 

Section 104 provides for the issuance of regulations. The Committee strongly believes that regulations should be issued in a 

timely manner in order to provide maximum clarity to parties 

claiming benefits under the Agreement. As noted in the Statement 

of Administrative Action, a regulation-issuing agency will provide 

a report to Congress not later than thirty days before one year 

elapses on any regulation that is going to be issued later than one 

year. 

Section 105: Administration of dispute settlement proceedings 

Current law 

No provision. 

Explanation of provision 

Section 105 authorizes the President to establish an office within 

the Commerce Department responsible for providing administrative 

assistance to any state-to-state dispute settlement panels that may 

be established under the Agreement and authorizes appropriations 

for the office and for payment of the U.S. share of expenses. 

Reason for change 

The Committee believes that the Commerce Department is the 

appropriate agency to provide administrative assistance to panels. 

Section 106: Arbitration of claims 

Current law 

No provision. 

Explanation of provision 

Section 106 authorizes the United States to resolve certain 

claims covered by the investor-state dispute settlement procedures 

set forth in the Agreement and specifies that all U.S. government 

contracts are to contain a choice of law provision for resolving any 

breach of contract claim. 

Reason for change 

This provision is necessary to meet U.S. obligations under Article 

15.21 of the Agreement. 

Section 107: Effective dates; effect of termination 

Current law 

No provision. 

7

Explanation of provision

The effective date of this Act is the date of entry into force of the 

Agreement. However, sections 1–3 and Title I take effect upon enactment, and section 205 takes effect on the date in which the textile and apparel provisions of the Agreement take effect. The Act 

shall cease to be effective on the date on which the Agreement 

ceases to be in effect. 

Reason for change 

Section 107 implements U.S. obligations under the Agreement. 

TITLE II: CUSTOMS PROVISIONS

Section 201: Tariff modifications 

Current law 

No provision. 

Explanation of provision 

Section 201(a) provides the President with the authority to proclaim tariff modifications to carry out the Agreement. 

Section 201(b) gives the President the authority, subject to consultation and layover procedures, to proclaim further tariff modifications as the President determines to be necessary or appropriate to maintain the general level of reciprocal and mutually advantageous concessions with respect to Singapore provided for by 

the Agreement. 

Reason for change 

Section 201(a) is necessary to put the United States in compliance with the market access provisions of the Agreement. Section 

201(b) gives the President flexibility to maintain the trade liberalizing nature of the Agreement. The Committee expects the President to comply with the letter and spirit of the consultation and 

layover provisions of this Act in carrying out this subsection. 

Section 202: Rules of origin 

Current law 

No provision. 

Explanation of provision 

Section 202 codifies the rules of origin set out in Chapter 3 of the 

Agreement. Under the general rules, there are three basic ways for 

a good of Singapore to qualify as an ‘‘originating good,’’ and therefore be eligible for preferential tariff treatment when it is imported 

into the United States. A good is an originating good if: (1) it is 

‘‘wholly obtained or produced entirely in the territory of Singapore, 

the United States or both’’; (2) those materials used to produce the 

good that are not themselves originating goods are transformed in 

such a way as to cause their tariff classification to change or meet 

other requirements, as specified in Annex 3A of the Agreement; or 

(3) it is a good listed in Annex 3B of the Agreement and thus considered to be an ‘‘originating good’’ if the good itself is imported 

into the territory of the United States from the territory of Singapore. 

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Annex 3A of the Agreement sets forth product-specific rules of origin for a wide variety of products. Under Annex 3A rules, an apparel product must generally meet a tariff shift rule that implicitly 

imposes a ‘‘yarn forward’’ requirement. Thus, to qualify as an originating good imported into the United States from Singapore, an apparel product must have been cut (or knit to shape) and sewn or 

otherwise assembled in Singapore from yarn, or fabric made from 

yarn, that originates in Singapore or the United States. There is 

a limited amount of apparel that may enter the United States duty 

free, subject to tariff preference level (TPL) caps if it does not meet 

the rule of origin. 

The goods listed in Annex 3B (also called Integrated Sourcing 

Initiative or ISI products) are predominantly information technology goods for which the current United States Normal Trade Relations or Most Favored Nation duty rate is zero. In general, imports of these goods into the United States would receive duty-free 

treatment regardless of origin. The bill makes clear that the Annex 

3B good ‘‘itself, as imported,’’ is deemed to be an originating good. 

This means that an Annex 3B good produced outside of Singapore 

is originating only when transshipped through Singapore, not when 

the good is incorporated as a component into another product, unless the Annex 3B good is first shipped from the third country to 

Singapore and then to the United States and back to Singapore. 

Thus, for purposes of determining origin by way of a transformation using the regional value content formula in section 

202(d) of the bill, an Annex 3B good would not be ‘‘originating’’ for 

purposes of the regional value content calculation unless it was 

shipped from the United States to Singapore, where it was then incorporated into the final product. 

The remainder of section 202 of the implementing bill sets forth 

more detailed rules for determining whether a good meets the 

Agreement’s requirements under the second method for qualifying 

as an originating good. These provisions include rules pertaining to 

de minimis quantities of non-originating materials that do not undergo a tariff transformation and the alternative methods for calculating regional value content. Other provisions in section 202 address valuation of materials and determination of the originating 

or non-originating status of fungible goods and materials. 

Reason for change 

Rules of origin are needed in order to confine Agreement benefits, such as tariff cuts, to Singapore goods to prevent third-country 

goods from being transshipped through Singapore and claiming 

benefits from the United States. Section 202 puts the United States 

into compliance with the rules of origin provisions of the Agreement. 

The Committee believes that the ISI provisions are sufficiently 

restrictive that they will not disrupt trade. The Committee will ask 

the International Trade Commission to monitor whether trade in 

any regional value content good which could contain an ISI component surges after the Agreement goes into effect. If such a surge 

is detected the Commission will examine whether the increase is 

due to reliance on ISI provisions allowing third country ISI components in RVC goods to be considered originating under the AgreeVerDate Jan 31 2003 14:22 Jul 22, 2003 Jkt 019006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR225P1.XXX HR225P1
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ment because they were first shipped to the United States and 

then to Singapore and then for final assembly. 

In addition, the committee expects the President to carry out 

faithfully the obligations specified in article 3.18 of the Agreement 

by applying any affirmative short supply determination in effect on 

November15, 2002 under another U.S. free trade agreement or 

trade preference program. 

Section 203: Customs user fees 

Current law 

Section 58c of Title 19 lays out various user fees applied by customs officials to imports, including the Merchandise Processing 

Fee, which is applied on an ad valorem basis with a cap. 

Explanation of provision 

Section 203 of the bill implements U.S. commitments under Article 2.8 of the Agreement, regarding the exemption from the merchandise processing fee for originating goods. This provision is 

similar to the one from the implementing legislation for the North 

American Free Trade Agreement. The provision also prohibits use 

of funds in the Customs User Fee Account to provide services related to entry of originating goods in accordance with U.S. obligations under the General Agreement on Tariffs and Trade 1994. 

Reason for change 

As with other free trade agreements, the Agreement eliminates 

the customs merchandise processing fee on qualifying goods from 

Singapore. Other customs user fees remain in place. Section 203 is 

necessary to put the United States in compliance with the user fee 

elimination provisions of the Agreement. The Committee expects 

that the President, in his yearly budget request, will take into account the need for funds to pay expenses for entries under the 

Agreement given that MPF funds will not be available. 

Section 204: Disclosure of incorrect information 

Current law 

No provision. 

Explanation of provision 

Section 204 of the bill implements Article 3.14.4(a) of the Agreement. The provision prohibits the imposition of a penalty upon an 

importer who makes an invalid claim for preferential tariff treatment under the Agreement if the importer acts promptly and voluntarily to disclose the error. The Secretary of the Treasury may 

prescribe regulations that allow one year or more as a time period 

for such voluntary disclosures. 

Reason for change 

Section 204 is necessary to put the United States into compliance 

with Article 3.14.4(a) of the Agreement. 

10

Section 205: Enforcement relating to trade in textile and apparel 

goods 

Current law 

No provision. 

Explanation of provision 

Section 205 of the bill implements the textile and apparel good 

anti-circumvention enforcement provisions of the Agreement. In accordance with Articles 5.4.5, 5.5.5, and 5.8.2 of the Agreement, the 

provision allows the President to exclude from entry textile and apparel goods from any enterprise that does not permit site visits requested by U.S. officials or that engages in intentional circumvention. The President may also take further action against circumventing enterprises or related enterprises, such as barring future 

entries of goods, if consultations with Singapore authorities fail to 

address problems of circumvention. 

Reason for change 

Avoiding textile transshipment remains a concern, and for this 

reason special textile enforcement provisions were included in the 

Agreement. Section 205 is necessary to authorize these enforcement mechanisms for use by U.S. authorities.

Section 206: Regulations 

Current law 

No provision. 

Explanation of provision 

Section 206 of the implementing bill provides that the Secretary 

of the Treasury shall issue regulations to carry out provisions of 

this bill related to rules of origin and customs user fees. 

Reason for change 

Because the implementing bill involves lengthy and complex implementation procedures by customs officials, section 206 is necessary in order to authorize the Secretary of the Treasury to carry 

out provisions of the implementing bill through regulations. 

TITLE III: RELIEF FROM IMPORTS

Subtitle A: Relief from imports benefiting from the Agreement 

(sections 311–316) 

Current law 

No provision. 

Explanation of provision 

Sections 311–316 authorize the President, after an investigation 

and affirmative determination by the U.S. International Trade 

Commission, to impose specified import relief when, as a result of 

the reduction or elimination of a duty under the Agreement, a 

Singaporean product is being imported into the United States in 

such increased quantities and under such conditions as to be a substantial cause of serious injury or threat of serious injury to the doVerDate Jan 31 2003 14:22 Jul 22, 2003 Jkt 019006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR225P1.XXX HR225P1
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mestic industry. Section 311(a) permits the award of provisional relief under certain circumstances. 

Section 311(c) defines ‘‘substantial cause’’ in the same manner as 

section 201 of the Trade Act of 1974. 

Section 311(d) exempts from investigation under this section 

Singaporean articles that have previously received relief since 

entry into force of the Agreement under: the bilateral safeguard 

provision; the textile and apparel safeguard set out in Subtitle B 

of Title III of this Act; the global safeguard provisions in section 

201 of the Trade Act of 1974; article 6 of the WTO Agreement on 

Textiles and Clothing; or Article 5 of the WTO Agreement on Agriculture. 

Under section 312(c), if the ITC makes an affirmative determination, it must find and recommend to the President the amount of 

import relief that is necessary to remedy or prevent serious injury 

and to facilitate the efforts of the domestic industry to make a positive adjustment to import competition. 

Under section 313(a), the President must provide import relief to 

the extent that the President determines is necessary to remedy or 

prevent the injury found by the ITC and to facilitate the efforts of 

the domestic industry to make a positive adjustment to import 

competition. Under section 313(b), the President is not required to 

provide import relief if the President determines that the relief will 

not provide greater economic or social benefits than costs. Section 

313(c) sets forth the nature of the relief that the President may 

provide as: a suspension of further tariff reductions for the article; 

or an increase of tariffs to a level that does not exceed the lesser 

of the existing most favored nation (MFN)/normal trade relation 

(NTR) rate or the MFN/NTR rate in effect when the Agreement entered into force. The provision further states that if the President 

provides relief for greater than one year, the relief must be subject 

to progressive liberalization at regular intervals over the course of 

its application. 

Section 313(d) provides that the import relief that the President 

is authorized to provide may not exceed two years. However, the 

President may extend the relief under certain circumstances, but 

the aggregate period of relief, including extensions, may not exceed 

four years. According to section 313(e), the rate of duty at the end 

of the relief period is to be the rate that would have been in effect 

on that date but for such action. 

Section 314 provides that no relief may be provided under this 

subtitle after ten years from the Agreement’s entry into force unless Singapore consents. 

Section 315 authorizes the President to provide compensation to 

Singapore consistent with Article 7.4 of the Agreement. 

Reason for change 

The Committee believes that it is important to have in place a 

temporary, extraordinary mechanism if a U.S. industry experiences 

injury by reason of increased import competition from Singapore in 

the future, with the understanding that the President is not required to provide relief if the relief will not provide greater economic or social benefits than costs. The Committee intends that administration of this safeguard be consistent with U.S. obligations 

under Chapter 7 of the Agreement. 

12

Subtitle B: Textile and Apparel Safeguard (Sections 321–328) 

Current law

No provision. 

Explanation of provision 

Section 321 provides that a request for safeguard relief under 

this subtitle may be filed with the President by an interested party. 

The President is to review the request and determine whether to 

commence consideration of the request. If the President determines 

to commence consideration of the request, he is to publish a notice 

commencing consideration and seeking comments. The notice is to 

include the request itself. 

Section 322(a) of the Act provides for the President to determine, 

pursuant to a request by an interested party, whether, as a result 

of the reduction or elimination of a duty provided under the Agreement, a Singaporean textile or apparel article is being imported 

into the United States in such increased quantities, in absolute 

terms or relative to the domestic market for that article, and under 

such conditions that imports of the article constitute a substantial 

cause of serious damage or actual threat thereof, to a domestic industry producing an article that is like, or directly competitive 

with, the imported article. The section defines ‘‘substantial cause’’

as well as ‘‘serious damage,’’ directing the President to examine the 

effect of increased imports on the domestic industry producing the 

article that is like, or directly competitive with, the imported article. 

Section 322(b) identifies the relief that the President may provide 

as either a suspension of further duty reductions or an increase in 

tariffs to the normal trade relations/most-favored-nation duty rate 

for the article at the time relief is granted. Section 323 of the bill 

provides that the initial period of relief will be no longer than two 

years, although an extension is permitted under certain circumstances as long as total relief, including any extension, does not 

exceed four years. Section 324 provides that relief may not be 

granted to an article under the textile safeguard if relief has previously been granted under subtitle A of this title. Under section 

325, the duty rate applicable to the article after the safeguard expires is the rate that would have been in force on that date, but 

for application of the safeguard. 

Section 326 of the bill provides that the authority to provide this 

safeguard relief expires ten years after the textile and apparel provisions of the Agreement take effect. Section 327 of the Act gives 

authority to the President to provide compensation to Singapore if 

he orders relief. Section 328 provides for the treatment of business 

confidential information. 

Reason for change 

The Committee intends that the provisions of Subtitle B be administered in a manner that is in compliance with U.S. obligations 

under article 5.9 of the Agreement. In particular, the Committee 

expects that the President will implement a transparent process 

that will serve as an example to our trading partners. 

13

Subtitle C: Cases Under Title II of the Trade Act of 1974 (Section 

331) 

Current law 

The President has no authority under Title II of the Trade Act 

of 1974 (‘‘section 201’’) to exclude Singapore articles from the application of a safeguard remedy. 

Explanation of provision 

If, in any investigation initiated under Title II of the Trade Act 

of 1974 (‘‘section 201’’ action), the International Trade Commission 

makes an affirmative determination, the ITC will also find and report to the President whether imports of the article from Singapore 

are a substantial cause of serious injury or threat thereof. In determining relief to be taken under section 201, the President will determine whether imports from Singapore are a substantial cause of 

the serious injury or threat thereof found by the Commission and, 

if such determination is negative, may exclude products from 

Singapore from the safeguard relief provided. 

Reason for change 

This provision implements U.S. obligations under Article 7.5 of 

the Agreement.

III. VOTE OF THE COMMITTEE 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the following statements are made concerning the vote of the Committee on Ways and Means in its consideration of the bill, H.R. 2739. 

MOTION TO REPORT THE BILL

The bill, H.R. 2739, was ordered favorably reported by a rollcall 

vote of 32 yeas to 5 nays (with a quorum being present). The vote 

was as follows:

Representatives Yea Nay Present Representative Yea Nay Present 

Mr. Thomas ........................... X ........... ............. Mr. Rangel ........................... X ...........

Mr. Crane .............................. X ........... ............. Mr. Stark .............................. ........... X 

Mr. Shaw ............................... X ........... ............. Mr. Matsui ............................ X ...........

Mrs. Johnson ......................... X ........... ............. Mr. Levin .............................. X ...........

Mr. Houghton ........................ X ........... ............. Mr. Cardin ............................ X ...........

Mr. Herger ............................. X ........... ............. Mr. McDermott ..................... X ...........

Mr. McCrery ........................... X ........... ............. Mr. Kleczka ........................... ........... X 

Mr. Camp .............................. X ........... ............. Mr. Lewis (GA) ..................... ........... X 

Mr. Ramstad ......................... X ........... ............. Mr. Neal ............................... X ...........

Mr. Nussle ............................. X ........... ............. Mr. McNulty .......................... ........... X 

Mr. Johnson ........................... X ........... ............. Mr. Jefferson ........................ ........... ...........

Ms. Dunn .............................. X ........... ............. Mr. Tanner ............................ X ...........

Mr. Collins ............................ X ........... ............. Mr. Becerra .......................... ........... ...........

Mr. Portman .......................... X ........... ............. Mr. Doggett .......................... ........... ...........

Mr. English ........................... X ........... ............. Mr. Pomeroy ......................... X ...........

Mr. Hayworth ......................... X ........... ............. Mr. Sandlin .......................... X ...........

Mr. Weller .............................. X ........... ............. Ms. Tubbs Jones .................. ........... X 

Mr. Hulshof ........................... X ........... ............. .............................................. ........... ...........

Mr. McInnis ........................... X ........... ............. .............................................. ........... ...........

Mr. Lewis (KY) ...................... X ........... ............. .............................................. ........... ...........

Mr. Foley ............................... X ........... ............. .............................................. ........... ...........

Mr. Brady .............................. ........... ........... ............. .............................................. ........... ...........

Mr. Ryan ............................... X ........... ............. .............................................. ........... ...........

14

Representatives Yea Nay Present Representative Yea Nay Present 

Mr. Cantor ............................. X ........... ............. .............................................. ........... ...........

IV. BUDGET EFFECTS OF THE BILL 

A. COMMITTEE ESTIMATE OF BUDGETARY EFFECTS

In compliance with clause 3(d)(2) of rule XIII of the Rules of the 

House of Representatives, the following statement is made concerning the effects on the budget of this bill, H.R. 3009 as reported: 

The Committee agrees with the estimate prepared by CBO which 

is included below. In addition, the legislation is governed by procedures of the Trade Agreements Act of 2002. 

B. STATEMENT REGARDING NEW BUDGET AUTHORITY AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee states that enactment of 

H.R. 3009 would reduce customs duty receipts due to lower tariffs 

imposed on goods from Singapore. 

C. COST ESTIMATE PREPARED BY THE CONGRESSIONAL BUDGET

OFFICE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, requiring a cost estimate prepared by 

the Congressional Budget Office, the following report prepared by 

CBO is provided.

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, July 21, 2003. 

Hon. WILLIAM ‘‘BILL’’ M. THOMAS, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2739, a bill to implement 

the United States-Singapore Free Trade Agreement. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Annabelle Bartsch. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN, 

Director. 

Enclosure. 

H.R. 2739—A bill to implement the United States-Singapore Free 

Trade Agreement 

Summary: H.R. 2739 would approve the free trade agreement 

(FTA) between the government of the United States and the government of Singapore that was entered into on May 6, 2003. It 

would provide for tariff reductions and other changes in law related 

to implementation of the agreement, such as provisions dealing 

with dispute settlement, rules of origin, and safeguard measures 

for textile and apparel industries. The bill also would allow the 

temporary entry of certain business persons into the United States. 

15

The Congressional Budget Office estimates that enacting the bill 

would reduce revenues by $55 million in 2004, by $410 million over 

the 2004–2008 period, and by about $1 billion over the 2004–2013, 

net of income and payroll tax offsets. The bill would not have a significant effect on direct spending or spending subject to appropriation. CBO has determined that H.R. 2739 contains no intergovernmental or private-sector mandates as defined in the Unfunded 

Mandates Reform Act (UMRA) and would not affect the budgets of 

state, local, or tribal governments. 

Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 2739 is shown in the following table.

By fiscal year, in millions of dollars—

2004 2005 2006 2007 2008

CHANGES IN REVENUES 1

Estimated Revenues ...................................................................................... ¥55 ¥80 ¥86 ¥92 ¥98

1 H.R. 2739 also would affect direct spending and discretionary spending, but the amounts of those changes would be less than $500,000 

a year. 

Basis of estimate 

Revenues 

Under the United States-Singapore agreement, all tariffs on U.S. 

imports from Singapore would be phased out over time. The tariffs 

would be phased out for individual products at varying rates according to one of several different timetables ranging from immediate elimination to partial elimination over 10 years. According to 

the U.S. International Trade Commission, the U.S. collected $88 

million in customs duties in 2002 on about $14.1 billion of imports 

from Singapore. Of the imports, only $1.3 billion faced non-zero 

tariff rates. These dutiable imports from Singapore consist mostly 

of certain electrical machinery, knitted or crocheted apparel, mineral fuels and oils, surgical and precision instruments, and certain 

nuclear reactor components. Based on these data, CBO estimates 

that phasing out tariff rates as outlined in the U.S.-Singapore 

agreement would reduce revenues by $55 million in 2004, by $410 

million over the 2004–2008 period, and by about $1 billion over the 

2004–2013 period, net of income and payroll tax offsets. 

This estimate includes the effects of increased imports from 

Singapore that would result from the reduced prices of imported 

products in the United States, reflecting the lower tariff rates. It 

is likely that some of the increase in U.S. imports from Singapore 

would displace imports from other countries. In the absence of specific data on the extent of this substitution effect, CBO assumes 

that an amount equal to one-half of the increase in U.S. imports 

from Singapore would displace imports from other countries. 

Based on current law, H.R. 2739 would not provide for the assessment of civil monetary penalties on employers for violations of 

the labor attestation process with respect to certain workers from 

Singapore. However, if H.R. 2738, a bill to implement the United 

States-Chile FTA, were to be enacted prior to this bill, H.R. 2739 

would allow the Secretary of Labor to assess such penalties. CBO 

expects that any additional revenues collected as a result would 

amount to less than $500,000 in any year. 

16

Direct spending 

Title IV of H.R. 2739 would permit certain traders and investors 

from Singapore, and their spouses and children, to enter the 

United States as nonimmigrants. The Bureau of Citizenship and 

Immigration Services (BCIS) would charge fees of about $100 to 

provide nonimmigrant visas, so CBO estimates that the agency 

could collect several million dollars annually in offsetting receipts 

(a credit against direct spending). The agency is authorized to 

spend such fees without further appropriation, so the net impact on 

BCIS spending would not be significant. 

However, if H.R. 2738 (a bill to implement the United StatesChile FTA) were to be enacted prior to this bill, title IV would establish a new nonimmigrant category for certain professional workers from Singapore. The legislation would limit the number of annual entries under this category to 5,400, plus spouses and children. The BCIS would charge fees of about $100 to provide nonimmigrant visas, so CBO estimates that the agency would collect 

less than $3 million annually in offsetting receipts. Again, the 

agency is authorized to spend such fees without further appropriation, so the net impact on BCIS spending would not be significant. 

Under current law, the Department of State also collects $100 

application fee for nonimmigrant visas. These collections are spent 

on border security and consular functions. CBO estimates that the 

net budgetary impact would be less than $500,000 a year. 

Spending subject to appropriation 

Title I of H.R. 2739 would authorize the appropriation the necessary funds for the Department of Commerce to pay the United 

States’ share of the costs of the dispute settlement procedures established by the agreement. Based on information from the agency, 

CBO estimates that implementing this provision would cost 

$100,000 in 2004, and $250,000 in each of the following years, subject to the availability of appropriated funds. 

Title III would require the International Trade Commission (ITC) 

to investigate claims of injury to domestic industries as a result of 

the FTA. The ITC would have 120 days to determine whether a domestic industry has been injured, and if so, would recommend the 

necessary amount of import relief. The ITC would also submit a report on its determination to the President. According to the ITC, 

similar FTAs have resulted in only a handful of cases each year, 

at an average cost of about $200,000 per investigation. Based on 

this information, CBO estimates the bill would have no significant 

effect on spending subject to appropriation. 

Summary of effect on revenues and direct spending: The overall 

effects of H.R. 2739 on revenues and direct spending are shown in 

the following table.

By fiscal year, in millions of dollars—

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Changes in receipts ..... 0 ¥55 ¥80 ¥86 ¥92 ¥98 ¥104 ¥110 ¥117 ¥124 ¥132

Changes in outlays ....... * * * * * * * * * * *

*=Less than $500,000.

*Source: The Congressional Budget Office. 

17

Intergovernmental and private-sector impact: The bill contains 

no intergovernmental or private-sector mandates as defined in 

UMRA and would not affect the budgets of state, local, or tribal 

governments. 

Estimate prepared by: Federal Revenues: Annabelle Bartsch. 

Federal Spending: Dispute Settlements—Melissa Zimmerman; Immigration—Mark Grabowixz, Christi Hawley-Sadoti, and Sunita 

D’Monte. Impact on State, Local, and Tribal Governments: Melissa 

Merrell. Impact on the Private Sector: Paige Piper/Bach. 

Estimate approved by: G. Thomas Woodward, Assistant Director 

for Tax Analysis and, Peter H. Fontaine, Deputy Assistant Director 

for Budget Analysis. 

V. OTHER MATTERS TO BE DISCUSSED UNDER THE 

RULES OF THE HOUSE 

A. COMMITTEE OVERSIGHT FINDINGS AND RECOMMENDATIONS

With respect to clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives (relating to oversight findings), the Committee, based on public hearing testimony and information from 

the Administration, concluded that it is appropriate and timely to 

consider the bill as reported. 

B. STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

With respect to clause 3(c)(4) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the bill contains no measure that authorizes funding, so no statement of general performance goals and objectives for which any measure authorizes funding is required. 

C. CONSTITUTIONAL AUTHORITY STATEMENT

With respect to clause 3(d)(1) of rule XIII of the Rules of the 

House of Representatives, relating to Constitutional Authority, the 

Committee states that the Committee’s action in reporting the bill 

is derived from Article 1 of the Constitution, Section 8 (‘‘The Congress shall have power to lay and collect taxes, duties, imposts and 

excises, to pay the debts and to provide for * * * the general Welfare of the United States.’’)

VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

existing law in which no change is proposed is shown in roman): 

SECTION 13031 OF THE CONSOLIDATED OMNIBUS 

BUDGET RECONCILIATION ACT OF 1985

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES. 

(a) * * *

(b) LIMITATIONS ON FEES.—(1) * * *

* * * * * * *

18

(13) No fee may be charged under subsection (a) (9) or (10) 

with respect to goods that qualify as originating goods under 

section 202 of the United States-Singapore Free Trade Agreement Implementation Act. Any service for which an exemption 

from such fee is provided by reason of this paragraph may not 

be funded with money contained in the Customs User Fee Account.

* * * * * * *

SECTION 592 OF THE TARIFF ACT OF 1930

SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE. 

(a) * * *

* * * * * * *

(c) MAXIMUM PENALTIES.— (1) * * *

* * * * * * *

(7) PRIOR DISCLOSURE REGARDING CLAIMS UNDER THE UNITED

STATES-SINGAPORE FREE TRADE AGREEMENT.—

(A) An importer shall not be subject to penalties under 

subsection (a) for making an incorrect claim that a good 

qualifies as an originating good under section 202 of the 

United States-Singapore Free Trade Agreement Implementation Act if the importer, in accordance with regulations 

issued by the Secretary of the Treasury, voluntarily and 

promptly makes a corrected declaration and pays any duties owing. 

(B) In the regulations referred to in subparagraph (A), 

the Secretary of the Treasury is authorized to prescribe time 

periods for making a corrected declaration and paying duties owing under subparagraph (A), if such periods are not 

shorter than 1 year following the date on which the importer makes the incorrect claim that a good qualifies as an 

originating good.

* * * * * * *

SECTION 202 OF THE TRADE ACT OF 1974

SEC. 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY COMMISSION. 

(a) PETITIONS AND ADJUSTMENT PLANS.—

(1) * * *

* * * * * * *

(8) The procedures concerning the release of confidential 

business information set forth in section 332(g) of the Tariff 

Act of 1930 shall apply with respect to information received by 

the Commission in the course of investigations conducted 

under this chapter, part 1 of title III of the North American 

Free Trade Agreement Implementation Act, øand¿ title II of 

the United States-Jordan Free Trade Area Implementation 

Act, and title III of the United States-Singapore Free Trade 

19

Agreement Implementation Act. The Commission may request 

that parties providing confidential business information furnish nonconfidential summaries thereof or, if such parties indicate that the information in the submission cannot be summarized, the reasons why a summary cannot be provided. If the 

Commission finds that a request for confidentiality is not warranted and if the party concerned is either unwilling to make 

the information public or to authorize its disclosure in generalized or summarized form, the Commission may disregard the 

submission. 

* * * * * * *

SECTION 214 OF THE IMMIGRATION AND NATIONALITY 

ACT 

ADMISSION OF NONIMMIGRANTS

SEC. 214. (a)***

(g)(1)***

* * * * * * *

[The purported changes made to paragraph (8) of section 214(g) by this bill 

are shown below. Section 402(a)(2)(B) of H.R. 2738 inserts at the end of 

subsection (g) a new paragraph (8), which is presumed to take effect 

prior to the execution of these amendments.] 

ø(8)(A) The agreement referred to in section 101(a)(15)(H)(i)(b1) 

is the United States-Chile Free Trade Agreement.¿

(8)(A) The agreements referred to in section 101(a)(15)(H)(i)(b1) 

are—

(i) the United States-Chile Free Trade Agreement; and 

(ii) the United States-Singapore Free Trade Agreement.

(B)(i)***

ø(ii) The annual numerical limitations described in clause (i) 

shall not exceed 1,400 for nationals of Chile for any fiscal year. For 

purposes of this clause, the term ‘‘national’’ has the meaning given 

such term in article 14.9 of the United States-Chile Free Trade 

Agreement.¿

(ii) The annual numerical limitations described in clause (i) shall 

not exceed—

(I) 1,400 for nationals of Chile (as defined in article 14.9 of 

the United States-Chile Free Trade Agreement) for any fiscal 

year; and 

(II) 5,400 for nationals of Singapore (as defined in Annex 1A 

of the United States-Singapore Free Trade Agreement) for any 

fiscal year.

* * * * * * *

20

VII. EXECUTIVE CORRESPONDENCE 

EXECUTIVE OFFICE OF THE PRESIDENT, 

THE UNITED STATES TRADE REPRESENTATIVE, 

Washington, DC, July 18, 2003. 

Hon. WILLIAM M. THOMAS, 

Chairman, Committee on Ways and Means, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: I appreciate your leadership in moving 

through the Ways and Means Committee legislation to implement 

the United States-Singapore and United States-Chile free trade 

agreements. 

Because we have received inquiries about how the tariff suspension provisions of the agreements would operate, I thought it would 

be useful to provide the relevant text for the enforcement of dispute 

settlement panel reports. The following provisions are set out in articles 20.5–7 of the U.S.-Singapore Free Trade Agreement (FTA) 

and articles 22.14–16 of the U.S.-Chile FTA. 

Commercial disputes 

If, in its final report, the panel determines that a Party has not 

conformed with its obligations under this Agreement or that a Party’s measure is causing nullification or impairment * * *, the resolution, whenever possible, shall be to eliminate the non-conformity 

or the nullification or impairment. * * * If * * * the Parties are 

unable to reach agreement on a resolution, * * * the Party complained against shall enter into negotiations with the other Party 

with a view to developing mutually acceptable compensation. 

If the Parties * * * are unable to agree on compensation within 

30 days after the period for developing such compensation has 

begun; or * * * have agreed on compensation or on a resolution 

* * * and the complaining Party considers that the other Party 

has failed to observe the terms of such agreement, the complaining 

Party may at any time thereafter provide written notice * * * that 

it intends to suspend the application to the other Party of benefits 

of equivalent effect. * * *

If the Party complained against considers that * * * the level of 

benefits [that the other Party has] proposed to be suspended is 

manifestly excessive; or * * * [that the defending party] has eliminated the non-conformity or the nullification or impairment that 

the panel has found, it may * * * request that the panel be reconvened to consider the matter. * * * If the panel determines that 

the level of benefits proposed to be suspended is manifestly excessive, it shall determine the level of benefits it considers to be of 

equivalent effect. 

The complaining Party may suspend benefits up to the level the 

panel has determined * * * or, if the panel has not determined the 

level, the level the Party has proposed to suspend * * * unless the 

panel has determined that the Party complained against has eliminated the non-conformity or the nullification or impairment. 

The complaining Party may not suspend benefits if, within 30 

days after it provides written notice of intent to suspend benefits 

or * * * the Party complained against provides written notice 

* * * that it will pay an annual monetary assessment. The Parties 

shall consult * * * with a view to reaching agreement on the 

21

amount of the assessment. If the Parties are unable to reach an 

agreement within 30 days after consultations begin, the amount of 

the assessment shall be set at a level, in U.S. dollars, equal to 50 

percent of the level of the benefits the panel has determined * * * 

to be of equivalent effect or, if the panel has not determined the 

level, 50 percent of the level that the complaining Party has proposed to suspend.* * *

If the Party complained against fails to pay a monetary assessment, the complaining Party may suspend the application to the 

Party complained against of benefits [under the Agreement]. 

Labor and environment disputes 

If, in its final report, a panel determines that a party has not 

conformed with its [labor or environment] obligations * * * and 

the Parties * * * are unable to reach agreement on a resolution 

* * *; or have agreed on a resolution * * * and the complaining 

Party considers that the other Party has failed to observe the 

terms of the agreement, the complaining Party may at any time 

thereafter request that the panel be reconvened to impose an annual monetary assessment on the other Party. * * *

The panel shall determine the amount of the monetary assessment in U.S. dollars. * * * In determining the amount of the assessment, the panel shall take into account [various factors set 

forth in the agreement.] 

The amount of the assessment shall not exceed 15 million U.S. 

dollars annually. * * * Assessments shall be * * * expended * * * 

for appropriate labor or environmental initiatives, including efforts 

to improve or enhance labor or environmental law enforcement, as 

the case may be, in the territory of the Party complained against, 

consistent with its law. 

If the Party complained against fails to pay a monetary assessment, [or, under the U.S.-Singapore FTA, does not make funds 

available through an escrow account] the complaining Party may 

take other appropriate steps to collect the assessment or otherwise 

secure compliance. These steps may include suspending tariff benefits under the Agreement as necessary to collect the assessment, 

while bearing in mind the Agreement’s objective of eliminating barriers to bilateral trade and while seeking to avoid unduly affecting 

parties or interests not party to the dispute. 

Again, thank you for your efforts in securing passage of this important legislation. 

Sincerely, 

ROBERT B. ZOELLICK.

(22)

VIII. VIEWS 

DISSENTING VIEWS 

If these two trade agreements were truly going to benefit U.S. 

workers, as the Administration claims, then we would have no reservations and would gladly support both agreements today. However, the lack of strong labor enforcement language, the addition 

of new permanent work visa program, and the use of these agreements as a template for future trade agreements is sufficient reason to oppose both agreements and the implementing legislation. 

Our nation’s unemployment rate reached 6.4 percent in June—

the highest rate in more than nine years, causing a loss of more 

than one million jobs in the last three months alone. The Bush Administration’s solution to pursue trade agreements that depart 

from the standard set by the US-Jordan Free Trade Agreement and 

return to the failed North American Free Trade Agreement 

(NAFTA) model. As of September 2000, the U.S. lost over half a 

million jobs due to NAFTA. Over three-quarters of the jobs lost due 

to NAFTA have been in the manufacturing sector. These are good 

paying U.S. jobs that have been shipped overseas. But rather than 

take the successes of the US-Jordan FTA which was heralded by 

the Clinton Administration, labor and environment organizations, 

as the new model for trade agreements, the Bush Administration 

is taking us down the path of further job losses. 

Neither trade agreements includes the International Labor Organization’s (ILO) five core labor standards. While both countries 

claim to uphold the ILO’s core labor standards, there is nothing in 

the agreements that require either country to do so. If these countries are truly committed to the five core labor standards then 

there is no reason to exclude binding agreement language that 

would have committed these countries to adhering to them. It is 

time to make labor standards as serious and issue in trade agreements as the commercial provisions—especially when the involved 

parties claim to uphold ILO’s policies anyway. 

Furthermore, these agreements fail to provide the same enforcement mechanisms for labor and environmental violations as the 

agreements provide for commercial violations. Once again, the Administration chooses to relegate labor and environment to a substandard class. Under the Chile and Singapore agreements, once a 

determination that a labor violation has been made the first course 

of action is a fine, which is capped at $15 million annually. This 

is a mere slap on the wrist for a country that could be found in 

serious violation of the labor provisions. The negotiated course of 

enforcement pales in comparison to the sanctions that are available 

for commercial violations. 

In addition to the failures of the labor provisions in both trade 

agreements, both agreements set up a new immigration visa proVerDate Jan 31 2003 14:22 Jul 22, 2003 Jkt 019006 PO 00000 Frm 00022 Fmt 6604 Sfmt 6604 E:\HR\OC\HR225P1.XXX HR225P1
23

gram. This sets a dangerous precedent by including U.S. immigration law in trade agreements. Nor was this provision authorized in 

the Fast Track negotiating language that narrowly passed the 

House of Representatives. House Judiciary members of both the 

majority and minority have expressed serious reservations about 

including U.S. immigration law in trade agreements, and usurping 

Congress’s constitutional authority. The current H1–B visa program is a 3-year temporary work visa, which may be renewed one 

time. The new visa program negotiated in these trade agreements 

will allow an indefinite renewal of 5,800 nationals from Singapore 

and Chile. This means that we are earmarking ten percent of the 

current H1–B visa program to nationals from these small countries 

in these small agreements. 

Another serious concern we have is the fact that the implementing language contradicts the trade agreement language with 

respect to the new visa program. It is doublespeak. The implementing language attempts to address the concern of allowing new 

immigrant workers only upon certifying that U.S. workers won’t be 

displaced; the negotiated trade agreements prohibit such certification as a condition of entry. As the U.S. experienced with 

NAFTA, it is the trade agreement, and not the domestic statute 

that takes precedent under global trade rules. 

Finally, these two agreements should not be used as a model for 

future trade agreements. A vote in support of the agreements signals to the Administration that the model used for Chile and 

Singapore is acceptable, when it is far from acceptable. We oppose 

both agreements, the implementing legislation and urge the Administration to avoid using the flawed Chile and Singapore model 

for future trade agreements.

PETE STARK. 

STEPHANIE TUBBS JONES. 

JERRY KLECZKA. 

MIKE R. MCNULTY. 

JOHN LEWIS.

(24)

ADDITIONAL VIEWS OF DEMOCRATIC MEMBERS 

The U.S.-Singapore Free Trade Agreement 

The U.S.-Singapore Free Trade Agreement (FTA) includes strong 

and comprehensive commitments by Singagore to open its goods, 

agricultural and services markets to U.S. producers. The agreement includes commitments that will increase regulatory transparency and act to the benefit of U.S. workers, investors, intellectual property holders, businesses and consumers. 

At the same time, the economic impact of the Singapore agreement is likely to be minuscule. The U.S. International Trade Commission estimates that the Singapore FTA will account for just one 

one hundredth of one percent of U.S. GNP. 

While some of the provisions in the FTA could serve as a template for other agreements, a number of provisions clearly cannot. 

In some instances, this is because the provision, while workable in 

the Singapore context, is not appropriate for FTAs with other 

coiuntries, where very different circumstances prevail. In other 

cases, it is because the policy being pursued by the Administration 

is just plain wrong. 

In fact, one of the concerns raised in the consideration of both 

the Chile and Singapore FTAs has been that the Administration is 

beginning to use some of their provisions as models for other FTAs, 

for example the CAFTA, where the conditions make it inappropriate to do so. 

We cannot change in the implementing bill major provisions in 

the basic agreements specifically negotiated between the parties. 

Unfortunately, the provisions relating to core labor and environmental standards, and investment issues raise serious concerns. 

For example, there are separate dispute settlement rules that 

place arbitrary caps on the enforceability of those provisions. This 

is a mistaken approach, the difficulties of which would only be 

magnified if used as a precedent for future FTAs involving very different circumstances. 

That is doubly true of any attempt to use as a model for other 

FTAs the ‘‘enforce your own law’’ standard used in Chile and 

Singapore. The laws of Chile and Singapore essentially reflect core 

internationally recognized labor rights and these countries have a 

history of enforcing their laws. How they are applied does vary in 

the two countries, reflecting the different characteristics of the two 

nations. At the same time, there is little practical concern that 

these countries will back track. 

Singapore is very diferent from many other FTA negotiating 

partners, including certainly most Central American countries and 

many others that would be a part of an FTAA. Use of the ‘‘enforce 

your own law’’ standard is invalid as a precedent—indeed, it contradicts the purpose of promoting enforceable core labor standards—when a country’s laws clearly do not reflect international 

25

standards and when there is a history, not only of non-enforcement, but of a hostile environment towards the rights of workers 

to organize and bargain collectively. Using this standard in different circumstances will lead to totally different results. 

The Office of the U.S. Trade Representative (USTR) has undertaken this misapplication of the ‘‘enforce your own law’’ standard 

by using it in the core labor proposal tabled in CAFTA and Free 

Trade Area of the Americas (FTAA). USTR justifies this action by 

arguing that the Trade Act of 2002 does not allow it to go further. 

That interpretation is erroneous. Under Trade Promotion Authority 

USTR can negotiate a provision to adopt and enforce the five core 

ILO labor standards (ban on child labor, forced labor, discrimination, and the right to associate and bargain collectively). 

Expanded trade is important to this country and the world. Benefits will accrue to a broad range of persons in our nation and in 

other nations if these trade agreements include enforceable commitments on basic labor standards. With such a provision, workers 

in developing countries, including in Central America, will have the 

opportunity to become real partners in economic progress and help 

develop the expanded middle class so vital to those nations, and to 

the United States. 

With regard to other provisions that the Administration has stated it intends to use as a model, we are seriously concerned about 

any such use and we will be watching carefully their implementation. These provisions include: (1) certain intellectual property provisions that lock in the current state of U.S. law, thereby making 

it much more difficult for Congress to change those rules in the future; (2) the investor-state provisions and the issue of whether the 

USTR has adequately ensured that foreign investors will not have 

greater rights than provided under U.S. law; and (3) the provisions 

on capital controls and the question of whether USTR’s and Treasury’s effort to eliminate a country’s flexibility to impose on an 

emergency basis temporary capital controls, is sound policy and 

should be pursued in future FTAs. In addition, we are interested 

to know whether more can be done by Singapore to stop the transshipment of illegally harvested timber. 

Finally, one area where we would like to see improvements in future FTAs is in the rules of origin. To a large extent, the provisions 

on rules of origin in the implementing legislation are dictated by 

the underlying agreements. 

The Committee report states that the Agreement contains 

‘‘strong, simple, and transparent rules of origin.’’ The rules of origin 

used for the Agreement are different than those for the NAFTA 

and for other previous FTAs. It is extremely difficult for Congress 

to gauge whether the rules of origin strike the correct balance between the dual goals of preventing trans-shipment/ensuring economic activity in the FTA partners and ease of compliance and administration. While we trust that the USTR negotiators are seeking the correct balance, the Committee should request the ITC to 

conduct a study into the operation of various types of rules or origin and their impact on trade. 

26

The U.S.-Singapore implementing legislation 

The Committee Democrats pressed for the Committee to hold the 

July 10, 2003, traditional ‘‘mock’’ mark-up. the informal legislative 

drafting process ensures active congressional involvement in shaping the legislation necessary to implement changes to U.S. law that 

are required by trade agreements. 

In the past, the informal legislative drafting process in the 

House—prior to the Administration’s introduction of the formal, 

and nonamendable, legislation—has culminated in the Ways and 

Means Committee holding an informal markup (sometimes called 

a ‘‘mock markup’’) of the draft legislation. This process was used 

in the case of implementing legislation for the North American 

Free Trade Agreement (NAFTA), the Uruguay Round agreements 

and prior agreements dating back more than 20 years. 

The mock markup reflects a broadly agreed-upon and well-established practice. Further, it enables the Members of the Committee 

and the public to understand more fully and clearly the content of 

the legislation, raise questions about it, and offer ‘‘mock amendments’’ when necessary. Ensuring that the legislative process for 

the implementing legislation is as open as possible is consistent 

with the great importance the United States has attached to improving the transparency of international trade agreements and 

foreign government laws and regulatory practices. 

The implementing legislation includes only addresses those portions of the FTA where implementation requires changes to U.S. 

law. With respect to these provisions, it is important to note the 

improvements that we have been successful in making to several 

controversial areas. 

First, the Integrated Sourcing Initiative (ISI) was initially described by USTR as a special program to benefit two Indonesian islands near Singapore. In fact, the ISI was much wider than USTR 

had initially described it. Any country could benefit from the ISI, 

and it would have allowed Singapore to import certain components 

directly from any country in the world, incorporate them into other 

products, and count the components as ‘‘Singapore content.’’ Further, the ISI called for considering an expansion of the list of products that could benefit from this unusual treatment, and the initial 

draft of the implementing legislation would have allowed expansion 

through an Executive proclamation. 

Democrats on the Ways & Means Committee began raising questions and concerns about the ISI with USTR. The result has been 

a number of changes: • Expansion of the ISI Requires Congressional Approval. Under 

the ISI’s primary feature, certain goods listed in an annex to the 

FTA can be trans-shipped through Singapore and receive the benefits of the FTA. The ‘‘trans-shipment’’ feature of the ISI is not significant in practice, however, as all of the goods currently on the 

ISI Annex already enter the U.S. duty-free regardless of where 

they originate. However, Ways and Means Democrats were concerned that the ISI Annex could be expanded by Executive proclamation in the future to include other goods which could be more 

sensitive. Accordingly, Ways and Means Democrats and other offices succeeded in modifying the implementing legislation to require congressional approval for expanding the ISI. 

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• Local Content Feature Restricted. Ways and Means Democrats 

raised a number of questions about the fact that the ‘‘local content’’ feature of the ISI would allow components from any other country 

to be counted as Singapore content in ‘‘downstream goods,’’ helping 

those goods benefit from duty-free treatment under the FTA. As a 

result, a key sentence in the agreement was deleted. The initial 

draft of the legislation implementing the agreement contained an 

ambiguity and the implementation language was modified. While it 

was our expectation that as a result, the local content feature was 

being eliminated entirely, the Statement of Administrative Action 

contained language that indicated that the local content feature 

had been restricted so that ISI components would first have to be 

trans-shipped between the U.S. and Singapore before they could 

count as local content for another good which would itself have to 

be shipped between the two countries. 

In sum, as a practical matter, it would appear that use of the 

local content feature would be severely restricted. Nonetheless, we 

are taking steps to ensure adequate monitoring, including through 

agreement with the Chairman to request detailed monitoring by 

the U.S. International Trade Commission for the first two years of 

the agreement to follow trade in products that could be affected by 

the ISI and to detect surges, if any, in use of the ISI local content 

provision. If such a surge is detected, the ITC would conduct a special investigation. In any event, the Commission would prepare a 

report to the Committee on the results of its monitoring. 

A second set of troublesome issues in both the U.S.-Chile and 

U.S.-Singapore FTAs related to H1–B immigration visas. Although 

not under the jurisdiction of this Committee, we worked actively 

with our colleagues in both parties on the Judiciary Committee to 

make meaningful changes to these provisions. The most significant 

changes include: (1) inclusion of the Singapore and Chile visas 

within the overall H1–B cap; (2) a requirement that employers pay 

the H1–B fee (currently $1000) for the initial visa, and for every 

third renewal of the visa (these fees are used to fund training programs for workers in the United States); (3) a requirement that 

employers submit labor attestations not only for the initial visa, 

but also for every third renewal; (4) clarification in the Statement 

of Administrative Action that visas issued under the Chile and 

Singapore programs are temporary, and that laws governing temporary visas, including requirements that the visa holder show that 

the stay is temporary, continue to apply; and (5) a clarification in 

the Statement of Administrative Action on the scope of occupations 

covered.

Additionally, as first drafted, bills did not require Administration 

to consult with trade advisory committees, ITC, or Congress when 

exercising discretionary authority granted by the legislation. The 

bill has been amended to require consultation with each of these 

entities, helping provide greater role for Congress and a more balanced and well-founded trade policy. 

This process has worked for improving the problematic provisions in the implementing legislation. 

Finally, we are concerned that the legislative implementation of 

the rules of origin may create unnecessary confusion. The rules of 

origin in the Chile and Singapore FTAs differ in a number of ways, 

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some substantive, but most non-substantive. In a number of instances, the implementing legislation mirrored the language in the 

agreements, despite the fact that there were no substantive differences intended. We are concerned that the differences in legislative language between two contemporaneously considered bills 

could create confusion for Customs and traders. Generally, Congress does not use different language when it means the same 

thing. Accordingly, we encourage Customs to issue harmonized implementing regulations for the Singapore and Chile FTAs to the 

maximum extent possible. 

U.S. Trade policy for economic growth and jobs 

Even as we support the Singapore and Chile free trade agreements, it is vital that American trade policy restore a focus on 

opening markets that achieve big gains for Americans. In particular, numerous barriers to exports of American goods and services, and other unfair trade practices have been allowed to stand 

for too long. These barriers include international piracy of American copyrights and other intellectual property, discrimination by 

China against key American high-tech exports, and Japan’s discrimination against myriad of manufactured and agricultural 

goods. A more concerted effort needs to be undertaken to reduce 

these barriers that cost American jobs and exports. 

Additionally, there is a great deal at stake in negotiations currently ongoing under the auspices of the World Trade Organization—the so-called Doha round. These negotiations should be conducted carefully to achieve potential significant benefits to American manufacturing, agriculture and services, and to prove benefits 

to both the United States and other developed countries, as well as 

developing countries. Ways and Means Democrats are monitoring 

these negotiations carefully and urge a greater focus by the Administration on ensuring real and meaningful progress at the upcoming Ministerial meeting in September in Mexico.

CHARLES B. RANGEL. 

JIM MCDERMOTT. 

MAX SANDLIN. 

ROBERT T. MATSUI. 

EARL POMEROY. 

RICHARD E. NEAL. 

BEN CARDIN. 

SANDER LEVIN. 

XAVIER BECERRA.

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