The U.S.-Singapore Free Trade Agreement ( P.L. 108-78 ) went into effect on January 1, 2004. This report provides an overview of the major trade and economic developments following the FTA over the five years ending in January 2010. It also includes selected information on key provisions of the agreement. As the United States and Singapore adjust to the provisions of the FTA, it becomes increasingly difficult to separate out the effects of the FTA from that which has occurred because of other economic forces. The effects of the global financial crisis and recession of 2008-2009 have had a major downward effect on trade flows, but some general conclusions still can be drawn. The U.S.-Singapore FTA has taken on new importance in trade policy because the United States is engaged in negotiations to join the Trans-Pacific Partnership (TPP). The TPP negotiations are the first major market-opening initiative of the Obama Administration. On December 14, 2009, United States Trade Representative Ron Kirk notified Congress of the intent to enter into the TPP negotiations. The objective is to shape a high-standard, broad-based regional free trade agreement with Australia, Brunei Darussalam, Chile, New Zealand, Peru, Singapore, and Vietnam. The first round of negotiations began March 15, 2010, in Sydney, Australia. Singapore, Chile, Brunei, and New Zealand are the original members of the pact. The United States, Australia, Peru, and Vietnam are seeking to join. The United States already has FTAs with Singapore, Chile, Australia, and Peru. The TPP could become the basis for a Free Trade Area of the Asia-Pacific over the long term. The U.S.-Singapore FTA essentially eliminated tariffs on all goods traded between the two countries. It also included market access measures and other provisions related to trade in services, investment, rules of origin, intellectual property rights, government procurement, licensing of professionals, telecommunications, worker rights, the environment, capital controls, and dispute settlement. The FTA has provided greater access for U.S. companies, has been instrumental in increasing bilateral trade, and has provided reassurance to Singaporeans of U.S. interest in the country at a time when many in the region perceived that the United States had been focused on the Middle East and "neglecting" Asia. The FTA seems to have benefitted overall bilateral relations. The FTA has provided certain advantages to American businesses, but since Singapore has FTAs with many other nations, those advantages often are extended to other nations as well. As a city-state, Singapore operates as an entrepot and shipping center and basically has free trade with almost all countries. It imposes import restrictions on only a handful of goods. Under the FTA, Singapore made concessions that dealt mainly with providing greater access for American service providers (particularly financial services) and with strengthening the business environment in areas such as the protection of intellectual property rights and access to government procurement. In 2009, the United States ran a $6.6 billion surplus in its balance of merchandise trade with Singapore, up from $1.4 billion in 2003, but down from the $12.0 billion in 2008. U.S. exports of goods to Singapore surged from $16.6 billion in 2003 to a peak of $27.9 billion in 2008 before declining to $22.3 billion in 2009. Major U.S. exports to Singapore include machinery, electrical machinery, aircraft, optical and medical instruments, plastic, and mineral fuel oil. U.S. trade with Singapore has increased faster than anticipated before the FTA. Even with this rapid increase in U.S. exports to Singapore, however, the U.S. share of Singapore's imports has declined from 16% in 2003 to 12% in 2009. The main reason for this is that Singapore's overall trade is booming. Still, Singapore imports more from the United States ($28.5 billion) than from China ($26.0 billion). Malaysia is Singapore's top source of imports, while the United States is second, and China is third. Imports from China, however, have been rising rapidly, and China has passed Japan as a source of imports. The U.S. balance of trade in services with Singapore declined from a surplus of $4.0 billion in 2001 to $1.2 billion in 2005 but rose to $4.2 billion in 2008. While U.S. receipts of royalties and license fees ($3.2 billion) and exports of other private services ($4.2 billion) have increased, so have U.S. payments for other private services ($2.1 billion) and for travel and transportation ($1.3 billion). A significant increase has been in income from U.S. direct investments in Singapore. U.S. access to the Singaporean market for multinational corporations seems to have been enhanced considerably under the FTA. U.S. income from assets in Singapore rose from $6.7 billion in 2003 to $21.1 billion by 2008. As an example of U.S. service providers in Singapore under the FTA, Citibank has been able to expand its operations there (it has 50% of the credit card market), offer innovative products (such as biometric identification for bill paying), and partner with the subway system to issue credit cards that double as subway fare cards and to locate branches and ATM terminals in and around subway stations. On the U.S. import side (Singapore's exports), a noteworthy development is that U.S. imports of pharmaceuticals from Singapore have risen dramatically from $0.09 billion in 2003 to $3.0 billion in 2007 before declining to $2.0 billion in 2008. In 2008, Singapore was the seventh largest supplier of pharmaceuticals to the United States. The FTA did not lower the U.S. tariff rate for pharmaceuticals, since such products already enter the United States duty free. What appears to have occurred has been the development of Singapore as a regional center for multinational pharmaceutical companies. This apparently was partly triggered by provisions in the FTA that required Singapore to strengthen its intellectual property protection. The Singaporean government also has provided incentives for multinational biomedical companies to locate research and production in the country. Most of the major pharmaceutical companies of the world have established subsidiaries in Singapore and are exporting part of their production. Singapore has relatively high labor standards. It ratified the International Labor Organization's Minimum Age Convention in 2005. This brought the number of ILO Conventions the country has ratified to more than 20, including Core Conventions that cover child labor, forced labor, collective bargaining, and equal remuneration. As a city state with 3.4 million people and an area roughly the size of the Washington, DC, area inside the Beltway, Singapore's environmental challenges relate primarily to industrial pollution (strictly regulated), urbanization, and preservation of natural areas. The country touts itself as a garden city. It recycles all waste water, appears clean, and uses variable tolls to alleviate traffic congestion. The United States has not formally raised environmental or labor issues with Singapore under the FTA. For details on the content of the FTA, see CRS Report RL31789, The U.S.-Singapore Free Trade Agreement , by [author name scrubbed]. Since the U.S.-Singapore FTA came into effect in January 2004, U.S. trade with Singapore has boomed. As shown in Figure 1 , U.S. exports of merchandise to Singapore rose by 68% from $16.6 billion in 2003 to a peak of $27.9 billion in 2008 before the global financial crisis depressed world trade in 2009. In 2009, U.S. exports to Singapore were at $22.3 billion. U.S. imports from Singapore increased by a lesser 22% to go from $15.1 billion in 2003 to a peak of $18.4 billion in 2007 before declining to $15.7 billion in 2009 or approximately the same level as prior to the FTA. The U.S. trade surplus with Singapore rose from $1.4 billion in 2003 to a peak of $12.0 billion in 2008 before declining to $6.6 billion in 2009. Major U.S. exports to Singapore include machinery, electrical machinery, aircraft/spacecraft, mineral fuel and oil, optical and medical instruments, plastic, and organic chemicals. As shown in Figure 2 , U.S. exports of each of these products have risen since the U.S.-Singapore FTA took effect in January 2004, although they declined in 2009 because of the global financial crisis. The highly developed nature of the city-state's economy can be seen in the major U.S. exports there. They consist primarily of industrial and scientific machinery and materials. The rising surplus in merchandise trade with Singapore, however, masks other underlying trends that do not bode as well for the United States. Although Singapore's share of U.S. exports to the world has remained at about 2.3% to 2.1%, Singapore's imports from the United States have been declining relative to those from many other countries of the world. As shown in Table 1 , in 2001, the United States accounted for 16.4% of Singapore's imports. By 2009, that share had fallen to 12%, despite the rapid growth in U.S. exports there. Still, Singapore imports more from the United States ($28.5 billion) than from China ($26.0 billion). Malaysia is Singapore's top source of imports, while the United States is second, and China is third. Imports from China, however, have been rising rapidly, and China has passed Japan as a source of imports. The surplus in the U.S. balance of merchandise trade with Singapore runs contrary to a commonly held perception that free trade agreements lead to larger U.S. deficits in trade.