- The Washington Times - Monday, February 17, 2003

SINGAPORE, Feb. 17 (UPI) — After two years of negotiations, Singapore and Australia finally signed a free trade agreement Monday that lifted all tariffs on the exports from both countries and took significant steps toward opening up the service sectors in both countries, including specific commitments on telecommunications, financial and professional services.

With bilateral trade of $5.7 billion last year, the Singapore-Australia Free Trade Agreement (SAFTA) is expected to bring cost savings of $18 million for Singapore and stimulate both business opportunities and two-way investments in both nations.

Currently, the services sector comprises more than 80 percent of the GDP in Australia and Singapore exports about $1.1 billion worth of services to the Australian market. Monday's pact is the first trade agreement that has taken a negative-list approach — a listing of all restrictions and exemptions — for services, which should create a more predictable business environment for both sides.

From an Australian perspective, the SAFTA will open up legal services by easing conditions on the establishment of joint ventures in Singapore involving Australia law firms. The move will put the Singapore firms on a more level playing field with their U.S. and British counterparts.

In addition, the number of Australian universities whose law degrees are recognized in Singapore will double from four to eight, making Australian law schools even more attractive to Singaporean students.

The pact will also give Singaporean companies greater market access in the Australian telecom sector, where SingTel already has a presence through its acquisition of Optus.

While Singapore has already concluded negotiations on free-trade agreements with several countries, including most recently the United States, this was the first new trade deal for Australia since its Closer Economic Relations Trade Agreement with New Zealand some 20 years ago.

Last week, the Australian government issued a white paper on its foreign and trade policies, naming security and trade liberalization as its major priorities.

Speaking at Monday's signing ceremony, Australian Trade Minister Mark Vaile said the pact was "a crucial installment" of what was happening regionally as well as globally. He added that Australia remained committed to the World Trade Organization's Doha round, but also indicated his government would pursue bilateral deals.

Australia is currently negotiating trade deals with the United States and Thailand. After the meeting, Vaile told United Press International that the discussions with Thailand that began late last year "were going on very well," although he acknowledged they were "a bit more difficult" than those with Singapore due to the agriculture component; Singapore has nearly no agricultural exports.

"I'm very hopeful that we can do the Thailand deal in a similar time frame (two years) as we did with Singapore," he said.

Vaile also said he was hoping that the negotiations with the United States would be concluded before the end of 2004, which is an election year in both the United States and Australia.

The ministers said they hoped the new pact would smooth the flow of trade among Singapore, Australia and the United States.

"The conclusion of this agreement is a very important triangle in building an economic relationship with the largest and most dynamic economy in the world,'' Vaile pointed out.

The trade agreement is expected to come into force by the middle of this year and will be reviewed and improved within a year of its entry into force, and subsequently, every two years.

Vaile enthused, "This is a living, breathing document."

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