US-Singapore Free Trade Agreement 20th Anniversary
This article was adapted from my speech at the US-Singapore Free Trade Agreement 20th Anniversary Business Reception at Washington DC on 30 April 2024.
Beginnings of the US-Singapore Free Trade Agreement (USSFTA)
Ten years ago, Prime Minister Lee Hsien Loong spoke in Washington DC on the 10th anniversary of the USSFTA.
He recounted how the decision to launch negotiations was made after a round of midnight golf between President Bill Clinton and Prime Minister Goh Chok Tong in November 2000.
After 11 rounds of intensive negotiations, Prime Minister Goh signed the USSFTA with President George W Bush in 2003, and the agreement was passed by Congress, before it came into effect in 2004.
Even though the golf game in the year 2000 led to the birth of the USSFTA, the seeds were planted as early as 1983. During a visit to the region that year, President Ronald Reagan spoke about the importance of strengthening economic ties between the US and East Asia. This developed into a clear strategic imperative for the USSFTA.
The USSFTA was a bridge built at the right place, at the right time. When it came into effect in 2004, the USSFTA was the US’ first FTA with an Asia-Pacific country. Today, it remains the US’ only FTA with an ASEAN country.
Benefits of the USSFTA
Over the past 20 years, bilateral trade between the US and Singapore has almost tripled. In 2022, the US was Singapore’s second largest trading partner in 2022, and Singapore the US’ 17th largest.
The US has long had a trade surplus with Singapore, which amounted to almost US$40bn in 2022. This is no surprise as the US has been Singapore’s top trading partner in services for over 20 years, and was our second largest goods trading partner last year.
Singapore is also the top recipient of US investment in the Indo-Pacific, and the 7th highest worldwide. US investment in Singapore is larger than that in Mainland China, Japan, and Republic of Korea combined, with almost 6,000 American companies currently in Singapore.
Singapore is much smaller than the US – in fact we are slightly smaller than New York City – but we are the US' third largest Asian investor. There are over 200 Singapore companies in around 40 of the 50 states, both larger firms as well as start-ups. Two of these start-ups, Krosslinker and Luminis Water Technologies, clinched top prizes in the start-up pitching competition at the 2023 SelectUSA Investment Summit. Founded by women to address different sustainability challenges, both companies are examples of the growing interest by Singapore companies in the US.
The US government has estimated that bilateral trade and investment between Singapore and the US supports nearly 250,000 jobs in the US. We hope that greater trade and investment between the US and Singapore will help generate more goods jobs in both countries.
The success of the USSFTA demonstrates how two countries can benefit from an open, inclusive, rules-based multilateral trading order. This has underpinned our economic and commercial relationship for the past 20 years.
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New Areas of Cooperation
Building on the USSFTA, Singapore and the US are already deepening our cooperation in new areas that are important to our businesses and people.
We have launched platforms like our bilateral Partnership for Growth and Innovation (PGI), and our bilateral Climate Partnership. These support collaboration in growing sectors like the digital and green economies. Last October, we held our inaugural Critical and Emerging Technology (CET) Dialogue where we seek to identify opportunities in game-changing technologies - like AI, quantum, and biotechnology.
Singapore is also happy to be working closely with the US on the Indo-Pacific Economic Framework for Prosperity (IPEF). The IPEF is a new model of international economic cooperation. It promotes tangible collaboration and concrete outcomes for our workers and businesses.
In June this year, Singapore will host the inaugural IPEF Clean Economy Investor Forum, and the next IPEF Ministerial meeting. The Investor Forum will bring together investors, financial institutions, start-up entrepreneurs, project proponents, and political leaders to facilitate investment and business matching in the clean economy. This will be critical to the region’s economic development and transition to a more sustainable future.
The Investor Forum reflects the importance of strong partnerships between governments and the business community which have been integral to Singapore’s economic development. We appreciate US companies’ confidence in Singapore as a preferred business location and gateway to Southeast Asia. And we do not take this for granted. For example, throughout the COVID-19 pandemic, Singapore was one of the few countries which continued to maintain the free flow of goods and services so that businesses could fulfil their contracts. We will continue to serve as a safe and secure regional hub for US businesses.
Take AI as an example. Singapore is investing more than S$1bn over the next five years into AI compute, talent, and industry development. This will enhance our AI ecosystem that already offers best-in-class compute infrastructure, access to the region, and a diverse and capable talent pool.
The Singapore Government will ensure that we continue to serve as a digital economy hub supported by innovative firms, advanced and highly-connected digital infrastructure, and balanced and pragmatic regulation including:
We recognise that we will not succeed in these plans if we are not seen as a responsible and trusted partner on AI. We believe that AI must be deployed responsibly, so we participate in rule-setting at bilateral platforms such as the PGI and CET Dialogue with the US, regionally through ASEAN, and internationally via the UN High Level Advisory Body on AI.
Trust is a premium in AI, and core to Singapore’s value proposition as an AI hub, for the world.
Looking Ahead
The USSFTA has been a pathfinder for our trade and investment relationship over the past 20 years. In the next 20 years and beyond, the next bound of economic cooperation between the US and Singapore can also serve as a pathfinder to:
Singapore will continue to work with the US to lay the foundations for our future.
Texas Instruments | GE | GE Aerospace | Pratt & Whitney | Meijer | Johnson & Johnson | KROSSLINKER Aerogel Solutions | Luminis Water Technologies | Enterprise Singapore | Singapore Economic Development Board (EDB)
Vice President , General Manager at Thomson Industries Pte Ltd
6moHappy Mother’s Day Sunday May 12 th 2024