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US-Singapore FTA
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Singapore has for some time now been considered a newly industrialising country.1 Its ability to maintain and sustain positive economic growth and amass capital has seen it soar, like Hong Kong, Taiwan and South Korea into the economic stratosphere as compared to its neighbours in the Global South. This has led the abovementioned group to be labeled the ‘Four Dragons’. As a traditional Chinese symbol it represents splendour and wealth. The United States of America on the other hand has always been a global superpower. Its sheer power both economically and militarily has allowed it to have an overwhelming influence on the world today. Its per capita GDP of $28,2302 ranks as one of the highest globally. Its national image of the great bald eagle also conjures an image or regality and respect. The lord of the skies. In that sense, one must ask, what does a dragon have to do with an eagle? In the past two years or so, plenty. Both Singapore and America have been working together since 2001 to produce a bilateral Free Trade Agreement (FTA) which has the aim of removing tariffs amounting up to nearly US$33 billion. This is in itself a historic agreement which covers a multitude of areas. With such an agreement of course there would obviously be major benefits for these two future free trade partners. However, it is questionable who stands to gain more from such an agreement, the United States, Singapore or could it possibly be that both end up with mutual gain. Could any problems arise from such an agreement? This essay will look to explore these various issues such as the clauses in the agreement and its content, the benefits of such an agreement and lastly who indeed benefits. Before such areas of discussion are tackled, certain key phrases need to be defined. Firstly, what exactly is ‘free trade’? Joshua Goldstein sums it up succinctly in his book, International Relations by describing it as ‘the flow of goods and services across national boundaries unimpeded by tariffs or other restrictions.’ Another key term that requires defining is tariff which has been described as a tax levied on imports to help protect a nation’s industries, labour or farmers from foreign competition. It can also be used merely to raise additional revenue.8 Based purely on a level of geographical size, the Free Trade Agreement seems to be mismatch. What could persuade one of the largest most powerful nations in the world to seek out the co-operation of a country at the other end of the geographical scale? Singapore has but a mere 600 sq km of territory with which to govern and a relatively small population of about 4.1million3. Despite all these ‘condemning’ facts, Singapore remains as an extremely essential trade and investment partner of the United States because of its transparent government and economy and its well-regulated, safe and secure investment climates. It’s GDP per capita of US$30,0003, surprisingly even higher than the United States has allowed it to become one of the most competitive economies worldwide. As recently as 2001, Singapore ranked as the 11th largest U.S. export market worldwide, and the largest in Southeast Asia, with two-way U.S.-Singapore trade totaling US$33 billion. Currently, there is approximately US$ 23billion in American investments within Singapore represented by more than 1,300 American companies6. Therefore, the bilateral USSFTA will only augur well for both nations and bring their remarkably productive relationship even closer. The ongoing discussions leading up to the signing of the FTA within the first week of May 200310 represent history in the making as it is the first FTA agreement engaged by the United States with an Asian nation. Out of a possible 200 FTA’s currently ongoing around the world, the United States is party only to three.11 Singapore, therefore given its background is seen a perfect foil to add to U.S.
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