Aim of Singapore pact 'free trade in action'

By Brian Fallow

Trade Minister Lockwood Smith is confident a free-trade agreement with Singapore can be concluded within a few months.

An agreement to negotiate a bilateral free-trade agreement was formally announced on Saturday by Prime Minister Jenny Shipley and her Singaporean counterpart Goh Chok Tong.

Meanwhile, New Zealand and Chile have agreed to study the merits of a free-trade agreement. Officials were working yesterday to finalise its terms of reference.

Both New Zealand and Singapore made it clear their main aim was to set an example of free-trade convictions in action rather than clear the few remaining barriers to their bilateral trade.

Trade between the two countries is worth about $1 billion a year, 98 per cent of which is already duty-free. The intention is to remove remaining tariffs on goods from the other country by the end of 2000.

The target date for liberalising trade in services is 2010, although most should be liberalised by the end of next year.

"We do not need an agreement to facilitate trade liberalisation between ourselves," Mr Goh said.

"The reasons [for the agreement] are strategic. We hope it will be a catalyst for movement towards the Bogor goals [of complete liberalisation of trade and investment by 2010 for developed Apec economies and 2020 for developing ones]."

Indeed he would like to see the Bogor goals adopted globally.

"Although we have this free-trade agreement, the primary focus is to have an open multilateral trading system. The World Trade Organisation is the only organisation which can [provide] a fair and predictable environment for international trade," Mr Goh said.

Some of Singapore's neighbours have asked the Association of South-east Asian Nations to investigate the New Zealand-Singapore agreement.

"The advantages we offer New Zealand will eventually be offered to other AFTA [Asean Free Trade Area] countries," Mr Goh said.

It is understood New Zealand has kept Australia apprised of its plans and believes the Singapore deal has no adverse implications for CER.

Rules of origin will be designed to ensure that only goods originating in Singapore or New Zealand benefit from the removal of tariffs. Such provisions need to be robust if the Australians are to be reassured that the agreement will not provide a "Trojan horse" into CER.

The agreement allows for some exceptions, including Treaty of Waitangi obligations and measures "to protect public order or morality, public safety, peace and good order, and to prevent disorder and crime."