Background of the Singapore-Australia Free Trade Agreement

February 2003

The principal elements of SAFTA and outcomes of interest to Australian business are described in more detail below in relation to the main chapters and sectors.

Trade in Goods

Singapore and Australia will eliminate tariffs on all goods imported from the other country from the date this Agreement comes into effect. For Australia this means duty free entry of beer and stout while all other Australian products already enjoy duty free entry into Singapore. The parties also agree not to use export subsidies, nor to apply safeguards measures against each other.

Rules of Origin

For most goods, the 50% value added rule of origin will apply as under the Australia-New Zealand Closer Economic Relations Agreement. For a limited number of electrical and electronic items, and products subject to Tariff Concession Orders (not made in Australia), the threshold will be 30%. Origin content can be calculated on the basis of accumulation, except for a range of products including textiles, clothing and footwear, passenger motor vehicle items and jewellery: accumulation takes into account all stages of the manufacturing process in one country when the manufacturing process is interrupted by offshore processing, provided that the control of the material in question does not change before and after offshore processing. To ensure the rules of origin are applied properly each country has a designated body responsible for issuing certificates of origin, and manufacturers are required to provide a declaration of origin for each shipment.

Technical Regulations and Sanitary and Phytosanitary Measures

This Chapter builds on the Australia-Singapore Mutual Recognition Agreement on Conformity Assessment and provides for the development of arrangements for the acceptance of the equivalence of mandatory requirements in accordance with sectoral annexes. Negotiations are under way on sectoral annexes covering food standards and horticultural products

Customs Procedures

Australia's and Singapore's respective Customs administrations will work towards having electronic means for all customs reporting requirements as soon as practicable, and agree to provide electronic systems to support business applications between each Customs administration and its trading community. The two governments agree to enhance the exchange of information to assist in the investigation and prevention of breaches of customs law.

Government Procurement

Non-discriminatory national treatment is guaranteed in tendering for government business with a specified list of agencies in each country. Australia gains access to such treatment in procurement by 47 Singapore ministries, agencies and statutory authorities as listed in the WTO Government Procurement Agreement (GPA), to which Australia is not a Party. Australia's access is not constrained by Singapore's GPA restrictions on thresholds and coverage of products and services. The two governments also commit to protecting intellectual property and confidential information supplied in tender processes. The Chapter includes exemptions for procurement policies in relation to industry development, including measures to assist small and medium enterprises (SMEs) and in relation to promoting employment and training opportunities for indigenous people.

Services - general

SAFTA's services framework requires both countries to treat each other's service suppliers on the same terms as their own businesses (national treatment) and to remove quantitative and other market access restrictions on service suppliers. All exceptions must be listed. This approach delivers a much more liberalising and transparent agreement: all exceptions must be reserved or they are deemed to be liberalised. In terms of the restrictions removed or bound in this chapter, Australia has achieved substantial outcomes across a broad range of services sectors, as described below.

Financial services

Singapore has bound recent liberalisation initiatives in areas including banking licenses, insurance and securities markets. These bindings will give Australian financial services providers and investors a more certain business environment. In addition, restrictions on the number of wholesale banking licenses available to Australian banks will be eased over time.

Legal services

Conditions on the establishment of joint ventures in Singapore involving Australian law firms will be eased, putting them on a more level playing field compared to large US and UK law firms. The number of Australian universities whose law degrees are recognised in Singapore will increase from 4 to 8, thereby enhancing the attractiveness of Australian universities for Singaporean students. Singapore has also bound liberal conditions of access for Australian law firms and lawyers in relation to the practice of Australian law, third country law, and international law.

Professional services

Singapore has accepted bound commitments on the removal or easing of residency requirements for Australian professionals such as architects, engineers, accountants and auditors. The FTA also provides a framework for Australian professional bodies to negotiate mutual recognition agreements (MRAs) with their counterpart bodies in Singapore. Australian architects and engineers are currently seeking to conclude MRAs covering registration of professionals and recognition of their qualifications.

Education

Singapore is making full national treatment and market access commitments for university, adult and vocational and technical education, with only some limited exceptions. These commitments will ensure that Australian education providers face liberal conditions in offering education services to Singaporean students. Singapore government scholarships for overseas use will be tenable at Australian universities. Aspects of the administration of these scholarships that may have discouraged students from using them in Australia have been removed.

Environmental and other services

The environmental services sector will be open to Australian businesses apart from some restrictions in the areas of waste water and hazardous waste. Singapore has given full market access and national treatment commitments in a range of other sectors of interest to Australian exporters, such as construction, sporting services, computer and related services and auxiliary transport services.

Investment

SAFTA will improve the environment for Australian investment in Singapore. Australian investors will receive national treatment placing them on a par with local competitors except in areas specifically exempted. They will enjoy greater transparency in relation to investment restrictions in Singapore's government-linked companies. Australian investors will also enjoy protection against expropriation and will be entitled to compensation should expropriation or other loss occur. No changes are required to Australia's foreign investment screening processes, nor to current restrictions on foreign ownership controls, e.g. on institutions such as Telstra and Qantas.

Telecommunications

SAFTA establishes disciplines for telecoms regulation by both countries that expand significantly upon WTO commitments. Regulators must operate in a transparent manner and properly explain decisions in relation to such matters as the approval of commercial terms and conditions and standards and the adjudication and resolution of disputes. Parties aggrieved by regulatory decisions will be able to appeal to an independent authority. Telecoms having major supplier status in a particular segment of the market must provide other suppliers with interconnection on terms that are non-discriminatory terms, in a timely fashion, and cost-oriented rates. Both governments commit to maintaining effective sanctions to enforce competitive safeguards and regulatory decisions, and to facilitate consultation with industry participants, including in the development of industry standards.

Movement of Business People

The initial period of stay granted to Australian business people and professionals visiting Singapore to negotiate the sale of goods or services, establish an investment, or fulfil a short-term contract for their company, will increase from 1 month to 3 months. Long-term business residents working for Australian companies in Singapore will be granted an initial period of 2 years, extendable on application up to at least 14 years. Conditions for spouses of long-term business residents in Singapore who wish to pursue careers will be more secure: spouses will be guaranteed the right to work in managerial, specialist and professional occupations and in office administration.

Competition Policy

The two governments commit themselves to address anti-competitive business practices and to consult with each other upon request in relation to anti-competitive practices of particular concern. They undertake to ensure that government-owned businesses will be subject to competitive neutrality disciplines. Singapore has only recently commenced the process of developing a general competition regime. The competition policy provisions will be reviewed to consider extending them once Singapore enacts a generic competition law.

Intellectual Property

As well as confirming their WTO commitments on intellectual property protection, Australia and Singapore will cooperate on eliminating trade in goods infringing intellectual property rights, including by exchanging information. They also agree to take measures to prevent the export of goods that infringe copyright or trade marks on receipt of information or complaints.

Electronic Commerce

Australia and Singapore agree to continue not to impose customs duties on electronic transmissions between them. They undertake to make publicly available electronic versions of all existing publicly available trade administration documents by 2005, and to cooperate to enhance the acceptance of paperless trading bilaterally and internationally. To promote confidence and trust in bilateral e-commerce, each government will maintain e-commerce consumer protection and electronic authentication legislation; work towards the mutual recognition of electronic signatures; encourage the interoperability of digital certificates by business; and take measures for personal data protection.

Dispute settlement

The focus is on resolution of disputes through consultation. However, where consultations fail, Australia or Singapore may request the appointment of an arbitral tribunal, which will determine whether a measure of a Party is inconsistent with a SAFTA provision and, if so, recommend that the relevant Party bring the measure into conformity with that provision.  

Exchange of Third Person Notes

A number of understandings between Australia and Singapore about the operation of SAFTA and topics to be taken up at the first review are recorded in the text of Third Person Notes (TPNs) that are to be exchanged on entry into force of SAFTA.