Knight Frank Singapore Occasional Paper
The United States-Singapore Free Trade Agreement (USSFTA): Impact on the local real estate market

Introduction
Singapore and the United States have recently signed the historic Free Trade Agreement  (USSFTA) which will erase tariffs on two-way trade worth S$58 billion. 

The agreement will soon go before the US Congress, and if passed, is scheduled for implementation on Jan 1, 2004. 

USSFTA represents a landmark in an already strong trans-Pacific economic relationship between Singapore and the US.

It is significant for Singapore since it is highly trade-dependent, with the highest trade-to-GDP ratio in the world.

Furthermore, Singapore is the first Asian country signing the FTA with the US, the largest developed economy in the world.

This fact is more amazing given that Singapore is merely the US’s 12th-largest trading partner with its small scale in terms of both territory and population. 

Significantly too, US is Singapore’s second largest trading partner.

Therefore, in many ways, the FTA will strengthen an already rich and multi-faceted relationship founded on enlightened mutual economic and security self-interests.

The USSFTA will enhance trade and investment flows in both economies by providing lower tariffs for exports of goods, hassle-free customs procedure, improved market access and national treatment for various commercial and professional services, easier entry for our businessmen into other countries, better terms for investment in foreign countries, etc.

The USSFTA will be NAFTA-plus in several areas, including electronic commerce, customs procedure and the protection of intellectual property spanning IT and other creative works.

According to the Singapore’s Ministry of Trade and Industry, it is a forward-looking agreement that commits both countries to greater trade liberalization than what they have currently committed to at the World Trade Organization (WTO).

Overview of USSFTA
USSFTA is a comprehensive binding agreement between US and Singapore for closer economic integration. As with other bilateral FTAs with Singapore, the USSFTA covers:
• Tariff-free access for goods         
• Easy market access for services, including specific commitments in the financial and business services, telecommunications, transportation, logistics and professional services (engineering, architectural), etc       
• Cooperation and trade facilitation in key areas such as e-commerce, standards, education and customs procedures.

Furthermore, the USSFTA breaks new ground in at least two areas: (1) the protection of intellectual property spanning IT and other creative works (including, for example, even the distinctive scent of a Chanel perfume), and (2) the Integrated Sourcing Initiative (ISI). Singapore is making changes to its laws to ensure that it will have the same rules as the US, which protect patents, copyright and other intellectual property.

The innovative ISI will enable some foreign components of Infocomm Technology (ICT) products and medical equipment to be regarded as originating in Singapore, as long as the final products are made in Singapore.

Generally, the USSFTA will assist the exporters in both countries through enhanced market opportunities, and provide investors with greater certainty through provisions dealing with the protection and promotion of investment.