Building Prosperity Together: The U.S.-Singapore Economic Relationship
Assistant Secretary, Bureau of Economic and Business Affairs
Introduction and Outline
Thank you for the opportunity to speak here today. I have been looking forward to this for some time now.
I want to applaud the work of the American Chamber of Commerce and the Temasek Foundation Centre for Trade & Negotiations not just for organizing today’s event, but for your tireless work in promoting trade and economic enhancement, especially between our two countries, and with the Asia Pacific region. We couldn’t do our work without you.
Back in Washington, DC, we are very aware of the corporate social responsibility—or CSR—work undertaken by the Chamber, most recently the October 13th Corporate Community Day. Year after year, companies represented here today are nominated for the Secretary of State’s Award for Corporate Excellence, such as Agilent Technologies this past year, and UPS-Asia before it. I’ll get back to CSR in a few minutes.
Singapore’s prominent role in trade is nothing new. From its founding, Singapore has served as a primary trade port. Its geographic location makes it a vital connection between Europe and the Middle East and Africa on one side and East Asia on the other in times of war and peace. Connectivity may be the word of the day in ASEAN and APEC, but Singapore has been building on connectivity for two hundred years. The United States quickly recognized Singapore’s importance, and only a decade and a half after it was founded, we established a Consulate here. And we’ve never left.
I want to begin today by focusing first on our bilateral relationship, which lays the foundation for my second focus: the Trans Pacific Partnership, and lastly, what the United States aims to do in Burma.
The Bilateral Relationship
Let’s start with our bilateral relationship. The entrance into force of the U.S. – Singapore Free Trade Agreement on January 1, 2004 yielded enormous benefits for both our countries. The two-way trade of goods between our countries totaled over $50 billion in 2012, up 60 percent from the year before the Free Trade Agreement took effect. Last year, despite the global slow-down, U.S. goods exports to Singapore were over $30 billion, up nearly 85 percent from what they were before the Free Trade Agreement. Singapore is now our 13th largest export market. For the American companies in the room, that translates into profits, jobs, and increased investment opportunities, both here, where U.S. companies employ huge numbers of Singaporeans, as well as back home.
But the FTA has done more than just increase the flow of goods between our two countries. It also enhanced Singapore’s attractiveness as an investment destination, and has continued to facilitate strong growth in investment flows between the United States and Singapore. U.S. foreign direct investment in Singapore rose nearly 12 percent between 2010 and 2011, and Singapore investment in the United States increased slightly more north of $22 billion, concentrated in the manufacturing sectors in both countries. In fact, Singapore is now the third largest recipient, behind Canada and Australia, of U.S. foreign direct investment in the Asia Pacific region, with over $116 billion of cumulative foreign direct investment, and over 1,500 U.S. companies operate in Singapore today.
Our strong bilateral partnership was further enhanced when former Secretary Clinton and Foreign Minister Shanmugam signed a Memorandum of Understanding on the “Singapore-United States Third Country Training Program,” or TCTP. This program will jointly extend technical assistance to countries in the Lower Mekong Initiative as well as to other ASEAN countries. Under the TCTP, the United States and Singapore draw on the expertise of their respective public sectors to develop innovative capacity-building courses and programs that recipient countries want, including supporting the connectivity agenda that ASEAN and APEC want. Just earlier this month, we completed our fifth such TCTP course on Trade Facilitation—where Singapore and the United States share their experiences with developing investment regimes and trade policies with other senior officials from across the ASEAN region.
The Trans Pacific Partnership
While the FTA has produced impressive results, we can further improve upon it. The Trans Pacific Partnership, which I will turn to now, and a number of other innovative initiatives, offer exciting opportunities for both of our countries in the region.
The Trans Pacific Partnership, or TPP, trade agreement has received a lot of media attention and my bureau has been inundated with inquiries about it in recent months. The Partnership is a key element of President Obama’s strategy of prioritizing U.S. economic engagement in the Asia Pacific region. It brings together some of the largest and fastest growing economies across the region into a comprehensive, high-standard trade and investment agreement. Together, the current eleven TPP countries make up almost a third of global GDP. TPP may be a high standard agreement, but it’s open to other countries in the region that are prepared to meet its high standards. In fact, we believe that as other countries in the region become prepared to take on the ambitious TPP commitments, TPP could eventually grow to become a Free Trade Agreement for the Asia Pacific, incorporating all 21 APEC economies.
The TPP is a high standard trade agreement which seeks to address new and emerging trade issues and 21st century challenges. The goal of the partnership is not simply to reduce tariffs or non-trade barriers, but to address all the barriers to creating a strong and dynamic integrated regional economy. To do that, agreements need to include strong protections for workers, the environment, intellectual property, and innovation. They should also promote the free flow of information technology and the spread of green technology, as well as coherence in our regulatory systems and increased supply chain efficiency.
We have proposed groundbreaking provisions to ensure companies and consumers alike have access to information by prohibiting arbitrary restrictions on data flows and emphasizing the important balance between copyright protection and the fair and open use of copyrighted material. In addition, we have laid out new and innovative environmental proposals that seek to curb illegal trade in fisheries, wildlife, and logging.
And we are not just leveling the playing field for corporate giants. We are working to ensure that our trade agreements work better for small- and medium-sized enterprises, which are major job creators in many TPP countries, including our own. We do this by tackling trade and investment barriers that hit these small businesses hardest, such as lack of transparency and complex regulatory frameworks.
As President Obama has noted, the TPP is his highest trade priority for his second term. Given all of the benefits that both our countries stand to gain from this agreement, it goes without saying that TPP is at the top of our agenda in our bilateral economic relationship with Singapore.
We’re pleased that there is a consensus that we should aim to complete the negotiations for this agreement as soon as possible. We have accomplished a great deal already in the negotiations, but there is still plenty of work to be done. We’re also pleased TPP members accept that we must have an agreement that’s consistent with the high standard TPP objectives we have all endorsed publicly from the start of this process. As we continue with the negotiations, as we approach the home stretch, we need to make every month count. Our respective leaders must provide our negotiators with the mandate and resources to make next week’s round right here in Singapore a success. We applaud Singapore for its leadership on trade liberalization and high standards, and we have high expectations that its continued efforts will ensure the March TPP round makes substantial progress.
Despite the complex challenge of finding a common approach that works for all 11 TPP members and is consistent with the high standard objectives our leaders have set, we have a shared vision of what we want TPP to be. I think that vision will help us reach agreed outcomes, recognizing that any agreement needs to generate benefits for all parties involved.
Many of the TPP countries are leaders on trade and investment issues. Several have already achieved many of the traditional market access gains, like tariff reductions, in past free trade agreements with other TPP members. But the kinds of barriers and impediments exporters and investors face today and will confront tomorrow go far beyond tariffs. This is why TPP is designed to address the barriers that impede trade and investment in the 21st century. Addressing these barriers will generate real benefits and opportunities for all our economies regardless of the level of economic development.
That’s an ambitious agenda, and we recognize that not all countries in the region are prepared to sign up for those kinds of commitments at this point. But we expect that over time, other countries in the region will see the benefit that the TPP brings; and when they’re prepared to make those commitments themselves, TPP will be in a position to expand to include them.
As I mentioned earlier, I was in Burma the past few days and met with members of a U.S. Chamber of Commerce organized delegation. The delegation included government officials and representatives from the private sector and international financial institutions. It focused on the opportunities and challenges to doing business in Burma, including promoting goodwill and not going back to how things were previously. There is great interest from American companies in entering the Burmese market, especially in the new foreign investment law there and in the electricity, transportation infrastructure, and telecoms sectors, but I know there is concern regarding the status of sanctions. And I also know that this Chamber has been very interested. So let me tell you what I told them.
President Obama’s administration has implemented an approach that eases many sanctions and provides incentives for further political and economic reform as the result of recent positive developments. It’s what we call a “calibrated approach.” We are encouraged that the Burmese parliament has taken several steps towards reform, including passing new legislation to protect the freedom of assembly and the rights of workers to form labor unions. The government has also agreed to the U.S.-Myanmar Joint Plan on Countering Trafficking in Persons, and is taking steps to bring increased transparency to the national budget. President Obama’s trip in November highlighted the continued progress Burma is making on key reforms. In recognition of this progress, we have responded with positive steps in many areas, including on the sanctions front, as we had promised to do.
So we have eased our sanctions, but in a carefully calibrated manner. We remain vigilant about the corruption, lack of transparency, and the role of the military in the country’s economy. Our approach aims to support respect for human rights and democratic reform while aiding in the development of an economic and business environment that provides benefits to all people. Just last Friday we provided a general license for four financial institutions to give U.S. companies and NGOs greater access to Burma’s banking system, thereby encouraging additional economic involvement in Burma. Government officials now agree that there is no impediment to permitted economic activities in Burma.
As we shift from the sanctions era to more normalized trade relations, I encourage American businesses to let the U.S. government know if your companies are encountering impediments, sanctions-related or otherwise, to investing or doing business in Burma.
And we can work with you to devise appropriate solutions. For example, the embassy in Rangoon recently made my staff aware that a particular Internet company had cut off services to customers in Burma out of a misplaced concern about sanctions. My staff called the company’s lawyers, explained why there was no sanctions impediment, and the company restored its service.
An integral part of U.S. corporate culture is that American businesses act as responsible partners in the countries where they invest. The U.S. government is dedicated to doing everything in its power to encourage and support this proud tradition. We want U.S. companies to invest in Burma and to do so in a socially and environmentally responsible manner that can serve as a model for others and benefit everyone. As a result, we have paired our sanctions easing on new investment with reporting requirements for U.S. companies that encourages responsible investing, including with regard to promoting transparency and respect for human and labor rights, as well as supporting sound environmental practices, and land use. In addition, companies working with the Myanma Oil and Gas Enterprise, or MOGE (pronounced M-O-G-E) must report their investment within 60 days. The purpose of the public reporting is to promote greater transparency and encourage civil society to partner with our companies for fostering sustainable development through responsible investment. It is also encouraging to see that the government has decided to implement the Extractive Industries Transparency Initiative, which helps countries benefit in a transparent manner from the development of petroleum and mineral resources.
We are aware of the need for clearer guidance to companies on various aspects of this reporting requirement and have been working diligently with U.S. government experts on responses to comments from companies, civil society, and other stakeholders during the public review periods over the past few months. Our goal has been, and remains, to come up with a balanced reporting requirement that is not too onerous for companies, but that still provides useful parameters for responsible investing in Burma.
Companies present will be happy to hear that we are pushing back the deadline for submission of reports in recognition that it has taken the U.S. government longer than anticipated to respond to the public comments.
As U.S. companies expand activities in Burma, sanctions-related situations and other impediments to business will arise that we in Washington never dreamed of. I urge you to alert us as soon as you run into problems so that we can work together to find solutions. The dialogues we have maintained with government officials in Burma, the private sector, civil society, and other stakeholders throughout the sanctions-easing process have been vibrant and productive, and we hope to continue in this vein. Normalizing our trade and investment relationship is something we aspire to in all of our sanctions programs. I am pleased to report that we continue to move in the right direction with your neighbor.
We strongly encourage American companies to take full advantage of opportunities in Southeast Asia. U.S. companies can be some of the best ambassadors for American ideas and values, especially in the areas of transparency and model corporate governance.
We have to sell the “American Brand.” And the American brand can’t just be that we make the best cars, have the most innovative software, or make the tastiest hamburgers. It’s got to be that we also make the best employers, the best neighbors, the best partners; that we don’t bribe and we leave the environment better than we found it. Our companies will help deliver lifesaving medicines to remote areas, respect workers’ rights, and create jobs that help more people make enough money to raise a family. And if we can do that, if we can walk the talk and sell the American brand, there is no question in my mind that responsible corporate citizenship not only benefits the communities where companies operate, but is good for the companies’ bottom line. And again, I know I’m preaching to the choir: It is heartening to see that many companies here today already have corporate social responsibility programs in place.
So let me leave you with a story, a story that has nothing to do with economics, nothing to do with business, but everything to do with what we are trying to convey throughout the world about the American brand. A few days ago I was at the National Museum in Rangoon, taking advantage of a day off to learn about Burma’s history. While there I happened to witness the historic return of an important Bagan-era Buddha that was stolen many years ago. An earthquake in the 1930s broke the statue in two. The upper half traveled the world before finally ending up at Northern Illinois University where a professor there recognized it for what it was. The professor was also able to identify the lower half, which still resided in a temple niche in Bagan. She and other experts were dedicated to seeing the pieces reunited and returned to their rightful home. They toiled for years, but thanks to their dedication, this statue has finally come home. When I asked the professor why she did it, she said simply, “Because it was the right thing to do.” This is exactly the type of people-to-people ties that we want to see between our countries. And this is the American brand.
Corporate social responsibility initiatives all contribute to our shared goal: building prosperity through economic partnership. As former Secretary Clinton said right here in Singapore last November, “we are shaping our foreign policy to account for both the economics of power and the power of economics.” Our new Secretary of State John Kerry has already demonstrated strong leadership to continue the work that she started. During his confirmation testimony before the U.S. Senate last month, he said, “more than ever, foreign policy is economic policy.” For almost 50 years, our countries have been close partners. We welcome the opportunity to continue working with all of you to create a more prosperous future for both our countries.