Exporting to Singapore

Key Gains

The Department of Foreign Affairs and Trade has published a business guide to SAFTA in which it identifies the key gains to Australian exporters and importers from the agreement. Here's where we can see why it was worthwhile negotiating an FTA even with Singapore's history as a free port. Even without tariffs, goods trade can be enormously complicated by technical regulations, and SAFTA reduces costs to Australian manufacturers and exporters through a new framework for determining equivalence of Australian and Singaporean product standards and requirements, and commits both countries to work towards harmonising mandatory requirements with international norms. Trade in horticultural and other food-related products is addressed through a new system allowing for mutual acceptance of testing certificates and reports. Of course, this is a two-way street, and importers of Singapore-origin orchids have already benefited importantly from new procedures under which the flowers are no longer automatically fumigated on arrival in Australia.

Australian goods and services exporters also enjoy new access to Singapore's government procurement market where, in their efforts to sell to 47 Singapore agencies, they are now treated equally to Singapore-based suppliers. A competitive environment is assured through SAFTA's obligations on the two governments to consult whenever corporate anti-competitive conduct is suspected. The agreement also opens up new opportunities for bilateral investment, with investors from each country given "national treatment" in the other, supplemented by strong commitments on the legal protection of existing investments.

Importantly, if an Australian investor can’t resolve a dispute with the Government of Singapore, the investor is empowered by SAFTA to submit the issue to arbitration by an independent international agency.

Services Boon

A major area of gain for Australian exporters is found in the FTA's provisions opening up trade in services. Singapore may long have been a liberal free port for goods, but the same was often not true for trade in services where behind-the-border regulations tended to discriminate against foreign companies and individuals. In part, for these reasons, Australians' past forte in selling services to Singapore tended to focus on education and tourism. The new agreement opened up much more and adopts the generally very liberalising "negative list" approach to ending discrimination against Australian providers. This means that in all-important respects, Australians will be treated the same as Singaporeans unless a restriction is specifically listed in an annex to SAFTA. Some services sectors that will benefit significantly from the easing of a formerly discriminatory environment include financial, legal, architectural, environmental, and telecommunications. In addition, because employees of services firms often need to live temporarily in the country in which they are doing business, SAFTA benefits Australian companies by liberalising the rules for temporary residency and providing opportunities for accompanying spouses to work in Singapore as office administrators, specialists, and managers. Many SME services suppliers will find this changed environment makes doing business in Singapore much easier than it was in the past.

The longer-term outlook for Australian business in this sophisticated island nation is very good and getting better all the time. Singapore's growth rate regularly tops 7 percent, and as both India and China pursue enhanced trade integration with ASEAN and other East Asian partners, Singapore—at the centre of the action—seems sure to profit from its position and its openness. As incomes continue to rise, this will make Singapore an ever more attractive market for our own goods and services and the country will assume an enhanced status as a stepping stone to doing business throughout the region.

*Andrew Stoler is executive director of the University of Adelaide's Institute for International Trade (www.iit.adelaide.edu.au)

Fact: in 2006, Singapore's 4.4 million people managed to find a way to use 4.8 million mobile phones in service that year!