Singapore Pact Pleases Textile Industry

The nearly-completed US/Singapore free trade agreement appears to have incorporated most of the
wish list of the US textile industry. While final details still need to be worked out, and the
agreement signed by the respective governments, initial reports indicate the agreement has a tight
country of origin requirement and includes perhaps the toughest Customs enforcement of any free
trade agreement. Since Singapore is not a major player in textile trade, the basic appeal of the
agreement involves other industries where some $33 billion in trade takes place at the present
time.The significance of the pact, where textiles are concerned, is that it may set a precedent for
future trade agreements involving other Asian nations where textiles are much more of a factor.
From the time the free trade agreement was proposed by President Bill Clinton, the American Textile
Manufacturers Institute (ATMI) and its supporters in Congress pressed for a NAFTA-like country of
origin rule and, since Singapore has little textile production, strong measures to prevent
transshipments from other countries. The rule of origin generally requires that goods be made from
yarn and fabric from either of the participating countries in order to qualify for duty and
tariff-free treatment. Since Singapore has little textile production, that means US-made products.
As a result of that rule, importers see little value in the agreement because of the time and
distance involved in using US yarn and fabric. Something that appeals to importers is agreement to
permit 25 million square meters of fabric made in other countries to be imported with the
preferential treatment, but that level of that trade will be phased out gradually over five
years.For the first time under a free trade agreement, all textile and apparel factories in
Singapore that ship goods to the United States will be required to register and provide information
about their production capabilities to both governments.In announcing the agreement, US Trade
Representative Robert Zoellick indicated that the Singapore pact, which still is subject to
approval by Congress, could provide a framework for future agreements.By James A. Morrissey,
Washington Correspondent
December 2002