US and Singapore Sign Historic Trade PactThe United States and Singapore have signed an historic
free trade agreement that, for the first time, will permit duty and quota-free access to the US
market for textiles and other products made in Asian nations. And, as has been the case with other
recent trade agreements, the pact does not satisfy either textile manufacturers or importers. The
importers are upset because the agreement has a yarn forward rule of origin that requires apparel
products eligible for the special treatment to be made of yarn and fabric made in the participating
countries. They say such a rule will sharply restrict their ability to do business with Singapore.
Textile manufacturers dont like the agreement because it says 25 million square meters of apparel
in the first year can be made with yarn and fabric from countries other than the US and Singapore.
Those imports, known as Tariff Preference Levels, will be reduced each year until they are phased
out in five years. Since Singapore has limited textile manufacturing capacity, the industry fears
it will become a source for illegal transshipments from other Asian nations.The agreement was
historic in another sense, in that it breaks “significant new ground,” and could become a model for
future trade agreements with other Asian nations. That sends shock waves throughout the US textile
industry. Under the agreement, Singapore agrees to eliminate all of its duties on US products
immediately and further agrees not to reimpose them. The US will phase out its duties over 10
years, with duties on the least sensitive products dropped first. The agreement still has to be
approved by Congress, but apart from some high-powered rhetoric from textile state lawmakers, it is
not likely to run into any difficulties.By James A. Morrissey, Washington Correspondent
May 2003