WONG CHIAN VOEN

1
Issues Affecting the Manufacturing Sector
Presented by WONG CHIAN VOEN Making
Business Sense of the US-Singapore Free Trade
Agreement Singapore, December 4, 2003
2
Market Entry Issues

• Market Access
• Tariffs
• Quotas
• Rules of Origin
• Wholly obtained
• Product-specific rules
• Integrated Sourcing Initiative

3
Market Entry Issues

• Customs Requirements
• Origin declaration
• Origin verification
• Record keeping
• Sanitary/Technical Standards and Requirements
• Trade Remedies
• Anti-dumping
• Countervailing
• Safeguards

4
Market Access

• Tariffs
• Duty-free from Jan 1, 2004 92 of tariff lines
• Reduced in stages 8 of tariff lines

5
Market Access

• Quotas
• Agricultural products
• 10 categories
• In-quota duty-free from Jan 1, 2004, quota
  expanded in 10 stages
• Out-quota tariff reduction in 10 stages
• Quota-free duty-free from Jan 1, 2013

6
Market Access

• Quotas
• Textile and apparel
• 49 types of cotton and man-made filament apparels
• No yarn-forward rule but must be fully
  assembled in Singapore
• In-quota tariff reduction over 5 stages,
  duty-free from Jan 1, 2008
• Quota reduced over 8 years
• No quota and no duty-free status by Jan 1, 2012

7
Rules of Origin

• Wholly Obtained
• Mineral products, live agricultural produce and
  goods processed entirely from these products
• Waste and scrap
• Remanufactured products
• Made wholly or partly from recovered goods
  obtained from complete disassembly of used goods
  into individual parts
• Recovered goods considered originating
  materials
• Remanufactured products must still meet USSFTA
  ROO

8
Rules of Origin

• Product-Specific Rules
• Change in tariff classification (CTC)
• Change to HS code of a good from those of
  non-originating materials used in its production
• De minimis of 10
• Process definition
• Specific processes must be performed in Singapore
• Some petrochemical products and all chemical,
  plastic and rubber products have alternative
  chemical reaction rule

9
Rules of Origin

• Product-Specific Rules
• Regional value content (RVC)
• Build-down method
• RVC AV VNM x 100
• AV
• Build-up method
• RVC VOM x 100
• AV
• Accumulation of Singapore content for a few
  electrical/electronic products

10
Rules of Origin

• Integrated Sourcing Initiative (ISI)
• Product
• 266 products (IT and medical devices)
• Already enter the US duty-free, regardless of
  where manufactured
• Must be shipped from Singapore to the US

11
Rules of Origin
12
Customs Requirements

• US Importer
• Claim preferential treatment
• Knowledge that good is originating
• Posses information that good is originating
• Submit statement on why good is originating,
  together with cost and manufacturing information
• Must ensure origin claim is valid
• If discover invalid claim, must correct and pay
  duty owing
• Keep records for up to 5 years after date of
  importation

13
Customs Requirements

• Singapore Exporter
• Check that good meets ROO
• Ensure information given to US importer is
  accurate
• If discover invalid claim, must inform the US
  importer
• Keep records for up to 5 years after date of
  importation
• Textile and apparel products
• Separate set of customs requirements
• Covers all goods imported into the US from or via
  Singapore, whether or not claiming USSFTA
  preferences

14
Customs Requirements

• US Customs Verification
• US Importer
• Request US importer for information
• Request US importer to arrange for Singapore
  exporter to provide information directly
• Singapore Exporter
• Directly request Singapore exporter for
  information
• Visit premises of Singapore exporter

15
Technical Standards and Requirements

• Telecommunication Equipment
• Mutual recognition agreement (MRA) on conformity
  assessment
• Need not be manufactured in Singapore
• Must be tested in accredited testing center in
  Singapore
• Sanitary and Phyto-Sanitary Requirements
• No provisions
• Originating goods must still fulfill US SPS
  requirements
• US FDA biosafety requirements
• Separate from USSFTA customs requirements
• Singapore exporters/producers must still comply

16
Trade Remedies

• No AD/CVD Provisions
• Safeguards
• Global
• May exclude Singapore from global safeguard
  measures
• Bilateral
• Allows protection of US domestic industry against
  surge in Singapore imports due to USSFTA
• Protection for for up to 4 years
• Compensate Singapore for loss of tariff
  preferences
• No repeat use of protection on same product
• No longer be used from Jan 1, 2013
• Separate mechanism for textile and apparel
  products

17
Food Beverage

• Market Access
• Tariffs
• Tariff rate quotas
• Beef, dairy, peanuts, sugar, cotton, tobacco
• Rules of Origin
• Sanitary Phyto-Sanitary Requirements
• FDA biosafety requirements

18
Textiles Garments

• Market Access
• Tariffs
• Quotas
• Tariff preference level (TPL)
• Rules of Origin
• Yarn forward
• Exceptions
• Short supply
• TPL Fully assembled in Singapore

19
Textiles Garments

• Special Safeguard
• Special Customs Requirements
• Importation, production, exportation, processing
  or manipulation in FTZs
• Transit and transhipment
• Penalties for non-cooperation or circumvention

20
Electrical, Mechanical Transport Products

• Market Access
• Rules of Origin
• Accumulation of Singapore content
• Integrated sourcing initiative (ISI)
• Remanufactured products
• Technical Standards Requirements
• Telecommunications equipment

21
Petrochemicals, Chemicals,Plastics Rubber

• Market Access
• Rules of Origin
• Process definition
• Chemical reaction

22
Other Issues

• Investment
• Expropriation and compensation
• Investor-state dispute resolution
• Labor and Environment
• Temporary Entry of Business Persons
• Sales
• After-sales
• Technical

23
Business Considerations

• Cost Calculation and Operational Strategy
• Marketing Tool, Enhance Competitiveness
• Tariff savings accrue to US importers
• Singapore goods more attractive
• Cost of Compliance
• Rules of origin
• Production
• Sourcing
• Administrative
• Are you in compliance?