Making
Sense of the New U.S.-Singapore Trade Deal
By Pat Choate
U.S. trade negotiators report that they are nearing completion of a landmark
free trade agreement with Singapore.
The provision of this proposed pact featured in the Dow Jones Newswires is the
one that allows U.S. companies to sell chewing gum in Singapore. Tired of
discarded lumps of gum cluttering streets, floors, and trains, the Government of
Singapore outlawed the import, production, or sale of gum in 1992. Anyone
caught chewing, moreover, was subject to caning, an ancient but seemingly
effective deterrent.
Lest one think, however, that the Government of Singapore is going soft on the
chewing gum issue, only those with a prescription from their doctors and
dentists will be permitted to buy or use gum. And even that must be sugarless
and for therapeutic uses only.
Surely, with a trade deficit of $500 billion annually, U.S. Trade Negotiators
have better opportunities to reduce that deficit than trying to force open the
sugarless, prescription gum market in Singapore, a nation of 4.4 million people
(roughly half that of New York City) located on an island in a space roughly 3.5
times the size of the District of Columbia.
And in fact, this new proposed trade treaty is about things and agendas other
than chewing gum.
Singapore, one of the most prosperous cities in the world, already permits the
import of U.S. manufactured goods duty and quota free.
The real issue behind this trade deal is
that U.S. banks, insurance companies and brokerage houses want unfettered access
to the Singapore market. So, too, do U.S. law firms, architects, and
engineering companies.
But there is a hitch, Singapore is willing to gradually accept more U.S.
services, but it is unwilling to do away with its capital restrictions. Today,
during times of financial crisis, as happened in the late 1990s, Singapore can
block companies from moving money out of the nation.
To sweeten the deal, that is to get the deal, the U.S. Government will allow
Singapore to export to this market, annually and duty free, 25 million square
meters of textiles assembled as apparel in either Singapore or its two low-wage
neighboring islands. This little trade gift is worth approximately $60 million
per year.
Singapore does not have a textile industry. Thus, the fabric used in these
goods will most likely come from China, which is running a $100 billion annual
trade surplus with the United States. Though seemingly small potatoes, this pact
reveals much of what is wrong about the way the United States Government makes
and implements its trade policies.
First and perhaps most important, the deal is not about reducing the U.S. trade
deficit, which should be priority one in U.S. economic policymaking. The future
value of sugarless, prescription, USA-made chewing gum that will be sold in
Singapore is unlikely to offset the trade loss created by the annual $60 million
duty free U.S. textile gift to that nation. And the American bankers, lawyers,
accountants, architects and engineers who will benefit from this deal are likely
to live there and thus sent little money back to the United States.
Second, the jobs of U.S. textile and apparel workers are being traded away (once
again) to gain concessions for some other industry. Since NAFTA, almost 800,000
textile and apparel jobs have been lost in the United States in similar
trade-offs. If sacrifices are required to get a trade deal, shouldn¹t it be
out of those sectors that benefit from the agreement?
Third, the Bush Administration promised the textile industry in the 2002
election cycle that it would no longer be used as a ³donor² industry in trade
negotiations, such as this. Other industries subject to trade negotiations
should note this particular pattern of promise and action.
Finally, once Singapore gets a duty-free gift of 25 million square meters of
textile exports, other nations are sure to demand something proportionate. And
if the U.S. textile industry is eventually decimated, as U.S. trade negotiators
seem intent on doing, other sectors will then be drafted as donor industries.
Ultimately, U.S. trade negotiators now seem more interested in the number of
treaties they can complete than in the substance of these pacts. The New York
Times, for instance, reports that immediately after finishing the negotiations
in Singapore, the United States Trade Representative (USTR), rushed off to
Manila to meet with his counterparts from the Philippines, Indonesia, Malaysia
and Thailand.
All this USTR travel and activity strongly suggests that Congress will soon get
several new trade agreements for an up or down ratification vote. Since the
fast track procedures under which these bills are to be considered permit no
amendments and limited debate, Congress would be wise now, while these pacts are
still being negotiated, to have the USTR show precisely how each proposed
agreement will lower the mounting U.S. trade deficit, by how much, and by when.
If the USTR cannot demonstrate that these proposed treaties will lower the U.S.
trade deficit, then the basic policy questions Congress faces is this: Why is it
entering into these deals and why is it giving away so many of our good,
well-paying jobs?
A USA Daily columnist, Pat Choate was Ross Perot's vice presidential running mate in 1996. Mr. Choate has served on two presidential commissions. A political economist, think tank strategist, policy analyst, and author of the best selling book " Agents of Influence ", Pat has also hosted a nationally syndicated talk radio show.