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Singapore Pact Pleases Textile Industry

Washinigton Outlook

James A. Morrissey, Washington Correspondent

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