Comparative Essay: U.S. free trade diplomacy with Australia and Singapore
Explain U.S. foreign policy in two �cases.�
Comparative Case Study: U.S. free trade diplomacy with Australia and Singapore
An essential function of the American government is basically to carry out relations
with over 180 other countries globally. Foreign policy determines the way the United States
will conduct relations with other nations. U.S foreign policy is how the country interacts with
other countries and creates standards of interaction for its corporations, organizations, as well
as individual citizens. It is aimed at furthering particular goals (Pickering, 2011). In this
comparative case study, standard questions and criteria are used in comparing two cases. An
argument is presented with the use of 2 cases of U.S. foreign policy behaviour. In particular,
the cases which are compared in this comparative case study are United States free trade
diplomacy with Singapore and Australia. Thesis statement: the specifics of the United States
free trade agreement with Australia is more or less the same as that of the agreement between
the United States and Singapore since the United States in both Agreements seeks to further
certain goals. America seeks to ensure greater access of American products into the
Australian and Singaporean/Southeast Asian markets and allow American products to be
more price-competitive within these markets when competing with local suppliers or
suppliers from other countries.
U.S free trade diplomacy with Singapore and Australia
These cases were chosen since they are aimed at increasing trade between America
and Singapore and between America and Australia. In essence, increased trade results in the
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creation of more jobs in America and it provides more opportunities for American
companies. The United States shares a lot of strategic and fiscal interests with both Australia
and Singapore. Just like with Australia, the United States has a longstanding relationship as
well as essential investment and trade relationship with Singapore (Evans & Welch, 2015).
The United States recognizes that competitive and open markets are important drivers of
wealth creation, innovation and economic efficiency. America also recognizes the
significance of liberalization of trade in services and goods at the multilateral level and
understands the increasing significance of investment and trade for the economies of
Australia, Singapore and other countries in the Asia-Pacific region (Maynes, 2010). As such,
these cases were selected also because examining and analyzing them will help to shed more
light on how America’s Free Trade Agreement with Australia contrasts or differs with the
FTA agreement it has with Singapore. Moreover, examining these cases would provide
important insight and expand knowledge on how the United States benefits from these
agreements and how it advances America’s foreign policy.
Examination of the cases
- U.S free trade diplomacy with Australia
America has implemented fourteen free trade agreements with twenty nations around
the globe. Free trade agreement (FTA) negotiations between Australia and the United States
were finalized in the year 2004. Given that the FTA went into force in 2005 January, the FTA
between Australia and America has resulted in a 104 percent rise in the United States trade
surplus with Australia (Naoi & Urata, 2013). The FTA between America and Australia not
only ensures greater access of Australian products into the American market, but it also
improves the prospects for Australian investment and trade, as well as services. It also
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enhances the investment and regulatory environment between America and Australia, and
fosters increased business mobility (Desker, 2010).
It is worth mentioning that America imported goods worth $9 billion from Australia
and exported products worth $26 billion in the year 2013 (U.S. Department of State, 2015).
Under the US-Australia FTA, the majority of Australian products get into America duty free
and also free of merchandise processing fee, and almost all Australian goods would be
exported to America free by the time the FTA is totally implemented by 1 st January, 2022
(U.S. Customs and Border Protection, 2015).
Through the elimination of duty, the Australia-U.S Free Trade Agreement allows
apparel and textile exporters from the United States to be more price-competitive within the
Australian market when they compete with local suppliers as well as with suppliers from
third world countries who have no duty benefits. By eliminating various non-tariff barriers,
the Free Trade Agreement further opens the Australian market to goods from the United
States (Aggarwal, 2013). It is notable that the Free Trade Agreement presents considerable
benefits in an extensive variety of service sectors. It also serves to facilitate American
investments through a stable business environment and predictable access. American
companies, for the very first time in a number of sectors, would be permitted to compete for
Australian government’s purchases on a fair, unbiased basis (Evans & Welch, 2015).
American vendors can bid on contracts to supply to the territory, state and commonwealth
government entities. The Commonwealth Government of Australia would get rid of its
industry development programs, which stipulated that suppliers satisfy various prerequisites
as conditions of their contracts (Aggarwal, 2013).
Under this Free Trade Agreement, duties on qualifying American apparel and textile
goods that are exported to Australia have been removed or would be removed through
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gradual decreases over a set time period, on or before 1 st January 2015. Every qualifying
travel product is duty-free and all qualifying Australian footwear are free of duty with the
exception of seventeen particular fabric/rubber and protective/plastic footwear items (Naoi &
Urata, 2013). The Free Trade Agreement between America and Australia is a mutual tariff
elimination accord. This means that qualifying travel goods, footwear, apparel and textile
products imported into America from Australia are subject to similar duty rates as those for
qualifying American exports to Australia. In order to make the most of the elimination or
reduction of duty, goods have to qualify as originating products under the Agreement terms.
Generally, the goods should have adequate Australian or American processing or content in
order to meet the criteria (Aggarwal, 2013). Rules of Origin for Apparel and Textile Goods:
the products should contain only Australian or American inputs. Even so, products that
contain inputs from other nations may also qualify if they satisfy certain conditions specified
in the FTA rules of origin. The rules for apparel and textile goods are commonly termed as
yarn forward, which demands that the production of the yarn and every other operation
forward take place either in America or Australia, although the fibre might come from
another country. There are also Rules of Origin of Footwear and Non-textile travel products.
For qualifying products where the Free Trade Agreement tariff benefits are requested, the
importing company has to make a claim of reference. The importer has to state in writing that
the product being imported actually qualifies as originating (Harris & Robertson, 2011).
The FTA between Australia and America has measures for ensuring that the
originating products are not subject to fraud, for instance transhipment. Claims for
preferential treatment under the Agreement are considered a declaration whose honesty and
truth might be audited or confirmed by American and Australian custom officials. In case a
preference has been claimed and the customs officials find out that the products do not
qualify, the duty benefit would be lost and fine may be imposed (Harris & Robertson, 2011).
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- U.S free trade diplomacy with Singapore
The FTA between Singapore and America was signed in May 2003 in Washington,
DC. It entered into force in the year 2004. Since then, the United States trade surplus with
Singapore has increased by over 800% to $12.7 billion. The export of American goods to
Singapore was worth $30.6 billion whereas imports from Singapore were worth $17.8 billion
in 2013 (U.S. Department of State, 2015). The FTA between Singapore and America has
allowed exporters from both countries to benefit from tariff concessions. It has also helped
both countries to attract investors and increase in competitiveness. It is worth mentioning that
this FTA describes the obligations and duties of the Unites States and Singapore regarding a
number of areas including customs procedures, services and goods, the environment,
movement of people, as well as protection of intellectual property. Furthermore, it outlines
the guidelines that can be used to settle disputes (Parinduri & Thangavelu, 2013).
The main aim of the United States-Singapore FTA is essentially to facilitate trade
between these 2 nations through the elimination or reduction of tariffs. Exporters from either
party could benefit from cost-savings in the following sectors: textiles, processed foods,
information technology and electronics, chemicals and petrochemicals as well as precision
instruments (Singapore Government, 2015). The Agreement also allows Singaporean
suppliers to take part in many tenders of services and goods conducted by the government of
the United States. Likewise, American suppliers can participate in tenders conducted by the
government of Singapore. Singaporean suppliers are allowed to take part in procurement
activities of nearly 100 federal entities in 37 states across America.
In the FTA, both the United States and Singapore also reached an agreement that each
of them would take steps to execute Phases 1 and 2 of the APEC Mutual Recognition
Arrangement (MRA) for Conformity Assessment of Telecommunications Equipment as
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regards the other country. In the Asian region, Singapore was the first nation to operate an
MRA on telecommunication equipment certification with America (Singapore Government,
2015). It is worth mentioning that the Mutual Recognition Arrangement facilitates direct
entry of telecommunication equipment into the market of either party without requiring extra
testing and certification. Examples of these telecommunications equipment include
Asymmetric Digital Subscriber modems, Wireless Broadband Access equipment, radio
pagers and telephones (Singapore Government, 2015).
This FTA offers 100 percent coverage of Singaporean domestic exports to America
and the elimination of tariffs. Under this Agreement, the United States and Singapore would
each gradually remove its custom duties on the other party’s originating goods according to
Annexes 2C (Singapore Schedule) and 2B (US Schedule). Originating goods refers to goods
which are entirely produced or obtained within the territory of Singapore and/or the United
States and have met the prerequisites stipulated in Annex 3A (Wolff, 2015). Annex 3C of the
FTA provides a listing of products which are considered as re-manufactured products that are
also considered to have come from America or Singapore. In addition, the two countries
would not maintain or implement a merchandise processing fee for originating products. The
importing individual or organization has to make claim for preferential treatment. The
information with regard to the qualification of the products as originating goods should be
submitted to the importer by the exporter. The exporter in Singapore must verify that the
products actually came from Singapore. Both countries would not introduce a new customs
duty or increase an existing customs duty on imports of originating goods, other than as
allowed by the FTA, subject to Annex 2A. The Agreement has also facilitated the elimination
of non-tariff obstacles hence the cost of doing business would be kept low and exports would
become more competitive (Parinduri & Thangavelu, 2013).
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The Singapore-United States Free Trade Agreement has been helpful in increasing
exports from the United States, improving the competitiveness of America globally, securing
presence of the United States in the Southeast Asia region, and providing a standard of free
trade which serves to encourage a high degree of liberalization. In Singapore, conducting a
business has become more transparent, cheaper, faster and much easier. The Agreement has
provided American exporters and companies with more access to Southeast Asia, one of the
largest markets globally, where there are lots of opportunities (Wolff, 2015). Other than
binding all Singapore tariffs for American products at zero, the U.S-Singapore Agreement
has increased export opportunities for some manufacturing sectors in America, such as the
ones that make medical equipment and instruments, chemicals, pharmaceuticals, photo
equipment, microelectronics and certain textiles. In addition, with few exemptions, Singapore
has accorded considerable access to its investment and services market. Singapore has also
increased opportunities for government procurement as well as protection of intellectual
property. What’s more, the Free Trade Agreement provides for revolutionary collaboration in
fostering labour rights and the environment (Parinduri & Thangavelu, 2013). Singapore was
America’s tenth biggest export market in 2010 at more than $28 billion. This represents an
increase of 31 percent over the previous year 2009. The main exports from America to
Singapore are in the following sectors: medical devices, oil and mineral fuel, machinery,
spacecraft and airplane, and electrical machinery (Aggarwal, 2013).
Discussion and synthesis of results
The results show that in both the Free Trade Agreements between America and
Australia and between America and Singapore, the United States seeks to further certain
goals. For instance, the Agreement between the United States and the two countries would
remove or gradually reduce tariff barriers on originating goods, and eliminate a merchandise
processing fee for originating products. The Australia-U.S Free Trade Agreement furthers the
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U.S foreign policy goal of allowing American apparel and textile exporters – that is, textiles
made in America – to be more price-competitive within the Australian market when they
compete with the local Australian suppliers in addition to suppliers from other countries such
as Thailand, India, China, or Malaysia who have no duty benefits. Besides eliminating tariff
barriers particularly duties, the Free Trade Agreement between America and Australia also
removes non-tariff barriers which helps to further open the Australian market to Made-in-the-
United States products (U.S. Department of State, 2015). Furthermore, through this
Agreement, America seeks to attain the goal of creating more employment opportunities in
the United States and benefit American exporters especially companies in America which
produce goods that qualify as originating goods.
Similarly, the Free Trade Agreement between the United States and Singapore is
aimed at achieving the foreign policy goal of facilitating trade between America and
Singapore. In addition, the United States uses this Singapore-U.S FTA to accomplish the
foreign policy goal of increasing exports of good that originate from the United States.
Furthermore, the United States achieves the foreign policy goal of improving the
competitiveness of America internationally, securing America’s presence in Southeast Asia,
and providing a standard of free trade which in fact promotes a high degree of liberalization.
Equally important, the Agreement helps to achieve America’s foreign policy objective of
providing exporters and companies based in the United States with more access to the market
of Singapore and the rest of Southeast Asian region, which is regarded as one of the largest
markets worldwide with plenty of business opportunities. Moreover, the Agreement between
the United States and Australia and the one between the United States and Singapore advance
the foreign policy goal of enabling American suppliers to participate in tenders conducted by
the governments of Australia and Singapore.
Conclusion
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To sum up, in the FTA between America and Australia and between America and
Singapore, the United States seeks to achieve the foreign policy goal of facilitating trade
between America and Australia and between America and the Southeast Asian nation of
Singapore by removing or decreasing tariffs, and removing non-tariff barriers. American
exporters can benefit from cost-savings when they export various originating goods to
Australia and Singapore. American companies that produce the following types of products
can particularly benefit: chemicals, precision instruments, information technology and
electronics, medical equipment and instruments, pharmaceuticals, photo equipment,
microelectronics and certain textiles. Through these Agreements, America is able to realize
the foreign policy goal of improving the competitiveness of America worldwide. In addition,
the United States, through these Agreements, seeks to accomplish the objective of creating
more jobs in America and benefit American exporters that export originating goods to
Singapore and Australia.
