Home MMBIZ News US Singapore Free Trade Agreement Anniversary Shows Possibilities for Local Prosperity

US Singapore Free Trade Agreement Anniversary Shows Possibilities for Local Prosperity

Last month the US-ASEAN Business Council (US-ABC) and US Chamber of Commerce marked the tenth anniversary of the United States’ free trade agreement with Singapore at a reception for Singaporean Prime Minister Lee Hsien Loong.

The anniversary of the free trade agreement shows the possible economic benefits Myanmar’s strengthening ties with the western nation could bring forth.

Two years ago the Obama administration suspended most of United States’ sanctions on Myanmar, which severely restricted trade between the two countries.

Without reforms in working conditions and labour rights throughout Myanmar, US investment in the country will remain stagnant and won’t reach the prosperity of their regional neighbours.

The US-Singapore free trade agreement (USSFTA) has spurred other trade initiatives in Southeast Asia including the Trans-Pacific Partnership (TPP).

The TPP is a trade agreement between the United States and other 11 countries in the region aimed at promoting economic growth in partner countries’ throughout Southeast Asia.

However, western trade sanctions on Myanmar, imposed in 2003, have meant US investments in Myanmar have trailed behind the country’s economic cooperation with other nations in the region.

The United-States’ free trade agreement with Singapore has seen the country become America’s 11th largest export market, with trade between the two countries totalling $65 billion, where as US capital investment in Myanmar makes up less than 1 percent of the country’s total foreign income – amounting to only $243.6 million nationwide.

Chamber Executive Vice President and International Affairs Head Myron Brilliant said his country’s free-trade agreement with Singapore has helped drive high levels of bilateral economic growth.

“Singapore’s strategic importance makes it a crucial partner for US businesses operating in the Asia Pacific,” Brilliant said.

Introduced on January 1, 2004 the USSFTA remains the only free trade agreement between the US and an ASEAN country.

The US-ASEAN Business Council is the premier advocacy organisation for the United States operations in the Southeast Asia region – helping the country’s investment in Southeast Asia develop a trade output greater than their cooperation with Brazil, Russia, India and China combined.

A free trade agreement between Myanmar and the United States isn’t in the cards. Even though most sanctions have been suspended, and interest continues to increase from American companies, Myanmar has a ways to go in terms of developing an appropriate regulatory environment and governance structures that reduce risk and support business.

However, President Thein Sein’s government’s sweeping economic and political reforms have helped improve Myanmar’s trade relations with the US, through reopening the country to foreign trade and investment.

Earlier this month, apparel company Gap became the first major US retailer to enter the country since the government began lifting trade sanctions two years ago.

The retailer’s entry into the country follows the lead of other top US brands including Coca-Cola Co, General Electric and APR Energy, already investing in Myanmar, according to the Wall Street Journal.

US-ABC’s Alexander Feldman said Singapore’s strong governance and well-managed industrial environment has encouraged the United States to expand the country as its regional headquarters in the ASEAN region.

“The US-Singapore FTA has seen bilateral trade grow more than 50 percent since it came into effect in 2003 and serves as a model for the kind of impact an FTA can bring for an economy,” Feldman said.

Until Myanmar can guarantee its working towards a similar economic and industrial stability, by improving labour rights, working conditions, and building adequate infrastructure throughout the country, many US companies will remain at bay to invest in the developing nation.

A report released by labour groups in November 2013 found Myanmar workers endured extremely low wages, which were up to less than $37 per month and worked long, unsafe hours, according to the Huffington Post.

Protests occurred at garment factories throughout Myanmar almost every month in 2013, according to the Huffington Post.

The Wall Street Journal also reported Gap was forced to conduct numerous review processes on labour violations throughout Myanmar, before making plans to enter the country.

However, since the International Labour Organisation (ILO) lifted its foreign industrial restrictions on Myanmar at its annual meeting two years ago, efforts towards bettering the country’s labour conditions have improved.

Last year, the Myanmar government signed an agreement with the ILO to conduct the first National Labour Force Survey (LFS) in the country since 1990.

The ILO and Myanmar’s Ministry of Labour and Employment plan to jointly administer the labour force survey in a nationwide census format.

The findings will cover a range of Myanmar-employment issues including youth unemployment, forced labour, child labour and the quality of factory conditions throughout the country.

Myanmar authorities hope the labour force survey’s data can help the government formulate policies to improve employment conditions for local workers throughout the country.

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