Singapore Update: Notes from 2018 Singapore Business Mission Planning Call #2

Singapore Update | August 17, 2018
Authors: Riley Smith
 
NOTES FROM 2018 SINGAPORE BUSINESS MISSION PLANNING CALL #2
 
 

On August 16, the Singapore Committee held the second planning call for the 2018 Singapore Business Mission, which will take place August 20-21. During the call Mr. Gregory Nichols, Principal for Asia at Tradewin, an international consulting group that focuses on trade issues, briefed members on recent developments related to the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Mr. Nichols also discussed how U.S.-China trade tensions could affect Singapore. Mr. Nichol's official bio can be found here

The remainder of the call was dedicated to providing an update on the logistics and meeting confirmations for the 2018 Singapore Business Mission. Talking points for the meetings were also briefly discussed. A PDF of the call notes can be found here.

If you have any questions about the call or the 2018 Singapore Business Mission, please contact Riley Smith (rsmith@usasean.org) and Sunita Kapoor (skapoor@usasean.org).

Notes from 2018 Singapore Business Mission Planning Call #2

Date and Time: Thursday, August 16, 2018, from 8:30-9:30 AM (Washington, DC) (Thursday, August 16, 2018, from 8:30-9:30 PM (Singapore))

  • Briefing by Mr. Gregory Nichols, Principal – Asia (Singapore) at Tradewin
    • Last six months has been wild ride for trade professionals
      • Have not seen similar uncertainty in past 20 years
    • Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)
      • Agreement signed in March 2018
        • Will take effect 60 days after 6 of 11 countries ratify it
          • Mexico, Japan, and Singapore have ratified CPTPP thus far
      • Next three are expected to be Australia, New Zealand, and Vietnam
        • No specific ratification schedule for Australia and New Zealand, but appears to be on track for ratification by end of 2018/early 2019
        • Vietnam has specific schedule for National Assembly to ratify later this year
      • New government in Malaysia says that CPTPP should be renegotiated
        • Ratification could be a long time coming in Malaysia
        • Prime Minister Mahathir has also started talking about East Asia Economic Caucus again
          • Mahathir proposed EAEC approximately 20 years
          • Was meant to specifically exclude United States then
      • CPTPP signatories agreed that newcomers would be welcome once agreement comes into force
        • Thailand, South Korea, Taiwan, Indonesia, UK (after Brexit) have indicated interest in joining CPTPP
      • Singapore already has existing FTAs with most of countries in CPTPP
        • Exceptions are Canada and Mexico
        • Impact on CPTPP on Singapore is probably fairly minimal
        • Certain rules would be more harmonized under CPTPP than under current FTAs that Singapore has
        • CPTPP goes deeper into trade in services than existing FTAs that Singapore has
    • Regional Comprehensive Economic Partnership (RCEP)
      • First two chapters of agreement completed at 23rd round of negotiations in Bangkok July 17-27
        • Chapters cover Customs Procedures and Trade Facilitation and (CPTF) and Government Procurement
      • 24th round scheduled for Auckland, New Zealand in November
      • Original target for completion of RCEP was 2015
        • Seems unlikely that RCEP will be completed in 2018
      • India continues to be the obstacle
        • Last week stood up panel to decide whether to continue with RCEP negotiations and, if so, to devise strategy for going forward with the negotiations
          • Panel will issue recommendations in next week or two
        • Indian Government concerned that trade deficit will increase under RCEP
          • Many Ministers in government oppose RCEP
        • India is pushing for more liberal movement of professionals than if currently in place
          • ASEAN does not support this
        • Expectation is that India could withdraw from RCEP negotiations
    • Effects of trade war between China and United States on Singapore
      • Had extensive discussion with Singapore Economic Development Board (EDB) recently on this topic
      • Singapore looking at trade war as opportunity in some ways but a risk in others
        • Opportunity – Investments that had been planned in China; contingency plans for if trade way expands further (even into services)
          • A couple of companies with factories in Singapore and China have decided to move higher end manufacturing to Singapore (where it was previously)
          • Other companies that had approved increased investment in China are now looking for other locations
          • Singapore Government supportive of these strategies if investments are in industries that Singapore wants to build up
        • Risk – Singapore wants to be sure to not be put in the “bad actor” category with the Trump administration in the United States
          • Singapore has a trade in goods deficit with the United States
          • However, there are rising concerns over trade diversion of goods coming out of China and passing through Singapore
            • Goods from China re-routed through Singapore to avoid tariffs
          • SGD has depreciated about 8% against USD in past several months
            • Singapore does not want to be perceived as a currency manipulator by USG
              • MAS will probably have to step in to stabilize currency to prevent further depreciation
          • Beyond Singapore
            • Indonesia
              • Announced plans to apply a 7.5% import tariff on 500 consumer goods, including goods bought online
              • Aim to curb imports, contain slide in value of IDR, and support domestic industries
            • EU-Singapore FTA
              • Expect that Singapore will ratify it by October and it will come into force by 2019
  • Q&A with Mr. Gregory Nichols
    • Question: Assessment of Singapore-China relationship over next several months?
    • Answer: SDG is appreciating against RMB
      • This has a negative impact on exports from Singapore to China
      • Singapore is a small country, and Government of Singapore says that they have to act like one
        • They need to be seen to be an even-handed player by both China and the United States
      • Expect that Singapore will try to work in multinational fora
        • Multinational fora allow Singapore to have certain amount of cover while still advancing some of their policies and hopes
    • Question: Thoughts on how long trade war can be sustained by either side?
    • Answer: If it continues to escalate, China will encounter very significant problems economically
      • Would expect concessions from China first
      • Do not think that the Chinese economy could withstand the full brunt of tariffs on US$500 billion of imports into US
      • Would threaten a severe slowdown of economic engine that would be a potentially very risky situation for them
    • Question: Could trade war be dialed down after midterm elections in United States in November?
      • In news today, China said it was sending a mid-level delegation to United States to restart trade talks
    • Answer: Hope that it could be dialed down, but not clear that they will be
    • Comment: Think timing of elections could see shifting in rhetoric
      • Process of rhetoric goes much faster than bureaucracy for policy
        • Process to seek exclusion from tariffs has been cumbersome
          • Could see the tempo to grant these exemptions increase
    • Comment: Think that either outcome of midterm elections in United States will see Trump double down on tariff policies
      • If the Democrats do well, then he will want to try to rally his base by continuing/expanding tariffs
      • If the Republicans do well, he will see it as vindication for his trade policies 
    • Question: What are your thoughts on the notion that progress on RCEP could reinvigorate intra-ASEAN trade, given establishment of AEC in 2015?
    • Answer: Practically, a number of goals of AEC have not been met
      • Hopefully, officials can push to get these implemented
      • RCEP negotiations can help focus officials’ attention on meeting AEC goals in practice
    • Comment: With exception of Indonesia, average tariff level in ASEAN is still below 4%
      • But bigger issue is non-tariff barriers (NTBs)
      • Since AEC came into effect, have seen increase in NTBs put up by countries in ASEAN
      • Have seen ASEAN Chairs try to mitigate these NTBs each year, but have not seen much progress thus far
    • Question: Have long been rumblings about finding a graceful way for India to exit the negotiations
      • Do you think that RCEP could be quickly finished if India were to exit?
    • Answer: Think it is quite likely that India will withdraw, given number of negative statements about RCEP by Government Ministers
      • Whether China and Japan can come to agreement on outstanding issues, will have to see
      • Do expect negotiations to be an easier road without India
      • Given that only two of the chapters are complete, expect it would be a stretch to finalize the remaining chapters before end of 2018
        • First half of 2019 is more realistic
        • Expect another 2-3 rounds of negotiations between now and then
  • Update on 2018 Singapore Business Mission
    • Update on Mission Logistics
      • Mission dates: Monday, August 20 – Tuesday, August 21
        • There will be a pre-mission briefing on the evening of Sunday, August 19
          • Tentatively scheduled for 6:30 PM at the Shangri-La Hotel Singapore
            • Comment: Request to send Outlook invite to delegation to see who is interested in attending Sunday evening pre-mission briefing
        • For those unable to attend the briefing on the evening of August 19, we are also looking into holding a second briefing on the morning of Monday, August 20
          • That briefing will be held either before or after our breakfast meeting with the U.S. Embassy in Singapore team
      • Mission hotel: Shangri-La Hotel, Singapore
        • Located near Orchard Road at 22 Orange Grove Road
        • Link to book a hotel room at a reduced rate was included in recent invitations
        • Breakfast on Monday, August 20, and the lunches on Monday, August 20, and Tuesday, August 21, will take place at the hotel
          • Specific room for breakfast and lunches will be included on final schedule
          • Final schedule will be sent out tomorrow (Friday, August 17) or over the weekend (Saturday, August 18, or Sunday, August 19)
      • Refund
        • Please note that the refund deadline passed on August 6
          • Means that even if a registration is canceled, participants will still be responsible for all registration fees
      • Transportation
        • Most meetings will take place offsite at Government Ministries
          • Exceptions are the breakfast on first day and the lunches on first and second days
        • Have rented a bus for the offsite meetings
          • We will often use the travel time between meetings for final confirmation of speaking roles in meetings
          • If you do not plan to use the bus, please let Sunita and me know beforehand
      • Schedule
        • Schedule will be finalized by tomorrow (Friday, August 17) or over the weekend (Saturday, August 18, or Sunday, August 19)
          • Will send schedule around to delegation when it is finalized
          • Will also have hard copies available before the start of the breakfast briefing with the U.S. Embassy in Singapore team
        • We can provide a notional schedule upon request
        • Emphasize that we have shared the full delegation list with the Government officials
          • When not everyone shows up to a meeting, it ends up being not as productive and it makes it harder to secure the meeting the next time around
          • For companies that have two or more representatives registered, let us know if not everyone from your group will attend a meeting
          • We really need at least one representative from each company at every meeting
    • Confirmed Meetings
      • Confirmed meetings
        • U.S. Embassy Team – led by Charge d’affairs, a.i., Stephanie Syptak-Ramnath
          • CDA Syptak-Ramnath also hosting us for a reception at the U.S. Ambassador’s residence on the evening of the first day (Monday, August 20)
        • Minister for Trade and Industry – Mr. CHAN Chun Sing
        • Minister for Foreign Affairs and Minister-in-charge of the Smart Nation initiative – Dr. Vivian Balakrishnan
        • Minister for Education – Mr. ONG Ye Kung
        • Permanent Secretary for Ministry of Communications & Information – Mr. Gabriel LIM
        • Permanent Secretary for Ministry of Manpower – Mr. Aubeck KAM
        • Permanent Secretary for Ministry of Finance – Mrs. TAN Chi Ying
        • Deputy Permanent Secretary (Hub Strategy) for Ministry of Transport – Mr. Calvin PHUA
        • Managing Director for Singapore Economic Development Board – Mr. CHNG Kai Fong
        • Assistant Managing Director (Development & International) at Monetary Authority of Singapore – Mr. YNG Yao Loong
      • Pending meetings
        • Awaiting final confirmation that the new Minister for Communications and Information S Iswaran will join our meeting with MCI
          • If Minister Iswaran is not able to join, we have been told that Dr. Janil Puthucheary (Senior Minister of State for MCI) will join
        • Also awaiting confirmation that an official from Ministry for National Development will be able to join our lunch with MOF on the first day
    • Speaking Roles/Talking Points During Meetings
      • If you have not submitted talking points yet, please do so
        • Talking points are incredibly helpful for us to see what advocacy points you would like to raise in the meetings
        • If we know what you would like to raise, we can help set the stage for your intervention
      • During pre-mission briefing, we will go over who would like to make interventions in which meetings
      • Comment: Request to send consolidated talking points for each meeting to delegation on Friday, August 17, so that they can start to review talking points before the weekend