Chapter 5 Amendments to the Singapore–Australia Free Trade Agreement
The Singapore–Australia Free Trade Agreement (SAFTA) was ratified
in February 2003. Article 3 of Chapter 17
of SAFTA provides for a Ministerial Review of the Agreement one year after
coming into force and then biennially thereafter.
The amendments to SAFTA that constitute this amending treaty result from
the second of these Ministerial Reviews. The second Ministerial Review was
intended to build upon SAFTA to ensure the Agreement remained up to date and
consistent with both countries’ business needs, and that it took into account
any changes to legislation or policy settings in both countries.
SAFTA underpins bilateral trade relations between Australia and
Singapore and is, according to the Department of Foreign Affairs and Trade
(DFAT), regarded as a high quality free trade agreement by both countries
Australia’s trade with Singapore
DFAT regards the two way trade and investment between Australia and
Singapore as significant. In 2010, Singapore ranked as Australia’s seventh
largest two way merchandise trading partner and Australia’s largest Association
of Southeast Asian Nations (ASEAN) trading partner. Singapore also ranked ninth
as a destination for Australian investment overseas.
The latest trade data (from the December 2010 quarter), indicates that
18.5 per cent of Australia’s merchandise exports to ASEAN countries went
to Singapore, while 27.6 per cent of merchandise imports from ASEAN countries came
from Singapore. This represents a decline over the same quarter in 2009, when
merchandise exports to Singapore constituted 26.1 per cent of ASEAN
exports, and merchandise imports from Singapore constituted 28.8 per cent of
Australian merchandise exports to Singapore were valued at $5.046
billion Australian for the 2009/2010 financial year while, for the same year, imports
from Singapore were worth $10.899 billion Australian.
Longer term data indicates that, since SAFTA came into force, the share
of Australia’s exports going to Singapore has remained relatively stable, while
the share of Australia’s exports going to other ASEAN countries, most notably
Thailand, have increased.
The DFAT argued that:
Bringing into force the proposed amendments arising from the
second Ministerial Review will help to ensure that SAFTA remains a high-quality
agreement and reflects Australia’s most recent FTAs by remaining relevant to
Australian and Singaporean businesses. It will also allow Australia and
Singapore to build on the platform provided by SAFTA. The proposed amendments
represent a balanced package of outcomes for Australia and Singapore.
The amendments relate to Chapters 6, 8, 10, and 13 of SAFTA.
Chapter 6 of SAFTA concerns government procurement, and requires
Government entities in Australia and Singapore to accord to the suppliers of
goods and services from the counterpart country no less favourable treatment
than those applying to suppliers of goods and services in their own country.
Annex 3(A) of SAFTA contains a list of Australian Government entities to
which Chapter 6 applies. The Annex is proposed to be amended to reflect changes
in the machinery of government in Australia since the first Ministerial Review
of SAFTA. DFAT was at pains to point out that the changes did not grant
Singaporean suppliers of goods and services any additional access to Australian
The Committee notes that while the amendment to Annex 3(A) is discussed
in the National Interest Analysis (NIA) and is listed on the cover of
the version of the Treaty tabled in Parliament, the amended Annex 3(A) is not
included in the text of the Agreement.
The DFAT has advised the Committee that this error will be rectified and
Annex 3(A) tabled in Parliament.
Chapter 8 of SAFTA deals with investment between the two signatories. The
amending treaty introduces new commitments according minimum standards of
treatment to each other’s investors and prohibits the imposition of performance
The new minimum standards include a commitment to accord investors from
the counterpart country ‘fair and equitable treatment’ and ‘full protection and
security.’ In this context, fair and equitable treatment means that investors
will not be denied justice in criminal, civil or administrative proceedings in
accordance with the principle of due process. Full protection and security
means providing investors with the level of police protection required under
The prohibition on performance requirements will prevent either party
from imposing conditions on the establishment, acquisition, operation,
management or sale of an entity by an investor from the other party.
Chapter 10 of SAFTA relates to telecommunications. The amending treaty
removes a series of footnotes from Article 9.7 of the Chapter. The Article
concerns interconnection between major suppliers, but DFAT argued that the
removal of the footnotes will not affect Australia’s obligations under SAFTA.
According to DFAT, the footnotes were originally included in SAFTA
because the Australian negotiators thought it desirable to include clarifying
text explaining Australia’s telecommunications regulatory regime. DFAT now
believes such clarifications are not necessary.
Chapter 13 of SAFTA relates to intellectual property. Since SAFTA was
concluded in 2003, both Singapore and Australia have concluded free trade
agreements with the United States of America. As a result of these agreements,
the legislative frameworks governing intellectual property in both countries
have been changed. According to DFAT:
The differences between Singapore and Australia’s respective
FTAs with the US mainly reflect our domestic laws and approaches to IP. The
scope of some AUSFTA obligations is narrower than SUSFTA, where Australian law
is narrower in its application. For example AUSFTA includes a narrower
definition of 'rights management information' - that is it is 'electronic
information', whereas SUSFTA is just 'information'. The narrower definition in
AUSFTA reflects Australian law. Another example is on civil remedies, where the
SUSFTA provides an opportunity for the right holder to elect between actual
damages or pre-established damages. Australia did not agree to such provisions
in AUSFTA as there is no system of pre-established damages in Australia.
Instead, AUSFTA provides for ‘additional damages’.
However, despite these differences, DFAT argued that the Singaporean
free trade agreement with the United States does not contain better terms for
Singapore than Australia’s free trade agreement with the United States does for
The amending treaty reflects the changes to the Singaporean and
Australian intellectual property regimes resulting from these free trade
The Committee is satisfied that the amendments contained in this treaty
are largely machinery in nature and will not result in significant change to
the degree of market access each country accords its counterpart.
However, the Committee notes that the NIA and the treaty text provided
to the Committee for the inquiry do not seem to have been prepared thoroughly. For
example, as already noted, the text of the amending treaty does not contain the
list of Australian Government entities referred to at paragraph 6 of the NIA.
The lack of clarity on the reason for, and nature of, the amendments to
SAFTA in the NIA made it necessary for the Committee to seek further
clarification from DFAT on a number of issues.
The Committee is otherwise satisfied by the Department’s representations
indicating that the amending treaty is in Australia’s national interest.
The Committee supports the Amendments to Singapore–Australia
Free Trade Agreement and recommends that binding treaty action be taken.