The United States and Singapore last week concluded a free-trade agreement, the first ever between the U.S. and an Asian nation. The deal has political and economic significance, and holds out both promise and peril. While the FTA reaffirms the U.S. commitment to Asia, it could also constitute a threat to the World Trade Organization's Doha Development Agenda trade negotiations.
In many ways, the FTA is a natural. Singapore is a sophisticated financial center that is already home to many U.S. companies. Both governments have a strong commitment to free trade; both economies depend on continued access to foreign markets. The U.S. is Singapore's largest foreign direct investor, with over $21 billion invested as of 2001, and its second-largest trading partner.
About 1,300 American companies operate in Singapore. Singapore is America's 12th-largest trading partner, with trade between the two countries topping $34 billion. The FTA is forecast to increase Singapore's economic output by about $500 million, or 0.05 percent, and add about $700 million to the $10 trillion U.S. economy. The agreement adds Singapore to a short list of U.S. free-trade partners that includes Canada, Mexico, Jordan and Israel.