Chapter 3 Exchange of Notes constituting a Treaty to amend the
Singapore-Australia Free Trade Agreement
Introduction
3.1
The Exchange of Notes constituting a Treaty between the Government of
Australia and the Government of the Republic of Singapore to amend the
Singapore-Australia Free Trade Agreement of 17 February 2003 (the Amendments) make three general amendments to the Singapore-Australia Free Trade
Agreement (SAFTA). The Amendments relate to joint law ventures and formal
law alliances, the removal of Singapore’s numerical quota on wholesale bank
licences in relation to Australian banks from 1 January 2007, and the extension of the range of exceptions to Australia’s obligations under SAFTA to include
reservations made by Australia’s State and Territory governments.
3.2
The Committee was informed that the Amendments will deliver additional
benefits to Australia above those negotiated in SAFTA.[1]
Moreover, the review process, which the Amendments are a result of, identifies
emerging issues and keeps SAFTA up to date and relevant to Australian and
Singaporean business.[2]
Background
3.3
The Committee recommended binding treaty action be taken in relation to
SAFTA in Report 52 and SAFTA entered into force on 28 July 2003.
3.4
Under Article 3 of Chapter 17 of SAFTA, a Ministerial Review was to be
conducted a year after its entry into force and biennially thereafter. The
first Ministerial Review took place in Sydney on 14 July 2004, and these Amendments are the second tranche of amendments resulting from the first Ministerial
Review to be considered by the Committee. The first tranche of amendments were
tabled in the Parliament in March 2005 and considered by the Committee in
Report 66.
3.5
The trade in merchandise and services between Australia and Singapore is considerable, with Singapore currently Australia’s sixth largest merchandise
trading partner in 2005.[3]
In 2005, merchandise exports to Singapore were valued at A$4.00
billion and imports were A$8.67 billion. Australian services exports to Singapore were valued at A$2.38 billion in 2005 and services imports were valued at A$2.78
billion.[4]
The Amendments
Joint law ventures and formal law alliances
3.6
Currently under SAFTA, joint law ventures (JLVs) and formal law
alliances (FLAs) must comprise at minimum four foreign lawyers resident in Singapore, with an aggregate experience of 20 years, and of whom at least two must be
equity partners in the foreign law firm or members of the board of directors.[5]
3.7
Following the exchange of diplomatic notes between Australia and Singapore, Singapore agreed to amend these conditions and extend to Australia treatment no less favourable than that granted to the United States under the
United States-Singapore Free Trade Agreement (USSFTA).[6]
3.8
The Amendments will require JLVs and FLAs to comprise at minimum three
foreign lawyers resident in Singapore, with an aggregate experience of 15 years
and at least two of whom must be either equity partners or members of the board
of directors of the foreign law firm.[7]
Wholesale bank licences
3.9
Currently under SAFTA, Singapore will lift its numerical quota on
wholesale bank licences in relation to Australian banks on 28 July 2007.[8]
3.10
Following the entry into force of the Amendments, Singapore will lift its numerical quota on wholesale bank licences in relation to
Australian banks from 1 January 2007.[9]
3.11
Prior to this Amendment only 20 new wholesale bank licences were to be
issued by the Monetary Authority of Singapore (MAS) during the period from 30 June 2001 to 30 June 2003.[10] During the period from 1 July 2003 to 28 July 2007, the MAS advised that it was prepared to issue a limited
number of wholesale bank licences but that no formal quota had been set.[11]
3.12
This Amendment is a result of Singapore’s agreement to extend the same
commitment to Australia in relation to wholesale bank licences as is extended
to the United States under the United States-Singapore Free Trade Agreement
(USSFTA).[12]
3.13
The Committee was informed that the lifting of the numerical quota, in
line with the USSFTA:
… really puts them on a level playing field with any US banks
which may want to open up in Singapore. Australian banks now have the same
opportunity if they wish to take it up.[13]
State and Territory reservations
3.14
The Amendments incorporate reservations to SAFTA made by Australia’s State and Territory governments. The Committee was informed by representatives
from the Department of Foreign Affairs and Trade that the reservations were not
included in the original SAFTA because:
Negotiating with eight states and territories takes some
time, and so it was decided to conclude the agreement on time. Both sides
agreed to continue with the consultations with states and territories to come
to an agreement that both sides would be happy with. That took about 18 months
to do.[14]
3.15
The Amendments to Annexes 4-I and 4-II of SAFTA incorporate the
reservations and reflect non-conforming measures in trade in services and
investment which are maintained at the State and Territory government levels.[15]
3.16
The Committee was informed that although in principle, the State and
Territory reservations were limiting Singapore’s access under SAFTA, overall
access was improved:
These amendments essentially allow Singapore business access
under the national treatment and market access rules to anything that the
states and territories have control over. So, technically, that expands their
access to the Australian market. However, in giving them that extra access, the
states and territories have said, ‘We would like to just take out some
reservations on things that we would not necessarily like to give to them
straightaway.’[16]
3.17
Moreover, no further reservations are able to be made under Annex 4-I
of SAFTA, with any future reservations now limited to Annex 4-II.[17]
3.18
Mr Kevin Foley MP, the Deputy Premier and the Minister for Industry and
Trade in the South Australian Parliament, wrote to the Committee regarding the
wording of the reservation for South Australia’s legal services contained in
Annex 4-I(A)-7 of the Amendments.[18]
3.19
South Australia’s reservation in this instance was approved as set out
below rather than as it is set out in the tabled treaty text:
South Australia
Natural persons practising foreign law in South Australia may
only join a local law firm as a consultant and may not enter into partnership
with or employ local lawyers. There are restrictions on the circumstances in
which a corporation may obtain a practising certificate.
A person is not taken to be practising the profession of the
law if he or she is only providing legal advice or services relating to the law
of a place outside Australia.
A company that is a subsidiary of a foreign law firm is not
permitted to obtain a practising certificate and is not permitted to share
profits with any other company or firm.
Entry into force
3.20
The Amendments will enter into force following an exchange of notes between
Singapore and Australia upon the completion of the Parties’ respective
domestic procedures.[19]
Future treaty action
3.21
The next Ministerial Review is scheduled for July 2006.[20]
3.22
Issues likely to arise at the next Ministerial Review include:
… improvement to the rules in SAFTA in relation to investment
and rules of origin, recognition of more Australian law degrees, revision of
the intellectual property chapter to reflect harmonisation of Australia’s and
Singapore’s intellectual property laws, cooperation in competition policy, and
commitments under the government procurement chapter.[21]
3.23
The Committee was also informed that the focus of future trade
negotiations will be in further liberalising the services sector, as there is
only limited scope for generating greater access and trade in merchandise due
to low tariffs prior to SAFTA.[22]
Costs and implementation
3.24
The National Interest Analysis states that the Amendments will not
introduce any additional costs above what was associated with SAFTA at the time
of entry into force.[23]
3.25
No additional measures or changes to legislation are required in order
for Australia to meet its obligations under the Amendments.[24]
Consultation
3.26
Leading up to the first Ministerial Review, the Department of Foreign
Affairs and Trade consulted widely with State and Territory governments, other
Commonwealth Departments, businesses and universities.[25]
Conclusion and recommendation
3.27
The Committee acknowledges that the Amendments are part of an ongoing
commitment to trade liberalisation and the expansion of trade and investment
links between Australia and Singapore.
Recommendation 2 |
|
The Committee supports the Exchange of Notes constituting
a Treaty between the Government of Australia and the Government of the
Republic of Singapore to amend the Singapore-Australia Free Trade Agreement
of 17 February 2003 and recommends that binding treaty action be taken
|