[asia-apec 1545] GATT Watchdog Media Release - Singapore Free Trade Agreement

[APEC Monitoring Group]

GATT Watchdog
PO Box 1905
Christchurch


7 September 2000
                                           MEDIA RELEASE FOR IMMEDIATE USE
Jim Sutton Agrees - Singapore Agreement opens backdoor to TCF products from
low-waged Indonesian factories! - GATT Watchdog

Trade Minister Jim Sutton has effectively conceded that under the Singapore
free trade and investment agreement, 60% of the value of Singapore-sourced
goods can be added by low-waged (minimum wage 425000 rupiah (US $51 a
month)) mainly women Indonesian workers in factories in the Batam free trade
zone, says GATT Watchdog.  Batam, 40 minutes by ferry from Singapore, in
Indonesia's Riau province, is part of a regional economic growth triangle
which is crucial to maintaining the international competitiveness of much of
Singapore's industry.

GATT Watchdog spokesman Aziz Choudry visited Batam ten days ago.  Apparently
Cabinet is due to approve the agreement on Monday 11th September but the
text remains secret

"There is major Singaporean investment there - attracted by cheap labour and
available land.  There is lots of new investment currently going in. In the
first 9 months of 1999, 29 foreign companies set up there.  Factories and
dormitories are surrounded by high fences and barbed wire. There are no
trade unions. Ethnic and religious conflict is rife. Some workers live in
shantytowns on the fringes of industrial parks.  The human costs of living
and working in Batam for migrants from all over Indonesia are very high.
Now New Zealand's remaining textile clothing and footwear (TCF) workers are
expected to compete with these industries. Workers in both countries lose
out as a result of failed economic models based on exploitation".

Mr Choudry will speak at a meeting tonight in Christchurch on his visit to
Batam and the Singapore free trade and investment agreement, along with
Green Party Co-Leader Rod Donald and CAFCA's Murray Horton.

Yesterday, Jim Sutton answered a written question (16079) to Rod Donald:
"Will goods produced by Singaporean owned companies in the SIJORI regional
economic trade and development zone (Singapore, Johore in Malaysia and the
Riau Islands) all be treated as coming from Singapore for the purposes of
the Singapore Closer Economic Partnership Agreement?"
Mr Sutton stated: "No Goods produced in export processing zones outside the
sovereign territory of Singapore will not be regarded as goods of Singapore
origin.  In order to qualify for tariff preference under the CEP Agreement,
goods must have at least 40% of their ex-factory or works cost added in the
sovereign territory of Singapore and the last process of manufacture must be
undertaken in Singapore."

"Does that mean a garment can be designed in Singapore, manufactured in
Batam, then go to Singapore to be pressed and labelled, before coming here
tariff-free?  Given the differences in input costs like labour and overheads
between Singapore and Batam, this could effectively mean that very little of
the real work in producing the product actually takes place in Singapore
itself - just enough to warrant the 40% threshold," said Mr Choudry.  "The
Singapore deal has lower-content requirements than apply to Australia under
CER."

"TCF imports from Singapore still attract tariffs.  Ministry of Foreign
Affairs and Trade officials casually told New Zealand unions in May that if
trade in TCF from Singapore doubled it would 'only' mean the closure of
about 3 medium sized clothing factories in New Zealand.   The government
tells us that only 1% of TCF imports come from Singapore - but the removal
of the 18% tariff will mean that level will increase. Even a small increase
could tip the balance for the domestic industry and there has been no
assessment of the impact on vulnerable factories and jobs of workers -
mainly Pacific Islands and Maori women.  And it competely contradicts the
tariff freeze which Parliament passed to support the struggling industry."

"Labour campaigned on regional development and support to small industry and
local businesses. It is now unable or unwilling to rein in the 'free trade
fundamentalists' to give effect to the Party's election manifesto".
For further comment, please contact Aziz Choudry at 03 3662803 or (025) 662
7174