Minister for Foreign Affairs and Minister for Law K Shanmugam led the Singapore delegation to the 3rd Singapore-US Strategic Dialogue (SUSSD) from 14 – 15 May 2014. The SUSSD is a closed-door Track 1.5 dialogue, involving governmental officials and non-governmental personalities, organised by the Center for a New American Security (CNAS). It brings together Singapore and US policy-makers, as well as think-tank, media, and corporate representatives to have a candid exchange of views on key international and regional issues of the day. These include the challenges and opportunities in the Asia-Pacific region, the regional economic and security architecture, as well as US-Singapore bilateral relations. Minister Shanmugam co-chaired the SUSSD together with former Assistant Secretary of State for East Asian and Pacific Affairs Kurt Campbell, former Under-Secretary of Defense for Policy Michele Flournoy, and former Governor of Utah and former Ambassador to Singapore and China Jon Huntsman.
At the SUSSD, Minister Shanmugam delivered the luncheon address on “The Future of US-Singapore Relations”, highlighting Singapore’s close and longstanding economic, defence and strategic relations with the US and our steadfast and consistent support of the US’ presence in Asia. Minister Shanmugam welcomed the US’ continued commitment to engage the region, and strongly urged all sides to work towards the early conclusion of the Trans-Pacific Partnership (TPP) agreement. Minister Shanmugam also highlighted key areas where both sides could cooperate to capitalise on US competitive competencies, such as developmental assistance, energy, economic cooperation, humanitarian assistance and disaster response as well as maritime cooperation, to bring about tangible benefits to the people in the region and the US. A copy of Minister Shanmugam’s speech is enclosed.
The Singapore delegation to the SUSSD included Senior Minister of State, Ministry of Trade & Industry and Ministry of National Development Lee Yi Shyan, Minister of State, Ministry of Communications and Information and Ministry of Education Sim Ann; Minister of State, Ministry of National Development Desmond Lee; Member of Parliament Dr Janil Puthucheary, senior officials from various government agencies, as well as senior representatives from key Singapore companies, media outlets, and think-tanks.
Minister Shanmugam also met with US Deputy Secretary of Defense Robert Work on 15 May 2014. During the meeting, both sides reaffirmed the excellent state of US-Singapore defence relations. Minister Shanmugam welcomed the successful ASEAN-US Defence Ministers’ Meeting in April 2014, as well as Secretary of Defense Chuck Hagel’s upcoming visit to Singapore to attend the Shangri-la Dialogue on 30 May – 1 June 2014.
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MINISTRY OF FOREIGN AFFAIRS
16 May 2014
LUNCH ADDRESS BY MINISTER FOR FOREIGN AFFAIRS AND MINISTER FOR LAW K SHANMUGAM ON
“THE FUTURE OF US-SINGAPORE RELATIONS”
AT THE 3RD SINGAPORE-US STRATEGIC DIALOGUE,
15 MAY 2014, WASHINGTON DC
Mr Richard Fontaine, President of the Center for a New American Security;
Co-Chairs The Honorable Kurt Campbell, The Honorable Jon Hunstman, and The Honorable Michele Flournoy;
Distinguished Guests, Ladies and Gentlemen;
1 I would like to begin by thanking CNAS for co-organising the 3rd edition of the Singapore-US Strategic Dialogue (SUSSD). Since the inaugural dialogue in 2008, it has proven to be a useful platform for the candid exchange of views between policy-makers and stakeholders from the business, academic and media communities.
2 We welcome President Barack Obama’s recent visit to Japan, Korea, Malaysia, and the Philippines. The visit sent a strong message of the US’ commitment to its Asia rebalancing policy. President Obama’s expression of unwavering support of the US’ regional allies and friends was important, timely and well-received. The messaging was well-calibrated in not conveying any intent to counter China or destabilise the crucial Sino-US relationship that both sides have invested strongly in managing.
3 In particular, ASEAN is encouraged by the renewed commitment of its Dialogue Partners- including the US, China, Japan and ROK- to deepen diplomatic, economic and security cooperation with it. ASEAN also appreciated the recognition of the importance of ASEAN unity and centrality to regional security and prosperity. I have made annual visits to Washington DC since my introductory visit as Foreign Minister in February 2012. Other ASEAN Leaders and Ministers also visit the US regularly. This is a clear demonstration of the desire of ASEAN member states to reciprocate the US’ engagement of our region.
Singapore the Steadfast Partner
4 As we approach the 50th anniversary of our diplomatic relations in 2016 and in fact Singapore’s 50th year of nationhood next year, it is timely to review how our ties have grown through the years. Right from our independence in 1965, Singapore has shared a convergence of strategic interests with the US. We have never shied away from publicly and consistently articulating the value and importance of continued US presence in Asia in ensuring peace, stability and prosperity of the region. This is for the benefit of the US as well. In his address to the Joint Session of Congress in October 1985, then-Prime Minister Lee Kuan Yew stated that “only the elevating power of her idealism can explain the benign manner in which America has exercised its enormous power since the end of World War II and the magnanimity and generosity with which it shared its wealth to rebuild a more prosperous world….If the era after the war has seen a world relatively at peace and accompanied by an unprecedented degree of human progress, much of the credit must go to American leadership.”
5 We have taken this position through Republican and Democrat Administrations. We have demonstrated this support in concrete ways, even when it was unpopular to do so. We first worked together to prevent communist expansion in Southeast Asia. Back in the 1960s, then-Prime Minister Lee Kuan Yew advocated strongly for the US’ involvement in the Vietnam War, both here in the US in addressing your domestic detractors, and in our region where anti-US sentiments pervaded. Even today, Vietnam Veterans as well as other thinkers have found comfort in his explanation that the US’ involvement helped create much needed space for Southeast Asian countries including Singapore to develop, for which we are grateful. Otherwise Southeast Asia would look very different now. This has been to the considerable benefit of the US as well.
6 When the US was asked to leave Subic Bay and Clark Air base in the Philippines, Singapore stepped up even though our total land size is smaller than these two bases. Our 1990 MOU started the concept of “places not bases”, and facilitated the continuation of US military presence in the region. More than 20 years later, your Enhanced Defence Cooperation Agreement (EDCA) with the Philippines is based on the same concept. Our facilities have served as a transit point for US ships and aircraft for refuelling and resupply, including during both the first and second Gulf Wars and Operation Enduring Freedom in Afghanistan. This was on top of our involvement in Operation Desert Storm in 1991 supporting Allied Forces. In the aftermath of the first Gulf War, the Singapore Armed Forces remained part of the UN Iraq-Kuwait Observation Mission (UNIKOM). Post 9/11, we were “with you” in both Afghanistan and Iraq. We supported Operation Iraqi Freedom and the International Security Assistance Force (ISAF) in Afghanistan in material ways. Today, under the 2005 Strategic Framework Agreement, US forces remain the most frequent foreign visitors to Singapore’s military facilities. We look forward to the rotational deployment of the second Littoral Combat Ship (LCS) this year, after the USS Freedom’s inaugural deployment last year. Our militaries also cooperate closely to counter piracy in the Gulf of Aden.
Trade is Strategy
7 Apart from defence, we have always said that trade is strategy for the region. In his recent speech to the American Chamber of Commerce Annual General Meeting celebrating the 10th anniversary of the US-Singapore Free Trade Agreement (USSFTA), US Ambassador to Singapore Kirk Wagar described the USSFTA, which came into force on 1 January 2004, as a key milestone in the US’ trade and commerce pivot towards the region. In fact, I would go further than 2004 to point out that Singapore went against post-colonial “conventional wisdom” in the 1960s and 1970s to welcome American multinational companies, which were otherwise seen as neo-colonialists by other newly independent nations. Having your first FTA in Asia with Singapore was therefore the logical continuation of that win-win policy which anchored corporate America in Singapore and the region. We benefited from your investments, managerial and technological know-how. Your companies created employment and also became part of Asia’s growth story.
8 Because trade is strategy, Singapore made strategic concessions to the US in the USSFTA that were not otherwise available to any other FTA partner. This is because the US, unlike others, is a strategic partner, playing a key role in our security and is a force for stability in the region. As a result, the USSFTA made it even more competitive and profitable for US companies to operate here, as well as expand to the region. At its ten-year mark, the success of the USSFTA is evident. Total trade volumes have reached the US$50 billion mark. US exports of goods to Singapore increased by over 85%, making Singapore, despite our small size, the US’ 13th largest export market. On top of that, the US has a trade surplus of US$18 billion! At end-2012, cumulative US foreign direct investment (FDI) into Singapore topped US$138 billion, the highest in the Asia-Pacific region.
9 On our part, Singapore is the US’ 3rd largest Asian foreign direct investor in 2012 (on a historical cost basis), after Japan and Australia. Singapore’s companies have created close to 40,000 jobs in the US. ST Engineering, who is represented here, employs over 5,000 people across states such as Alabama, Virginia, Texas, North Carolina and Mississippi. American President Lines (APL), a global leading shipping line owned by Singapore-based Neptunes Orient Line (NOL), employs 4,300 people across Arizona, California, Colorado, Washington DC, Florida, Atlanta, Illinois, Michigan, New Jersey, North Carolina, Tennessee and Washington State.
10 Singapore’s trade and economic linkages with the US also reinforce your relationships across the region. The USSFTA has served as a catalyst for the US to build up a network of FTAs with other Asian countries. US investments in Singapore broadened the reach of US companies into Asian markets, increasing your economic stakes in the region. Most of the 3,000 or so American businesses in Singapore have regional or global responsibilities, including Amgen’s first Asian biologics manufacturing facility, Pratt & Whitney’s first engine components manufacturing facility, and IBM’s largest supply chain focused on the analytics center.
11 More broadly, ASEAN is an important market and economic partner that the US should focus on. With growth rates of over 5%, ASEAN’s young and skilled 650 million population empowered with rising incomes will require more energy, food, and other goods and services. ASEAN’s combined GDP amounts to US$2.3 trillion, which makes ASEAN the 7th largest in the world. 28% of US goods and 27% of services exports now go to Asia, with almost US$100 billion worth of goods and services exports going to ASEAN. Today, more than 560,000 American jobs are already directly or indirectly supported by these goods and services exports to ASEAN. ASEAN’s investments in the US have also grown by 1,440% from just US$1.8 billion in 2001 to US$27.5 billion in 2012. Investment from ASEAN into the US today is more than five times that of China’s, and exceeds the combined investment from China, Hong Kong, India, Taiwan and New Zealand. ASEAN is now the top destination for US investment in Asia reaching almost US$ 190 billion in 2012. Potential investment opportunities for US companies in ASEAN abound, with over US$1 trillion of infrastructure investment needed through 2020.
12 However, with the rapidly evolving regional economic architecture, the US will need a steady anchoring economic strategy in Asia. The Trans-Pacific Partnership (TPP) is the answer. It must form the centrepiece of the US’ economic rebalancing to the region. The TPP will serve to level-up the US with ASEAN’s other dialogue partners which have concluded a network of ASEAN-plus FTAs. According to the US Chamber of Commerce, the TPP will create 700,000 new jobs in the US by 2025. Strategically, the successful conclusion of the TPP will not only connect a dozen Asia Pacific economies in a massive trade and investment framework covering 40% of global GDP, but will decisively set the rules of the economic game not just in the region but globally. The National Intelligence Council estimates that by about 2030, East Asia will surpass Europe and North America in terms of GDP, population and even technological innovation.
13 Can the US afford not to be deeply engaged? It is a no brainer. Because of the strategic rationale of the TPP, Singapore has worked hard in pushing forward negotiations. The reality is that given our bilateral FTA with the US, the TPP will not bring very much direct economic benefit to Singapore. However, we have consistently played an active role in negotiations. We helped bridge differences amongst parties by identifying key landing zones to move the negotiations forward and hosted many negotiation rounds, including the last two rounds of Ministerial negotiations, and we are hosting another round next week.
14 The TPP is not the only game in town. There are other regional FTAs being negotiated which do not include the US. There has already been good progress on the Regional Comprehensive Economic Partnership (RCEP) that started three years after the TPP. Discussions about an Asia-Pacific-wide FTA (FTAAP) are also being taken forward in APEC. China has also proposed the upgrading the ASEAN-China FTA.
15 Leadership is therefore critical for the TPP to be concluded soon. We are heartened by President Obama’s firm commitment expressed during his visits to the region to constructively resolve the remaining issues and conclude the TPP as soon as possible. It is crucial that political capital is also spent convincing the US Congress to look beyond individual constituencies to the broader strategic benefits behind the TPP. The US is the most technologically advanced country in the world. It need not fear competition. But it has to fear being marginalised from the fastest growing region in the world. Granting Trade Promotion Authority (TPA) will convince TPP negotiating partners, each of whom also has important domestic stakeholders, that concessions made at the talks will be honoured in order to close the deal. If the TPP does not go through, given the investment the Administration has made, there will be a serious impact to the US’ standing and prestige.
Helping Hands, Making Friends
16 Another key pillar of the US’ re-balance to Asia is through developmental assistance. The State Department’s first Quadrennial Diplomacy and Development Review (QDDR) recommended incorporating development as a “third pillar of US foreign policy” through partnerships. Singapore has worked with the US to strengthen functional cooperation with our ASEAN neighbours through the Singapore-US Third Country Training Programme (TCTP). The TCTP allows us to leverage on each other’s strengths to build up expertise and provide technical assistance to Southeast Asia. Since its inception in 2012, we have jointly trained over 280 participants from Southeast Asia through 10 courses that promote ASEAN Connectivity, regional resilience and sustainable development. These courses include workshops on trade facilitation, water resource management, urban transport planning as well as bio-risk, healthcare, and road management.
17 Like our bilateral defence agreement and FTA with the US, our TCTP has had a similar multiplier effect. It has spawned similar joint development partnerships between the US and countries like Japan and Indonesia. We have received positive feedback from US agencies describing our TCTP as setting the “gold standard”. Such collaborations like the TCTP are in line with the recommendations in the recent Senate Foreign Relations Committee (SFRC) Majority Staff Report entitled “Rebalancing the Rebalance: Resourcing US Diplomatic Strategy in the Asia-Pacific Region” which proposed a more network-centric approach where the US helps facilitate a web of capacity-building relationships throughout the region. We could have an informal network of like-minded partners working on joint developmental assistance programmes to Southeast Asia.
18 As we approach the three-year mark of our TCTP in 2015, we should set an ambitious target of another 7-8 courses by the end of this financial year. We should build on what we have done and move into new areas such as climate change, energy efficiency, pandemic preparedness and HADR. We should also think about renewing the TCTP for another three years. As per the SFRC’s recommendations for sufficient multi-year resourcing to support the US’ re-balancing, the US should consider creating a dedicated budget line for the US’ network of TCTPs to ensure sustainable financing and demonstrate its commitment for the long term.
Building upon the US’ Niche Strengths
19 Going forward, there are opportunities to capitalize on the US’ competitive competencies to strengthen the US’ re-balancing in the region.
20 As the US’ shale gas revolution converges with the region’s increasing energy needs, the export of US LNG to the region will play a major role in Asia’s energy landscape, not just in meeting energy demand and influencing energy prices since Asia is the world’s biggest LNG importer, but also in areas such as energy security. As Singapore’s LNG market and terminals grow, Singapore is well-placed to contribute to efforts to build regional gas markets by serving as a trading and pricing hub for LNG.
21 Regionally, as the country coordinator for US-ASEAN energy cooperation since 2010, our Energy Market Authority (EMA) has worked closely with the US Department of Energy (DOE) to develop the US-ASEAN Energy Workplan with the objective of accelerating the deployment of clean energy technologies in the region. Key activities under discussion for 2014 and 2015 include: (i) workshops on civil nuclear energy, which would address the issues of safety and security as well as new technologies; and (ii) a follow-up to the 2012 US-ASEAN Energy Efficiency Education Workshop in Phnom Penh that would help support development of an ASEAN curriculum in energy efficiency and pilot courses.
22 As part of the US-Asia-Pacific Comprehensive Energy Partnership for a Shared Future (USACEP) Steering Committee, Singapore and the US have been focussing on two projects. First, an Energy Infrastructure Financing Conference at the upcoming Singapore International Energy Week in October 2014 aimed at facilitating public-private partnerships. Second, a TCTP held in Singapore in September 2014 in which Singapore could share our energy efficiency experiences in buildings.
23 Under the Clean Energy Ministerial (CEM), Singapore is working with the US on the International Smart Grid Action Network (ISGAN) to accelerate the deployment of smarter electricity grids globally. Bilaterally, Singapore is also exploring with the US how we can help test-bed new technologies to address cyber-attacks to the electricity grid, which will contribute to broader efforts to build smarter and more resilient infrastructure.
(ii) Humanitarian Aid and Disaster Response (HADR)
24 With our region being prone to natural disaster and humanitarian crises, Singapore and the US could work on leveraging on our capabilities and capitalising on our expertise in HADR to help improve regional disaster response and coordination. We welcome the US’ support of Singapore’s proposal for a regional HADR coordination centre that was raised at the recent ASEAN-Defence Ministers Meeting in Hawaii. The proposed centre will utilise the existing framework of Singapore’s Changi Command and Control Centre (CC2C) to help affected countries, given their likelihood of being too overwhelmed to coordinate regional and international HADR efforts. The centre is envisaged to function round the clock to conduct pre-crisis monitoring, coordinate information flow between the ADMM-plus militaries, and deploy in-theatre during actual disaster. The centre will complement and coordinate closely with the ASEAN Coordinating Centre for Humanitarian Assistance in Jakarta.
(iii) Maritime Security
25 As major trading nations which subscribe to the principle of freedom of navigation and the importance of open, safe and secure sea routes, Singapore and the US can continue to work together to enhance regional maritime cooperation and combat piracy. The US should continue to contribute to the Cooperative Mechanism on Safety of Navigation and Environmental Protection (CM) in the Straits of Malacca and Singapore (SOMS), and eventually the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP). Apart from the ReCAAP Information Sharing Centre in Singapore, the US could help enhance Southeast Asia’s maritime domain awareness capabilities by increasing bilateral maritime assistance and facilitating regional coordination on maritime security issues.
26 Singapore and the US should harness our respective experiences and expertise and work together to facilitate greater trade and investment flows within the region. In addition to trade facilitation courses under the Singapore-US TCTP, we look forward to the US fleshing out and implementing its Expanded Economic Engagement (E3) initiative aimed at building up ASEAN members’ core expertise in pursuing high-standard trade agreements. In line with the SelectUSA initiative, we should work together to remove obstacles/barriers for companies, particularly SMEs, to invest in the US. In this regard, an Avoidance of Double Taxation Agreement (DTA) with the US should not be viewed as a loss of revenue, but an important signalling effect of a country’s openness to foreign investment and serve as an incentive for more companies to invest in the US. This would have a positive impact on job creation in the US.
Making it Work
27 We are strongly supportive of the recommendations of the recent Senate Foreign Relations Committee Majority Staff Report, including: (i) devoting more budget and resources to support the US’ rebalancing policy to Asia, (ii) improving inter-agency/Whole-of-Government coordination and information-sharing on development and implementation of the US’ Asia Pacific policy, and (iii) putting greater focus on developing multi-year programmes that are more sustainable and have longer-lasting impact.
28 We are entering a period of profound transition. It is unclear how the regional architecture and dynamics will look like in the next 50 years.
29 As we have done historically and consistently, Singapore stands ready in partnership to ensure that the US remains an anchor of regional peace and prosperity in a way that brings about tangible benefits to both the people in the region and in the United States. A strong, stable and peaceful Asia Pacific is what all of us desire. The US can play a significant role in ensuring that result, and benefit tremendously in that process.