TL;DR – CECA does not give Indian nationals privileged or unconditional access to Singapore. None of our FTAs do.
CECA is one of those things that most Singaporeans have heard of, but no one really knows what it stands for. It’s on the lips of many people, some say it’s good for the country as it opens up trade possibilities and opportunities, and some get so fired up at the mention of CECA because they think CECA brings in all the foreigners who take away Singaporeans’ jobs.
Mothership has tried to demystify it,
There was even a rally held at Hong Lim Park for it,
Ex-Nominated MP Calvin Cheng has done a great job explaining CECA. He did so in such a straightforward and easy-to-understand manner, so I highly recommend you read it.
Over the weekend, Professor Tommy Koh also wrote an article, Free Trade Agreements (FTAs) and Singapore, for the Straits Times.
The good professor had explained in a Facebook post why he had decided to contribute this piece to explain to Singaporeans what FTAs are and how it affects and benefits Singapore.
Firstly, FTAs has been in the news lately. Secondly, Singaporeans have been attacking CECA on the ground that it has created a loophole for foreigners to come to Singapore to work and take away jobs from Singaporeans. Thirdly, most Singaporeans do not really know what FTAs are.
Since Professor Tommy Koh’s article in Straits Times is a premium one, I’ve decided to lift some of the key points here so that more people can benefit from his sharing.
Professor Tommy Koh on Free Trade Agreements (FTAs) and Singapore
In his article, Professor Koh had attempted to address these points:
- What is an FTA?
- Is there a difference between an FTA and a comprehensive economic partnership agreement?
- Are such agreements compatible with the World Trade Organisation (WTO)?
- What is the logic behind Singapore’s FTA policy?
- How have our FTAs benefited the Singapore economy, Singapore’s exporters and the people of Singapore?
- Is the criticism against Ceca valid?
But for today, let’s just focus on what an FTA is, what it does and also the effects of CECA. If you wish, you can read his full article here.
1) About Free Trade Agreements (FTAs)
Free Trade Agreements (FTAs) are treaties which make trade and investment between two or more economies easier. Due to our small market size and also our lack of resources, Singapore has an open economy which is driven by trade in goods and services.
Essentially, FTAs are designed to reduce the barriers to trade between two or more countries, which are in place to help protect local markets and industries. Trade barriers typically come in the form of tariffs and trade quotas, so we can expect that many FTAs include the removal or lowering of tariffs and trade quotas. FTAs also cover areas such as government procurement, intellectual property rights, and competition policy.
According to Professor Koh,
“Singapore’s FTA policy was conceptualised and launched by former prime minister Goh Chok Tong and former trade minister George Yeo 20 years ago. Why did they do it?
They did it to expand Singapore’s economic space. The strategy was to link our small economy to the economies of other bigger countries.
In this way, Singapore will be more deeply connected to the global supply chain and our exporters will have lower tariff or non-tariff barriers. To keep up with the progress of technology, we are expanding our FTAs into the digital sphere.”
2) How many FTAs do we have?
Professor Koh said that “Singapore has been prolific in negotiating FTAs”.
“To date, Singapore has concluded 13 bilateral FTAs and 12 regional FTAs. The two most recently concluded agreements are the RCEP and the agreement with the Eurasian Economic Union (Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan).
It is estimated that our FTAs are with countries that collectively account for more than 85 per cent of global gross domestic product and account for over 90 per cent of Singapore’s trade. This is a very impressive achievement.”
To give you an idea of scale, Thailand has 12 FTAs (6 bilateral and 6 regional) and is currently negotiating for another nine, Australia has seven FTAs and is negotiating for another nine, and Taiwan has four FTAs.
3) Are CECAs the same as FTAs?
CECA stands for Comprehensive Economic Cooperation Agreement, and that’s the one we first signed with India back in 2005. According to Professor Koh, this term is used interchangeably in practice.
“Some of our agreements are called FTAs, like the one with the US. Others are called comprehensive economic partnership or cooperation agreements, like the one with India.
Is there any difference between them? In theory, comprehensive economic partnership or cooperation agreements are supposed to have a wider scope than FTAs. In practice, there is no difference between them. The two terms are used interchangeably.”
4) How has CECA benefited Singapore?
Right from the start, the India-Singapore CECA covers tariff reduction/elimination for 82% of Singapore’s exports to India, and that opens up enormous trade opportunities for our Singapore businesses. The 2nd protocol (upgraded CECA) further reduces or eliminates tariffs for an additional 30 products, thus benefiting even more businesses.
The signing of such FTAs and CECAs help us safeguard market access and ensure a more predictable operating environment for service suppliers. Did you know that CECA has allowed homegrown companies such as BreadTalk and Teh Yih Jia to expand into the Indian market?
Or in Professor Koh’s words, the India-Singapore CECA has benefited Singapore in the following ways:
- Eliminated most tariff barriers to access the Indian market;
- Enabled DBS Bank and United Overseas Bank to provide integrated banking services in India;
- Allows Singapore companies in sectors such as infrastructure, logistics and manufacturing to invest in India with greater confidence due to Ceca’s provisions on intellectual property rights and dispute settlement.
5) There are always two sides to a story
While some Singaporeans are perpetually blaming the Government for signing CECA and allowing Indians ready passes to come and take away our jobs, Professor Koh shared in his article that the Indian Government has accused Singapore of not honouring our CECA commitment by disallowing the necessary work passes for Indian IT professionals to work in Singapore.
“In 2016, India accused Singapore of not honouring its commitment under Ceca by blocking Indian IT professionals from securing the necessary work passes to work in Singapore. The issue was discussed during the second review of Ceca, which was concluded in June last year. The two governments decided not to make any changes to the chapter on the movement of people.
This issue is politically sensitive in both India and Singapore.
The Indian government is under pressure from its domestic constituency to ensure that Indian professionals are fairly treated. The Singapore Government is under pressure from its domestic constituency to ensure that there is fair competition for jobs and that Singaporean job seekers are not discriminated against.”
6) And then, there’s the truth
So who’s right? Was India right to accuse Singapore of blocking Indian IT professionals to come to Singapore to work? Or did the Singapore Government open the floodgates to let foreign talents from India come and take away Singaporeans’ jobs?
Here’s what Professor Koh said,
“Ceca does not guarantee Indian professionals jobs in Singapore nor preferential treatment over Singaporeans. What Ceca confers is for intra-company transferees and professionals from India to work in Singapore for specified durations, provided that they meet our work-pass qualifying criteria.”
7) Singapore lives by trade
This is a very important point, so let’s get it ingrained in our heads.
Singapore lives by trade.
Singapore lives by trade.
Singapore lives by trade.
With our tiny teeny market size, our businesses need to venture outside of Singapore. We need to sign as many FTAs and CECAs as possible to get other countries to open up their markets to us.
“… Singapore has pursued a proactive policy of negotiating bilateral and regional FTAs with other economies. The aim is to expand Singapore’s economic space and to enable our exporters to gain preferential treatment, including tariff-free access, to overseas markets, including those of the US, China, Japan, the European Union, India, etc.”
When he was wrapping up his article, Professor Koh made this conclusion,
“… Ceca has brought many benefits to Singapore and to India. India is a talent surplus country and Singapore is a talent deficit country.
As long as the import of Indian talent is to fill the gap and not to displace Singaporeans, this is a plus for both countries.”
What do the actual jobs statistics say?
So now, let’s have a look at the actual impact the India-Singapore CECA has on jobs in Singapore.
Minister for Trade and Industry Chan Chun Sing came out out in defence of the Singapore-India Comprehensive Economic Cooperation Agreement (CECA) recently.
He refuted criticism that CECA had given Indian professionals unfettered access to jobs and citizenship in Singapore, and said that FTAs such as CECA have helped more Singaporeans get employed in higher-skilled jobs.
Minister Chan also cited some numbers,
- The number of higher-skilled jobs for Singaporeans grew by 400,000 since CECA was signed in 2005.
- The proportion of Singaporeans in such jobs has also gone up from 50 per cent to 56.8 per cent.
- In 2005, of the 1.65 million Singaporeans and permanent residents in the workforce, 825,000 of them were professionals, managers, executives and technicians (PMETs).
- There are now 2.2 million in the resident workforce, of whom 1.25 million are in PMET jobs.
- This means 50% of our resident worker population were PMETs in 2005, and 57% of our resident worker population are PMETs today.
- Bilateral trade between the two countries has grown from S$16.7 billion to over S$26.4 billion (58% growth), with Singapore now one of India’s largest foreign investor.
Minister Chan said that CECA does not give Indian nationals privileged or unconditional access to Singapore, and that “none of our FTAs do”.
“Indian professionals, like any other professionals from other countries, have to meet MOM’s (Ministry of Manpower’s) existing qualifying criteria to work in Singapore,” he said, adding that anyone applying for Singapore citizenship must likewise satisfy existing criteria.”
“All our FTAs, including CECA, place no obligations on Singapore with regard to immigration matters.”
But we Singaporeans, we see what we see, and we feel what we feel. The truth is we are seeing more foreigners around us, both where we work and also where we live and play. And when someone is down and out and unable to get a job for a long time, I guess it’s easy to just blame it on the foreigners taking away our jobs.
A friend said it best.
Sure, the government and the ministers can explain all they want, and and they even cite all the numbers to try and convince us.
“But the ground feel is there. I think the communities that are here need to do more in engaging and reaching out to Singaporeans, understand our culture, learn and appreciate what Singapore has and can provide for them and their families. Show appreciation, not a bigoted sense of entitlement.
Then I think it will be win-win for all.”
(Featured image via)