Customs and Trade updates

India-Singapore Comprehensive Economic Cooperation Agreement (CECA)

The second review meeting for the India-Singapore CECA, attended by the trade ministers of India and Thailand, was launched on 11 May 2010 in New Delhi. The highlights of the meeting are as follows:

• Both sides agreed on a “bilateral economic roadmap” for the CECA applicable for the next five years. This is aimed at increasing bilateral trade in goods as well as services, promotion of greater business and investment, cooperation for India’s infrastructural development, development of bilateral cooperation in specified areas and promotion of movement of people, whether for work or otherwise;
• Both sides agreed to expand the product coverage under CECA and bring about parity in the rules of origin, taking into account the other FTAs signed by India; and
• Signing of a “special scheme for registration of generic medicinal products from India” with a view to facilitate easier market access of generic drugs into Singapore.

The review of CECA will be completed within a year through quarterly meetings at the expert level. Officials of both countries had met previously met in March 2010 for preparatory work.

India and Singapore signed the CECA in August 2005. The first review of the CECA was completed in 2007 which resulted in India increasing tariff reduction on an additional 539 products.

Mutual recognition arrangement on supply chain security with Canada and South Korea

At the World Customs Organisation Council Sessions in Brussels on 25 June 2010, Singapore Customs signed its first two Mutual Recognition Arrangements (MRAs) on supply chain security with its Canadian and South Korean counterparts.

The discussions with the customs authorities of Canada and South Korea had been ongoing since 2009. The separate bilateral MRAs in place signify the mutual recognition of supply chain security programmes, namely:

• Singapore’s Secure Trade Partnership (STP) with Canada’s Partners in Protection (PIP) programme; and
• Singapore’s STP with Korea’s Authorised Economic Operation (AEO) programme.

As a result, Singapore businesses certified under the STP programme, administered by Singapore Customs will be recognised by Canada and South Korea to be of a lower risk and hence be less liable to customs inspection. This will allow Singapore companies to better predict and streamline the movement of their goods. Similarly, exports from companies certified under PIP and AEO programmes in Canada and Korea will be less liable for inspection when arriving in Singapore. This can be a key cost-saving factor as additional costs could otherwise be incurred due to delays at the port. Furthermore, companies can benefit from being able to offer a higher level of assurance to their end costumers.

In order to be STP-certified, Singapore Customs will require companies to meet certain criteria, such as having approved business partners, a crisis management system and, most importantly, a clean compliance record with the customs authorities.

The signing of the two MRAs represents a significant stepping stone towards enhancing the supply chain security. Singapore Customs has the ambition to further grow their network of MRAs, by currently engaging in discussions with China, Japan, New Zealand and the US.

Opening of the Singapore FreePort

May 2010 saw the opening of the Singapore FreePort, a premium, high-security storage and trading facility for high-value items, such as diamonds, fine art and collectables, vintage wine, antiques cigars, carpets and other confidential archives. This infrastructure is the first of its kind in Singapore and the largest such facility in the world, located next to the Changi International Airport. The Singapore FreePort has been publicised as a round-the-clock free trade zone for tax-free storage and trading activities, allowing goods to pass through Singapore with duty and GST payments suspended.

The FreePort tenants will have to register their goods online with Singapore Customs. However, they are only required to report the general category they fall under (i.e. paintings, wine etc). There is no value, ownership and inventory information required for the importation, allowing such details to be kept confidential.

The FreePort adds momentum to two major parts of Singapore’s development strategy; to be recognised for its efficient international trading facilitation and a global centre for wealth management.

Singapore implements the ASEAN Trade In Goods Agreement (ATIGA)

On 21 June 2010 Singapore Customs issued a circular on the implementation of the ATIGA. The new scheme was entered into force on 17 May 2010 and is seen to be an improvement of the existing AFTA-CEPT.

The ATIGA will have the following impact on existing manufacturers and traders in Singapore:

Exporters:
In order to claim preferential tariff treatment under the ATIGA, exporters will need to forward the new Preferential Certificate of Origin, known as ATIGA Form D, to the overseas importer, who will need to present it to the importing customs authority. The ATIGA Form D is effective as of 1 July 2010 and is issued by the Singapore Customs.

Importers:
With effect from 17 May 2010 Singapore Customs will accept the new ATIGA Form D for imports of products such as stout/porter, beer including ale, medicated samsu and other samsu products originating from other ASEAN members countries. These are products that otherwise are subjected to customs duties when imported into Singapore.

As a trade facilitative measure, Singapore Customs will continue to accept preferential tariff claims based on both the new ATIGA Form D and the old AFTA-CEPT form D until 17 November 2010. However, beyond this date only the new ATIGA Form D will be accepted.

Manufacturers:
For manufacturers, there is a new cost statement under the ATIGA that needs to be submitted to Singapore Customs for verification for all new products, or when renewing previously approved cost statements. The cost statement must reach the Tariffs and Trade Services Branch at least seven working days before the export of goods.

For existing cost statements, Singapore Customs require no actions if they remain valid.

Duty exemption for motorised bicycles

As of 14 June 2010 imported motorised bicycles into Singapore are exempted from payment of excise duties, provided they are not registered as motorcycles or scooters by the Register of Vehicles and have a GST payment relief certificate applied through TradeNet.

Motorised bicycles, including electric bicycles, have previously been subjected to excise duties of 12% under the HS heading 8711.

In line with the duty exemption, the manufacture of motorised bicycles in Singapore is also exempted from any licensing requirement that was previously required.

For further details, please call your usual PricewaterhouseCoopers contact.