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

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