FROM THE OFFICE OF PUBLIC AFFAIRS
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January 15, 2003KD-3766
On Wednesday, January 15, 2003, the U.S. Treasury and the Monetary Authority of Singapore reached agreement on issues affecting transfers in the investment chapter of the U.S.-Singapore Free Trade Agreement.
This agreement was concluded between Singaporean Managing Director Koh Yong Guan and Treasury Under Secretary for International Affairs John Taylor. The transfers provision in the U.S.-Singapore FTA investment chapter is based upon the framework that is used in the U.S.-Chile FTA.
The agreement reflects the shared commitment by the United States and Singapore to the free transfer of capital and the avoidance of capital controls. The agreement was not intended to determine whether capital controls are or are not a legitimate macro-economic policy tool, but rather to provide legal protections for US investors if restrictions are imposed. Any restrictions that "substantially impede transfers" are subject to claims for damages, and even those that do not substantially impede can be subject to claims for damages if they are imposed for longer than one year. Therefore, this agreement does not prevent a country from imposing controls but does require compensation for US investors in the circumstances described above.
The agreement provides for the free transfers of funds related to an investment into and out of a country. Thus, the United States has maintained its long-standing policy of assuring that investment flows may move unimpeded by controls.
The free transfer provisions of the U.S.-Singapore FTA meet an important Trade Promotion Authority (TPA) objective – ‘freeing the transfer of funds related to investments.’ These provisions provide U.S. investors with substantially strengthened transfer rights over those available under the General Agreement on Trade in Services (GATS) and the General Agreement on Trade and Tariffs (GATT). Unlike those other agreements, the U.S.-Singapore FTA provides for effective investor-State and State-State arbitration provisions to enforce free transfer rights.
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