Transcript of Statement By Mr Tharman Shanmugaratnam, Deputy Prime Minister & Minister For Finance, At His Meeting With United States Secretary Of The Treasury Jacob J. Lew

1. Thank you for coming. Secretary Lew and I have had a good discussion, a very productive discussion.  First, let me say that we’re pleased that the US continues to build on its strategic engagement in Asia. Secretary Lew’s visit to Singapore testifies to America’s continued active involvement in the region.

2. We covered several issues in our meeting. We discussed the US economic outlook, the global outlook and what’s happening in Asia. We discussed some bilateral issues, in particular tax cooperation. We discussed the IMF governance reforms. And we discussed the TPP.

3. First, on the US.  I had a useful discussion with Secretary Lew. The US economy is fortunately recovering at a steady pace.  I was assured by Secretary Lew about the importance the US places on getting clear resolution of its current budget and debt impasses. Resolving this problem is important not just to the United States, but for the global economy, for sustaining the global recovery.

4. We also agreed on the need for domestic reforms elsewhere in the world. Here in Asia, we do have a very important priority of preparing for the eventual normalisation of global interest rates. That means not just a defensive strategy, it means taking the opportunity to put in place reforms that encourage long-term investments, that raise productivity, and that raise the trajectory of sustainable growth in Asia.

5. We had a good discussion of the implementation of the 2010 governance reforms of the IMF. This remains a priority to be completed with urgency. And I was assured by Secretary Lew that the US Government is fully committed to doing is part its part in taking this through Congress as early as possible.

6. On tax, I am pleased that Singapore’s bilateral discussions with the US to conclude the FATCA agreements are progressing smoothly. We expect to conclude the agreement over the next few months. Secretary Lew and I agreed that we should work towards reciprocity of information exchange under FATCA.

7. I would add that the signing of the FATCA Inter-Governmental agreement between the US and Singapore underscores Singapore’s preparedness to engage in automatic exchange of information as long as it is undertaken on a level playing field basis with regard to all financial centres and is undertaken with countries that respect the rule of law with regard to confidentiality of information.

8. We discussed the TPP. We are both committed to achieving high-standard TPP agreement that will ultimately boost trade, boost investment and boost job creation in all our countries. Our negotiators are working intensively to resolve the outstanding issues. Secretary Lew and I had a good exchange on issues relating to financial services and investment. We intend to raise standards of investor protection for businesses and strengthen the financial services sector, and of course the eventual TPP package will have to provide an overall balance of benefits for all participants. So we look forward to a mutually beneficial TPP agreement based on an overall assessment and balance of benefits. Singapore looks forward to hosting the next TPP Ministerial in December 2013.

9. Once again let me say we reaffirm our excellent bilateral ties between the US and Singapore. The US remains an important partner for us, and an important partner for Asean and the Asian region.

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DPM Tharman’s responses at the Question and Answer session following the delivery of the statement

Question: Sir, you’ve (Secretary Lew) just been to Japan, can I get some comments on the TPP issues out from the Japanese side. Are you confident that the TPP can be concluded by year-end, and also this morning, Asian stocks are a little bit rocky because of concerns that Fed will start tapering next month. So, could I have some comments there?

[Secretary Lew’s comments]

DPM Tharman: If I could add my comments on the issue of market jitters and speculation about Fed tapering. It’s useful to have some perspective on this.

At some point, the Fed will have to start tapering. Whether it tapers in December or sometime next year will eventually be (only) a footnote in history. At some point it’s going to have to taper, and it’s important for all of us to start preparing for this eventuality. And that means putting in place domestic reforms in all our countries…it means the TPP, it means liberalising and removing blockages to infrastructural investment, and it means raising productivity. So basically, if I could reflect also on our discussions in Washington, the eventual tapering on the Fed’s part will I think a net positive for emerging Asia – a net positive as long as we respond to this likely outcome, start preparing for it now, have a little more urgency in domestic reforms.

Question: What’s the likelihood of the TPP agreement being concluded in Singapore next month, and what are the key outstanding issues?

DPM Tharman: We should try our best to reach agreement. The negotiators are in fact meeting in a week’s time in Salt Lake City. We’re trying our best to come to some consensus. So we should be hopeful, but it’s tough work ahead.

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