European Union (EU)-Singapore Free Trade Agreement (FTA)
The European Union (EU) and Singapore have recently signed a landmark agreement. The EU-Singapore Free Trade Agreement (EUSFTA) signifies the shared conviction of both parties that open and global rules-based trade is the path to growth and prosperity. The FTA has finally come into force 2 days ago, after almost a decade of negotiations. This agreement is the first between the EU and an ASEAN member state. Fortifying Singapore’s position as the financial and trade centre of the region.
Benefits Arise From the FTA
Small and medium-sized businesses, in particular, would benefit greatly from the FTA. Many procedures at Singapore Customs will be simplified with less burdensome technical rules and minimised bureaucratic red tapes. While Singapore exporters will enjoy a reduction in cost that comes from product testing and certification of 3 product categories including electronics, pharmaceuticals and medical devices, and motor vehicles and vehicle parts.
With this EU-Singapore Free Trade Agreement, 84 per cent of Singapore’s exports to the EU will not be taxed. While Singapore will remove all remaining tariffs on certain EU products (like alcoholic beverages) and keep the current duty-free access for all other EU products unchanged. Three sectors such as telecommunications, transport and environmental services will enjoy direct access into the EU markets. Singapore based producers will enjoy 70 years of copyright protection under the FTA. On top of this Singapore companies will have greater access to EU government procurements including railway, telecommunications and landscape architecture services. The FTA also relaxes the rule of origin to enable more Singapore products to participate in EU markets.
Bilateral Relationship Between Singapore and the EU
Singapore hopes that this agreement will lead to an EU-ASEAN FTA, enhancing region-to-region connectivity between the EU, world’s largest single market and ASEAN, which is slated to become the fourth largest economic bloc in the world by 2030. Singapore business community interested in entering the European market is encouraged to leverage on the benefits that the agreement brings. Besides that, this agreement will enhance the bilateral relationship between Singapore and the EU, further boosting the EU’s commitment to ASEAN. This is a show of commitment as well as a sign of strong support for the rules-based international order.
Singapore is the EU’s largest goods trading partner in ASEAN while EU is the Republic’s third-largest goods trading partner. Singapore exported $49 billion to EU last year and their total bilateral trade amounted to $114 billion. Other than this, the EU is also the republic’s largest services trading partner which exceed $79 billion in 2017. From the investment perspective, the EU is the largest foreign investor in Singapore amounting to more than $376 billion which is also the second-largest foreign direct investment in Asia. Notably, Singapore is the EU’s seventh-largest foreign investors which are also the biggest ASEAN investor amounting to $122 billion. As of December 2019, there were about 14,000 European companies in Singapore.