Mutual Benefits to Be Gained Under the European Union
Singapore and the United Kingdom (UK) signed a Free Trade Agreement (FTA) on 10 December. Both countries are set to enjoy the mutual benefits of the deal.
The mutual benefits that both Singapore and the UK stand to gain by signing the free trade agreement fall under the Republic’s FTA with the European Union. The agreement spans over £17 billion (S$30.4 billion) of current bilateral trade in goods and services.
The UK is the second-largest trading partner for Singapore, aside from being Europe’s top investment destination. Singapore is the UK’s largest investment and trade partner in the South-east Asian region.
A Mutually Beneficial Agreement
The free trade agreement will bring about tangible and immediate benefits. One immediate benefit is that tariffs will be eliminated. 84% of all tariffs for Singapore exports. This includes exports to the UK. All remaining tariffs will no longer be applicable by November 2024. Markets will have easier access to Asian food products that are made in Singapore.
The deal with giving companies in both countries clarity and certainty when it comes to trade arrangements. It will also support regional operations and the supply chain in both countries. Companies in both countries can continue using parts and materials sourced from the EU-27.
The deal is going to strengthen both countries as the leading business hubs in their respective regions. One thing that businesses should take note of is that the UK’s independent trade regulations may vary slightly from the EU’s.
Assessing the Digital Economy Agreement (DEA)
Both countries have also agreed to assess the DEA. These are the UK-Singapore modules of the DEA. The agreement was reached in view of launching negotiations pertaining to the DEA in 2021.
Both countries have also agreed to start talks on investment protection. An agreement should be reached within two to four years of the FTA’s enforcement.
Singapore is hoping to secure a similar style deal like Canada and the EU. However, if that’s not possible, the next option is to secure an EU deal with the terms mimicking Australia’s style. The latter will revert to World Trade Organisation terms if it comes to that.
The new FTA will come into effect on 1 January 2021.