SINGAPORE: The landmark trade deal between Singapore and the European Union (EU) is set to enter into force in less than two weeks, after getting the green light from the EU Council on Friday (Nov 8).
This was announced by Minister-in-charge of Trade Relations S Iswaran and EU Trade Commissioner-designate Phil Hogan at a gala dinner attended by more than 200 business leaders, officials and academia in Singapore.
AdvertisementAdvertisementThe approval from the Council of the European Union, made up by ministerial-representatives of the bloc’s 28 member states, marks the final stage in the EU’s internal approval process for EU-Singapore free trade agreement (EUSFTA). The European Parliament had in February voted in favour of the deal.
Singapore and the EU “will now proceed to complete their respective remaining administrative processes, with a view to enable the EUSFTA to enter into force on Nov 21, 2019”, said a joint press release from the Ministry of Trade and Industry (MTI) and the European Commission.
Mr Iswaran, who is also the Minister for Communications and Information, said the council’s “strong support” reflects the commitment and interest from the EU and its member states to continue deepening economic relations with Singapore.
He noted that many Singapore firms are keen to grow their business in the European bloc.
AdvertisementAdvertisement“The entry into force of the EUSFTA will mark a new chapter in EU-Singapore relations,” Mr Iswaran said in a speech at the gala dinner. “The FTA will provide a solid foundation for Singapore and the EU to take our economic partnership to the next level.”
Mr Hogan, who is also the EU Commissioner for Agriculture and Rural Development, told reporters it is “very good news” that the trade pact will take effect later this month.
He added that both sides will work closely on the implementation, such as ensuring the working groups are “established immediately”, so that the business communities and people in both the EU and Singapore can feel the benefits “as soon as possible”.
Mr Iswaran said Singapore will ensure that its businesses, especially the small- and medium-sized enterprises, can benefit from the trade pact.
Apart from a recently held FTA symposium, firms can also access a “tariff calculator” set up by the Enterprise Singapore that tells them the preferential margins for particular products or markets based on Singapore’s FTAs.
The Government is also working with the trade associations and chambers to raise awareness among the SMEs, he added.
“It is a continual education process,” Mr Iswaran told reporters. “(SMEs) are probably the ones that need the most help in unpacking the FTAs (to) understand the elements that will be the most relevant and beneficial.”
LONG TIME IN THE MAKING
The EU-Singapore trade deal has been a long time in the making.
Negotiations for the EUSFTA began in late-2009 and were concluded in 2014. But the ratification was delayed after the European Commission decided to ask the European Court of Justice in 2015 if the EU had the exclusive competence to sign and conclude the trade deal. It was eventually signed in October 2018.
Once it comes into force, Singapore will remove tariffs on all EU products entering Singapore while the EU will do so for 84 per cent of Singapore exports, including Asian food products.
Tariffs on the remaining 16 per cent of Singapore products, such as selected meat and seafood produce, will be removed over three to five years.
The EUSFTA also includes flexible rules of origin for key exports such as automobiles, electronics and pharmaceuticals from Singapore and the EU into each other’s markets.
Notably, it will have the concept of “ASEAN cumulation” for key exports from Singapore. This means that materials sourced from other ASEAN member countries can now be deemed as originating from Singapore and qualify for tariff concessions.
Singapore businesses will also enjoy improved market access to a wide range of services sectors, and opportunities to bid for more government projects in the EU, including railway and computer services.
Other benefits include better intellectual property protection as the EUSFTA provides for 70 years of copyright protection.
A "GREEN" FTA
The EU and Singapore will also be removing obstacles to trade and investment in green technologies, as well as fostering green public tendering and create new opportunities in environmental services.
“This is an area where the EU has significant capabilities and Singapore has also developed significant capabilities,” said Mr Iswaran, while adding that there is “apparent” need for such capabilities in the region and the world.
“These forward-looking provisions recognise the increasing need for trade to contribute positively towards the fight against climate change and reaffirms our commitment to the Paris Agreement.”
Mr Hogan added that a “European Green Deal” will be a priority for the next European Commission, which will take office next month. “Singapore will be able to tap into the initiatives that will be proposed to green business activities across the EU,” he added.
There are more than 10,000 European companies in Singapore, with the EU being the country’s biggest foreign investor.
The EU is Singapore’s third-largest trading partner, with bilateral trade in goods exceeding S$114 billion last year. It was also Singapore’s largest market for services trade at more than S$79 billion in 2017.
On the other hand, Singapore is the EU’s biggest trading partner in goods and services within Southeast Asia.
When it comes into force, it will be Singapore’s 24th free trade agreement. Collectively, these FTAs account for 92 per cent of the country’s total trade with the world.
“CATALYTIC EFFECT” ON EU-ASEAN TIES
The EUSFTA is the first trade deal that the 28-member European bloc - the world’s single largest market - has concluded with an ASEAN country.
Mr Iswaran said it has had a “catalytic effect” on the relationship between the EU and ASEAN, with the EU already concluding its negotiations on a trade deal with Vietnam.
The European bloc is also in the midst of talks with Indonesia and may soon resume discussions with Thailand, he added.
On a wider level, the EUSFTA’s upcoming entry into force is a “strong and necessary statement from two like-minded partners on the need to continue upholding open and rules-based trade”, noted Mr Iswaran.
Echoing that, Mr Hogan said: “This agreement will enhance our bilateral relationship, boost the EU’s commitment to ASEAN, and is a sign of support for the rules-based international order.”
Beyond the EU-Singapore trade pact, both jurisdictions are looking at further partnerships, both on the bilateral front and at multilateral forums.
“In the face of the rapidly changing global economy, we need to ensure that global trade rules are updated and abided by so as to maintain a level playing field for all countries,” said Mr Iswaran.
In particular, both sides are working closely on the World Trade Organisation’s Joint Statement Initiative on E-Commerce (JSI), which aims to develop common rules and disciplines for the new digital economy.
“We will continue to work with the EU to meet the needs of the constantly evolving modern economy,” said the minister.
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