04 Dec EU and Singapore Have Signed the Free Trade Agreement
Singapore and the European Union (EU) have just signed a free trade pact which is called the EU-Singapore Free Trade Agreement (EUSFTA) with a goal to strengthen their economic relations. In addition, two more agreements were signed between the EU-Singapore Partnership and Cooperation Agreement (ESPCA) and EU-Singapore Investment Protection Agreement (EUSIPA). This pact shows their commitment to free trade especially with increasing protectionism and is expected as a preface to an FTA in times to come between the EU and the Association of Southeast Asian Nations (ASEAN).
Sanction and coming into force
The EUSFTA and EUSIPA are now under discussion and votes will be collected in the European Parliament in 2019 Quarter 1. After approval by the European Parliament and the national parliaments of every EU member state, the EUSFTA and EUSIPA will come into force and announced and this process would take about a couple of years.
Trade links between Singapore and the EU
Do you know that Singapore ranks as 14th largest trading partner in the EU in terms of goods and the 4th largest in terms of services? The EU is the country’s 2nd biggest trading partner for goods and the biggest for services. It is predicted that over 10,000 EU-based organizations that have their business in Singapore would highly benefit from this FTA. Now, other Vietnam, Singapore is the second ASEAN partner to sign an FTA with the EU.
Foreign direct investment (FDI) is also very important in the economic relations in Singapore and the EU. The size of trade between these two regions and the reciprocal FDI helps in making Singapore the top-most players in terms of EU trade activities in Asia.
Trade in goods
The EU decided to slash its tariffs to 0 within the coming 5 years after the coming in force of the EUSFTA, which will cut 75% of the tariff lines to almost 0% soon and the rest in the next three to five years. Some current tariffs, such as on agricultural products, would remain. In Singapore, almost 99% of goods from the EU are currently permitted duty-free access.
This agreement will strengthen cooperation in terms of regulatory standards and will also reduce needless technical barriers in trade. Some specific guidelines for food safety are also included. EU standards regarding automobiles and their parts are already accepted by Singapore. Third-party testing of Electronics would be removed slowly in Singapore complying with the EU rules. The EU calls for better transparency for pharmaceutical pricing. Also, green technology should be considered the same as national products in both regions in this agreement.
Trade in services
Trade in services is prepared with a positive list, which includes 12 sectors (with over 160 sub-sectors) which are open for competition from the associate countries. Postal service is now opened up on both sides and they also agreed for better co-operation in e-commerce and remove needless restrictions and rules.
Investment protection agreement
The EUSIPA is going to replace 12 current Bilateral Investment Agreements among Singapore and the EU. This agreement lays standards of fair and equitable treatment (FET) for investments between both the parties.