A free trade agreement (FTA) between the United Kingdom (UK) and Singapore has come into force since the 1st of January 2021, enacting companies to derive the same trading benefits even when the UK leaves the European Union.
The EU-Singapore Free Trade Agreement is not applicable any further for trade between the two nations as soon as the new deal kicked in, noted the Singapore Ministry of Trade and Industry (MTI).
The UK is Singapore’s third and second-largest trading partner for goods and services and also the top investment destination in Europe. Singapore, on the other hand, becomes the UK’s largest trade and investment partner in South-east Asia and many UK citizens opt for Singapore company incorporation.
The UK-Singapore FTA was signed on December 10th, 2020 by Minister for Trade and Industry Chan Chun Sing and UK Secretary of State for International Trade Elizabeth Truss.
The Ministry of Trade and Industry (MTI) said the UK-Singapore FTA offers certainty and clarity in trading arrangements between both countries.
Both countries completed their respective domestic procedures for the FTA’s provisional application that allowed them to make provisional treaty commitments until the FTA got vetted by both countries.
The most relevant features of this FTA include the elimination of tariff for goods trade, EU & ASEAN combination, business-friendly rules of origin, waiver of technical and non-tariff barriers, enhanced market access to the services sector, more opportunities in government procurement, and enhanced intellectual property rights.
Similar timelines as in the EU FTA will be followed for tariff reductions with tariffs abolished for 84% of all tariff lines for every Singapore product entering the UK from January 2021. As agreed in the FTA with the EU, the remaining products will be freed from tariff from 21 November 2024.
As agreed with the EU, Singapore and UK companies will continue to use EU materials and parts in their exports to each other’s markets. Similarly, materials and parts used by Singapore and sourced from other ASEAN member states may also qualify under liberal rules of origin for exports to the UK supporting bilateral trade between the two countries.
The UK Singapore FTA removes unnecessary barriers to bilateral trade between the two countries and focuses on reducing overall costs of exports for Singapore and UK business entities. The primary purpose is to ensure a level playing field for companies from both countries and enhance trade between Singapore and the UK. Electronics, automotive and parts, renewable energy, pharmaceuticals, and meat and meat products are the main sectors to benefit from this FTA.
Asian food products from Singapore will receive greater market access in the UK and will get a tariff-free entry under flexible rules of origin. Though evidence is needed that these food products are manufactured in Singapore any need for proving the ingredients grown or produced in Singapore is not essential.
The trade agreement allows both countries to continue enjoying the benefits of comprehensive Intellectual Property Rights including copyright etc.
The UK FTA provides enhanced market access for service providers, professionals and investors, and will create a level playing field for businesses in each other’s markets. The agreement covers services such as architecture, engineering, management consultancy, advertising, computer-related, environmental, postal and courier, maintenance and repair of ships and aircraft, international maritime transport, and hotels and restaurant services.
The FTA will also support financial services businesses in both countries. Existing UK Banks in Singapore will be allowed to expand their businesses through more Singapore company formation for banking and other financial services.
The UK will also grant Singapore companies enhanced access to participate in UK government procurement opportunities at both the city and municipal level. Companies that will benefit include those in the transport, financial services, and utility sectors.
The UK Singapore FTA not only maintains the same benefits that Singapore and UK companies were receiving under the trade agreement with the EU but widens the opportunities for companies of either country encouraging businesses to utilize every available benefit.
Finally, with this agreement, Singapore and the UK have committed to start negotiations for a high standard investment protection agreement within two years of the FTA coming into force, and aim to conclude the negotiations within four years.
The Minister of Trade and Industry added, “This will ensure that our bilateral investments will be covered by robust and up-to-date treaty protections, and provide our businesses and investors with the certainty of investment protection.”