Singapore, one of the leading Asian economies is all set to sign a free trade agreement with the Eurasian Economic Union (EAEU) in October 2019. The news is confirmed by Veronika Nikishina, Minister of Trade of the EAEU at the Far Eastern Economic Forum. With this move, Singapore will become the second ASEAN (Association of Southeast Asian Nations) after Vietnam to sign such a deal.
The EAEU is the international organization for regional economic integration. It is a free trade area. Many other countries like Armenia, Belarus, Kyrgyzstan, Kazakhstan and Russia also enjoy free trade with the EAEU. The combined gross domestic product (GDP) of EAEU is approximately US $ 5 trillion. Moreover, the EAEU countries represent a market of around 183 million people which works in its advantage.
The EAEU is strategically located between the European Union and China facilitating easy transport of goods between the two countries i.e. China and Europe. Last year China inked the free trade agreement with the EAEU; however, it was a non-preferential agreement. The negotiations are in line between China and EAEU over tariffs on goods. Once the deal is crystallised, there will be a considerable expansion of trade between China and Russia and goods transport between China and Europe. With this news, Moscow and Beijing have expressed their desire to increase their current bilateral trade volume to US $ 200 billion in the coming four years.
The free trade agreement between Vietnam and EAEU has also seen a boost in bilateral trade with Russia from nil to approximately US $ 250 million per annum within a period of two years. According to the Deputy Prime Minister of Vietnam, the free trade agreement is expected to liberalise next year with additional categories in textiles and agriculture.
Singapore being a hub of financial services in Asia and ASEAN, it is expected that the free trade agreement will include the provisions for financial and related items.
Many other countries including Egypt, Turkey and Serbia are also negotiating with the EAEU to sign the free trade agreement. This further pushes Russia closer to the Asian markets of China and Southeast Asia. The Asian market is likely to see an increase in Russian investment.
For Russian businesses who are eyeing to develop throughout ASEAN and the emerging markets of Indonesia, Philippines, Malaysia, Vietnam and Thailand, Singapore acts as an excellent regional base. Moreover, the ASEAN economies are showing positive GDP growth which further attracts investments into the region.
As per the latest communication from the Russian trade office in Singapore, no official statement has been given on the date of signing of the free trade agreement. But as per the media reports, the free trade agreement between Singapore and EAEU will be signed on October 1.
In the initial phase, the free trade agreement is anticipated to deal with trade in goods and commodities and will not accommodate financial services.
IMC Group is a leading cross-border advisory firm focusing on AMEA (Asia, Middle East and Africa) markets. If you are looking for company formation in Singapore, you may get in touch with us. Along with Singapore company incorporation, we also offer accounting and business consulting services across the globe.