On October 19, Singapore signed the EU-Singapore Free Trade Agreement (EUSFTA) and the EU-Singapore Investment Protection Agreement (EUSIPA). The EUSFTA is a long-awaited trade deal with the 28-member European Union, and the first of its kind between the EU and a member of the Association of Southeast Asian Nations (ASEAN). The progressive deals act as a gateway to each of the region’s ever-expanding markets, and are aimed at region-to-region cooperation and enhanced business. These agreements were signed in an effort to counter rising global trade protectionism, and could potentially serve as the foundation for an EU-ASEAN free trade agreement.

The two deals were signed by Singapore and EU officials on the side-lines of the 12th Asia-Europe Meeting (ASEM) Summit in Brussels, Belgium.

Key takeaways of the EUSFTA

With this agreement, Singapore is required to remove all tariffs imposed on goods imported from the EU. In return, the EU will eliminate duties on 84% of goods imported from Singapore. The remaining 16%  will be removed over a period of three to five years.

The EUSFTA  aims to provide flexible rules of origin which will ultimately ensure that the goods originating in the ASEAN member states qualify for tariff concession when exported to the EU. This will significantly boost the exports of products ranging from automobiles, chemicals, clothing and textiles, electronics, machinery, pharmaceuticals, and petrochemicals to both the markets.

The unnecessary technical barriers to trade (TBT) that previously inhibited the Singapore and EU exporters from selling their goods will be removed, which will reduce costs for exporters. This deal will also remove duplicate conformity testing requirements for exports of electronic goods, and certify that testing systems for meat-producers are more robust and hassle-free.

EUSFTA promises increased export of Asian food products produced in Singapore such as lap cheong (dried Chinese sausage) and roti prata (Indian flatbread). These products would enter the EU markets tariff-free, up to a combined quota of 1250 tons annually.

EU-Singapore trade statistics

According to the Singapore’s Ministry of Trade and Industry, the EU was Singapore’s third largest trading partner with the two-way trade in goods exceeding S$98 billion in 2017. Singapore is the largest EU trading partner in the 10-member ASEAN. Singapore exported approximately $43 billion worth of goods to the EU and imported goods amounting to S$55 billion from the EU, making it the 15th largest market of EU exports and the 19th largest market for EU’s imports. In services, EU was the largest market for Singapore with the total trade exceeding S$74 billion in 2017.

The situation ahead

The EUSFTA will enhance the trade between the EU and Singapore in sectors such as electronics, motor vehicles, pharmaceuticals, renewable energy, and meat products. Trade in services should also increase in sectors such as finance, research and development, business, telecommunication, environmental science, and tourism.

The EUSFTA will now be introduced in the European Parliament for ratification, which is set to occur in the first quarter of 2019. Once ratified, the EUSFTA will be entered into force.

 

If you want to learn more about the EUSFTA, read the Singapore’s Ministry of Trade and Industry Press Release