The Council of the European Union (EU) has approved the EU-Singapore Free Trade Agreement (EUSFTA), announced Singapore’s Ministry of Trade and Industry (MTI) yesterday. This marks the final stage in the EU’s internal approval process for the EUSFTA.
The EU and Singapore will now proceed to complete their respective remaining administrative processes, with the EUSFTA expected to enter into force on 21 November 2019. After which, companies in the EU and Singapore will benefit from greater market access across many sectors, increased government procurement opportunities and the progressive elimination of tariffs on exports into Singapore and the EU, among others.
Singapore and the EU started negotiations on the EUSFTA in December 2009, and they were concluded in October 2014. It is the first FTA between the EU and an ASEAN country, supporting an open and rules-based global trading system.
The EUSFTA also aims to address 21st century trade challenges such as e-commerce, plus contains strong rules on trade and sustainable development, including the protection of labour rights and the environment. For instance, the EUSFTA will foster green public tendering and create new opportunities in environmental services.
“The Council’s strong support reflects the EU and its member states’ interest and commitment to continue deepening economic relations with Singapore. Many Singapore companies are keen to grow their business in the EU and are looking forward to the EUSFTA’s entry into force,” said S Iswaran, Singapore’s Minister for Communications and Information and Minister-in-charge of Trade Relations.
“As the first agreement between the EU and an ASEAN country, the EUSFTA will further strengthen trade and investment links between our regions. It also signals Singapore’s strong commitment to open and rules-based trade,” he added.
EU Commissioner for Agriculture and Rural Development and Commissioner-Designate for Trade, Phil Hogan, commented, “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. In particular, I welcome the protection of Geographical Indications – iconic food and drink names which represent rural intellectual property – in the agreement.”
Significant benefits for both parties
1). Tariff elimination
Singapore will remove tariffs on all EU products entering Singapore. The EU will remove tariffs on 84% of all Singapore products entering the EU within the first year, and the remaining 16% over a period of three to five years.
The EUSFTA will provide for liberal and flexible rules of origin (ROO) for the EU’s and Singapore’s key exports to each other’s markets including automobiles, chemicals, clothing and textiles, electronics, machinery, pharmaceuticals, and petrochemicals.
2). Government procurement opportunities
The EUSFTA’s Government Procurement chapter includes rules on transparency and non-discrimination that go beyond the WTO’s Agreement on Government Procurement, which Singapore and the EU are signatories to.
The EU, which has the largest government procurement market in the world, will grant Singapore enhanced access to city-level and municipal-level government procurement opportunities. Companies that will benefit include those with strengths in architecture and engineering services, computer-related services, telecommunications services, land transport services, maintenance and repair services, sewage and refuse disposal.
In return, Singapore’s commitments in the GP Chapter will allow EU companies more opportunities to participate in the country’s public tenders.
3). Reduced non-tariff barriers
Unnecessary technical barriers to trade (TBT) for Singapore and EU exporters, which sometimes makes it difficult for companies to sell their products in different markets will be removed. The provisions in the agreement go beyond the requirements of the World Trade Organisation’s Technical Barriers to Trade (TBT) Agreement, and are aimed at reducing costs for exporters.
Provisions include rules on marking and labelling, reducing duplicative conformity testing for a range of electronic goods, promoting the recognition of international standards for motor and vehicle parts, and certifying systems for meat-producing establishments so that inspection of individual abattoir / food processing plants for companies to export their goods will not be required.
This will create a level playing field for EU and Singapore companies to facilitate trade between EU and Singapore. A wide range of sectors in both the EU and Singapore will benefit, such as electronics, motor vehicles and vehicle parts, pharmaceuticals, renewable energy, as well as meat and meat products.
4). Trade service sectors and Intellectual Property (IP) rights
The EUSFTA provides enhanced market access for service providers, professionals and investors, and creates a level-playing field for businesses in each other’s markets, including through certain sector specific rules on non-discrimination and transparency.
In addition, both the EU and Singapore rely on innovation as a driving force to support their economies, and have established modern systems for protecting and enforcing intellectual property (IP) rights in their territories. To continue encouraging innovation, the trade agreement includes a comprehensive intellectual property rights chapter covering provisions on copyright, designs, enforcement and geographical indications (GIs).
For more details on the key benefits of the agreements, refer to the business guide jointly produced by MTI and the European Commission.