The first free trade agreement (FTA) between the European Union and a Southeast Asian economy has been reached with the completion of negotiations between Singapore and the EU.
The two wrapped up negotiations on the Investment Protection Chapter of the EU-Singapore Free Trade Agreement, marking the successful conclusion of the negotiations of the entire EUSFTA.
Other parts of the agreement were signed in September 2013, according to a statement released October 17 by Singapore’s Ministry of Trade and Industry (MTI).
“The Investment Protection Chapter will now undergo legal scrubbing before both sides formally finalise the negotiations. After the agreement has been translated into all official EU languages, the agreement will be signed and ratified by both parties,” added the statement.
“The Investment Protection Chapter in the EUSFTA will strengthen investment relations between the EU and Singapore. The chapter commits both the EU and Singapore to ensuring a stable and fair regime for foreign investors while preserving the right of the parties to regulate in the public’s interest.”
According to MTI, the EUSFTA is a comprehensive agreement with extensive commitments by both parties to provide greater access to each other’s markets, including through services liberalization, investment and procurement markets, and removal of tariff or nontariff barriers to trade.
Singapore exporters of electronics, pharmaceuticals, chemicals, and processed food products in particular will benefit from the removal of the EU’s tariffs, while EU exporters will be granted immediate duty-free access to the Singaporean market for all products.
Businesses from both sides will also gain access to each other’s services markets in a wide range of sectors. Furthermore, the EUSFTA will see the removal of a number of nontariff measures between the EU and Singapore, improving access for exporters of pharmaceuticals and electronics.
In addition to removing obstacles to trade and investment in certain green technologies, the EUSFTA will foster green public tendering and create new opportunities in environmental services.
Singapore and the EU are important trading and investment partners. In 2013, the EU accounted for close to 10 percent of Singapore’s global trade and was Singapore’s third largest trading partner, with bilateral trade standing at S$96.5 billion (US$75.8 billion).
Singapore was the EU’s 15th largest global trading partner and fifth largest trading partner in Asia. On investment flows, the EU was the largest contributor of foreign direct investment into Singapore, accounting for almost S$190 billion and 25.9 percent of the total stock of FDI in Singapore, while Singapore was the second largest Asian investor into the EU with S$60.3 billion in FDIs in 2012.
The EUSFTA constitutes a stepping stone to greater engagement between the two regions, said MTI. “There are over 10,000 European companies in Singapore, many of which use Singapore as a hub. The agreement will open the door for Europe to the ASEAN market with 600 million consumers.”
Photo: William Cho
