The EU-Singapore Free Trade Agreement (EUSFTA), which is pending ratification, would be the first bilateral deal between the EU and an ASEAN country.
Singapore’s Trade and Industry Minister met with EU officials in Brussels this week to discuss the EUSFTA.
Singapore is the EU's largest commercial partner in ASEAN. It accounts for slightly under one-third of EU-ASEAN trade in goods and services, and two-thirds of investments between the two regions.Over 10,000 EU companies are established in Singapore and use it as a hub to serve the whole South Pacific.
Negotiations for a region-to-region trade and investment agreement between the EU and ASEAN were launched in 2007 and paused by mutual agreement in 2009.In December 2009, the EU decided to pursue bilateral trade and investment negotiations with individual ASEAN countries, starting with Singapore.The negotiations with Singapore were re-launched in March 2010. The FTA is the first deal between the EU and a Southeast Asian economy. The EU considers it a stepping stone to greater engagement between the EU and Southeast Asia.
The EU has a positive balance of trade in goods and in services with Singapore.Singapore is a major destination for European investments in Asia, as well as Asia's third largest investor in the EU after China and Japan.In 2016 the existing bilateral foreign direct investment stock between the EU and Singapore was roughly €256 billion, having expanded rapidly over the past years.
Singapore’s Trade and Industry Minister Chan Chun Sing met with EU trade officials in Brussels this Wednesday. He said,”The free trade agreement between Singapore and the European Union (EU) is a "pathfinder" deal that could pave the way for similar pacts between the EU and other Asian nations.”
The EUSFTA will allow Singapore and EU firms to enjoy greater market access and business opportunities in each other's markets. Once it comes into force, the deal will see tariffs on qualifying Singapore exports into the EU being progressively eliminated over five years.It will also liberalise certain rules. For instance, processed Asian food products made in Singapore, such as chicken and pork floss, canned luncheon meat and fish balls will be able to enter the EU tariff-free, within an annual quota.
The US-China trade war has caused disbalance in the market conditions and Singapore will soon face its brunt if the conflict persists. This has made the EUSFTA’s ratification increasingly significant and mutually beneficial for both the parties. "In the larger context, it's not just about a bilateral agreement between the EU and Singapore. There are quite a few larger strategic reasons for the EUSFTA to be ratified," Mr Chan said.He noted that given global developments, it is also important for the EU to continue entrenching its position in South-east Asia's economic development.
"Many other ASEAN and Asian countries are looking at Singapore and the EU and saying that if Singapore and the EU can do it, then there's hope for the rest of the countries to have similar agreements with the EU to benefit their economies and people,"Mr.Chan said."However, if this does not come about, then many South-east Asian and Asian countries might lose confidence and question the commitment of the EU to remain in this part of the region."
Among the officials Mr Chan met on Wednesday were Austrian Federal Minister for Digital and Economic Affairs Margarete Schrambock. She is also the chair of the Foreign Affairs Council (Trade), comprising the trade ministers of all 28 EU member states. Mr. Chan also met Member of the European Parliament David Martin, who is also the EUSFTA rapporteur and has been in charge of drafting and presenting reports on the pact to the European Parliament.
The meeting with the EU officials concluded on an optimistic note. They recognised that the deal is in their favour and agreed to ratify the FTA speedily before they are bogged down by domestic priorities.
According to an opinion of the Court of Justice of the European Union (ECJ) in Luxembourg, EUSFTA is a so-called mixed agreement. In order to be able to come into full force in its present form, all 28 individual EU countries would therefore have to ratify the agreement instead of only the EU institutions’ approval.
Our assessment is that Mr.Chan’s visit to Brussels comes at a crucial juncture due to rising protectionism around the world. We feel that the speedy ratification of this deal will safeguard the EU against Trump’s brutal tariff attacks. We believe that this deal will open new pathways of trade in Asia for the European Union.