Singapore is a financial and trading hub with an extensive network of 21 implemented bilateral and regional FTAs with 32 trading partners. In 2016, the European Union (EU) was Singapore’s 3rd largest global trading partner, and Singapore was the EU’s 15th largest global trading partner and largest trading partner in Southeast Asia. Total EU imported from Singapore hit SGD 31.5 billion while the EU exported SGD 51.03 billion, according to the European Commission.
Singapore and the EU launched their first negotiation in March 2010 and concluded the European Union – Singapore Free Trade Agreement (EUSFTA) after two years of negotiation in December 2012; except for the investment protection chapter. The negotiations on the last chapter were completed in October 2014.
It was initially expected that when the EUSFTA got inked, it would have become the first FTA between the EU and ASEAN countries. However, South Korea was the first Asian country to implement an agreement with the EU.
Update on Brexit
In 2016, 52% of Britons voted to leave the 28-nation bloc (European Union) – called Brexit. Skeptical pundits (Euroskeptics) said that “Brexit would see further push-back and even come to naught.” However, many experts said that “a delay [to the EUSFTA] might be a better outcome than a complete renegotiation.” The UK has traditionally been viewed as the bloc’s biggest free trade title-holder, though with Brexit this provides two less pro-free trade powers, Germany and France, to play a bigger role in the deal.
It’s clear that the trade pact will be immediately impacted by London’s departure. However, Brexit does not trigger a destabilizing effect on the bloc where the EU is keeping themselves intact with other trade agreements. The UK alone will soon be commencing its own trade negotiation deals and it could be there is a move to negotiate with Singapore a UK free trade agreement with both parties leveraging off of prior negotiations in the EUSFTA as prior negotiating members.
What is the EUSFTA?
The EUSFTA covers 17 chapters and outlines that import duties will be eliminated on most products as soon as the FTA is in force. Goods produced from components and parts sourced from other ASEAN countries for Singapore’s key exports can also be considered originating inputs. The trade accord is to make the EUSFTA a 21st century FTA – called “new generation” FTA and in compatibility with global efforts has elements that include the reduction of greenhouse gas emissions. The EUSFTA also includes a chapter on renewable energy generation, which aims to promote, develop, and increase the generation of energy from renewable and suitable non-fossil sources.
What led to the delays in the EUSFTA?
Some would say it’s all about the European Court of Justice (ECJ) opinion about how the European Commission’s demonstrated an inability to sign and ratify agreements within the European Parliament.
Despite the fact that the EU does not currently have free trade agreements with most ASEAN countries, this agreement was considered a launch pad to other future trade agreements with ASEAN member states. Unfortunately, these delays have cast doubt over the EU’s ability to agree upon future trade deals such as the finalization of the Europe – Vietnam Free Trade Agreement (EVFTA), currently on hold, and the resuming of the stalled EU-Malaysia talks.
In summary, both Singapore and the EU are looking forward to seeing the ratification of their long-time negotiated agreement very soon. The EU’s movement toward negotiations with partners in the Asia-Pacific — after the departure of the USA from the TPP — can strengthen both diplomatic and economic relations between these areas of the world.