In 2020, the European Union (EU) registered a trade surplus with Singapore amounting to €7 billion. Compared to global counterparts, Singapore ranks the 16th largest trading partner and has the highest trade surplus amongst Association of Southeast Asian (ASEAN) Member States [1]. In this article, we cover 4 key EU-Singapore agreements that underpin this strong trade relationship.
1. EU-Singapore Free Trade Agreement
The EU-Singapore Free Trade Agreement (EUSFTA), the first free trade agreement between the EU and an ASEAN country, came into force in November 2019 [2]. The EUSFTA will enhance region-to-region connectivity between the EU – the world’s largest single market, and ASEAN, which is projected to be the fourth largest economic bloc by 2030.
The agreement eliminates tariff and non-tariff barriers for goods and improves market access and commercial establishment conditions for services. The EUSFTA provides firms with additional opportunities to bid for government procurement contracts and addresses a wide range of provisions in areas such as intellectual properly, customs, rules of origin, trade facilitation, electronic commerce, sanitary and phytosanitary measures, renewable energy, competition and transparency. The agreement also includes a comprehensive chapter on trade and sustainable development to enhance the protection of environmental and labour rights [3].
The EUSFTA is a clear indication of the EU's commitment to step up its engagement with Southeast Asia. Together with the recent elevation of relations between the EU and ASEAN to a Strategic Partnership in December 2020, this EUSFTA is an important building block towards a potential EU-ASEAN FTA [4].
Useful infographics:
2. EU-Singapore Investment Protection Agreement
This agreement between the EU and Singapore ensures that governments treat foreign investors fairly whilst protecting the government’s right to regulate and pursue legitimate public policy objectives including health, safety and environmental protection.
This agreement clearly defines investment protection standards, such as what constitutes a breach of fair and equitable treatment or indirect expropriation – problems frequently cited by investors in disputes with states. It provides a single set of rules for protecting all investments between the EU and Singapore in bid to offer legal certainty to investors on both sides [5]. This agreement will enter into force when all EU Member States replace existing bilateral investment treaties between Singapore and individual EU countries.
As part of the trade agreement, the EU and Singapore have agreed to provide preferential market access to each other’s companies and to remove certain restrictions that prevent companies from serving each other’s markets. Specific rules on non-discrimination and transparency have been laid down to create predictability and equality on the playing field.
These include reducing restrictions on:
The number of service suppliers;
The value of service transactions or assets;
The number of services operations or quantity of services outputs;
The specific type of legal entity permitted; and
Foreign shareholding/equity limits.
This applies to a wide range of sectors such as:
Telecommunications services;
Financial services;
Computer and related services;
Transport services;
Environmental services;
Postal services; and
Business services.
3. EU-Singapore Partnership and Cooperation Agreement
The EU-Singapore Partnership and Cooperation Agreement (ESPCA), signed on 19 October 2018, reinforces the existing relationship between the European Union and Singapore and builds on a shared commitment towards multilateralism and international rules-based order.
It will provide the overarching framework to strengthen political dialogue and further enhance cooperation between the EU and Singapore in a broad range of areas. These include human rights, security, health, environment, climate change, energy, education and culture, science and technology and transport [6].
The agreement will enter into force once ratified by all EU Member States.
4. EU-Singapore Cluster Cooperation
The administrative arrangement between EU and Singapore on cluster cooperation was signed on 3 December 2020. This agreement builds upon the benefits of the EUSFTA and facilitates cooperation and business activities between industry clusters in Singapore and the EU [7]. The overarching purpose is to collectively drive a resilient and sustainable joint recovery from the impacts of the Covid-19 pandemic.
This administrative arrangement works in tandem with the memorandum of understanding between the Singapore Business Federation (SBF) and the European Chamber of Commerce, Singapore (EuroCham).
Useful Materials
European Union - Singapore Trade and Investment Agreements (link)
European Union - Singapore Free Trade Agreement Legal Text (link)
Guide to the EU-Singapore Free Trade Agreement & Investment Protection Agreement (link)
In figures: the EU's trade and investment relationship with Singapore (link)
EU-Singapore: Strategic benefits - building bridges, shaping globalisation (link)
Safeguards: Five ways the EU-Singapore agreements guarantee the EU's interests (link)
References:
[1] Singapore, the European Commission
[2] The European Union-Singapore Free Trade Agreement, Ministry of Trade and Industry [3] European Union - Singapore, Trade and Investment Agreements, European Commission and Ministry of Trade and Industry (Singapore)
[4] The many benefits of a European Union - Singapore FTA, The Business Times
[5] Details of the EU-Singapore Free Trade Agreement, EuroCham Singapore
[6] Agreement with Singapore set to give a boost to EU-Asia trade, European Commission
[7] EU and Singapore sign cluster cooperation agreement, European Cluster Collaboration Platform
Contact the Danish Ministry of Foreign Affairs for more information on free trade agreements and export/import tariffs
Humera Arshad
Export Advisor
Mail: humars@um.dk
Contact the Royal Danish Embassy in Singapore for more information about business opportunities and how Denmark seeks to inspire green transition in Southeast Asia:
Mark Edward Perry
Sector Expert at Royal Danish Embassy Singapore
Phone: +65 9088 5567
Email: markpe@um.dk