The European Union (EU) and Singapore have finalized their negotiations on a free trade agreement (FTA). Singapore expects that exporters of electronics, pharmaceuticals, chemicals, and processed food products will especially benefit from the completion of the FTA.
Negotiations for the FTA began in 2010 and were all but completed by 2013. However, the issue of investment protection held up proceedings until recently.
Negotiators on both sides hailed the completion of the agreement as a key step in strengthening their economic relationship.
EU Trade Commissioner, Karel De Gucht, summed things up succinctly by stating, “Now, we have a comprehensive agreement which is a gateway to this important region in Asia.”
“It will help boost economic growth, investment, and job creation in the EU. It will help open the door for Europe to the Association of Southeast Asian Nations (ASEAN) market with 600 million consumers.”
The importance of ASEAN continues to grow, with 2015 set to see the implementation of the ASEAN Economic Community (AEC).
The AEC seeks to “transform ASEAN into a single market and production base, a highly competitive economic region, a region of equitable economic development, and a region fully integrated into the global economy.”
Collectively, ASEAN represents a market of some 600 million people, with a combined GDP of about US$2.5 trillion and upwards of US$1.5 trillion in trade flowing throughout the region.
The provisions of the EU-Singapore FTA include:
- The EU and Singapore commit to ensure a stable and fair regime for foreign investors, while also keeping the right to regulate in the public’s interest
- EU exporters will be granted immediate duty-free access to the Singaporean market for all products
- The EU will eliminate virtually all tariffs over a five-year period
In 2013, Singapore was the EU’s 15th largest trading partner and second largest Asian investor into the EU. In turn, the EU makes up around 10% of Singapore’s trade volumes and is the largest contributor of foreign direct investment.
The EU is also currently negotiating FTAs with Vietnam, Malaysia, and Thailand.