The European Union-Singapore Free Trade Agreement (EUSFTA), a bilaterally beneficial trade agreement, was finally implemented on November 20, 2019, after ten years of negotiations. Talks began in 2009, with the Good and Services negotiations and investment protection negotiations ending in 2012 and 2014, respectively. EUSFTA was signed in October 2018, and approved by the European Parliament in February 2019. Singapore, the EU’s third largest services trading partner, is the primary goods trading partner from Asean (The Association of Southeast Asian Nations). Bilateral trade with Singapore exceeded €53 billion of trade in services (approximately 68 billion USD) in 2018 alone. Singapore is also the primary country for EU investment in Asia. The EUSFTA is the first of trade agreements implemented with Singapore, removing almost all customs duties between the EU and Singapore.
The EUSFTA creates an investment court which replaces the previous ad hoc investment arbitration system in Singapore, reducing tariffs and non-tariff barriers. Ultimately, this will provide Singaporean companies a greater market access to all EU member states. The investment court will be manned by EU and Singaporean judges as opposed to the original party-appointed arbitrators. In addition to the new investment court, the EUSFTA introduces new rules on trade and development, putting labor rights and the environment at the forefront of necessary protections. Primarily, the agreement was intended to offer major economic opportunities for both entities while allowing public policy objectives to flourish. Prime Minister Lee Hsien Loong of Singapore expressed hope that the EUSFTA would open new doors for trade growth:
Launched amid the 2008-2009 global financial crisis, and coming into force in today’s uncertain global economy, the EU-Singapore FTA signals the EU and Singapore’s shared conviction that open and global rules-based trade is the path to growth and prosperity. The agreement is an important addition to Singapore’s extensive network of FTAs, which has enabled our businesses to capitalise on opportunities in diverse markets. We hope it will lead eventually to an EU-ASEAN FTA, enhancing region-to-region connectivity between the EU — the world’s largest single market, and ASEAN — the fourth largest economic bloc, by 2030.
Meanwhile, EU Trade Commissioner Cecilia Malmstrom said that the agreement will “enhance our bilateral relationship. boost the EU’s commitment to Asean, and is a sign of strong support for the rules-based international order.” Specifically, the agreement is said to benefit the EU’s small and medium-sized businesses. The simplification of Singaporean Custom procedures and the reduction of technical rules should enhance the EU’s businesses. Many hope that this agreement will be the first of many similar agreements with other members of Asean.
Looking to the future, the EU and Singapore hope to ratify the EU-Singapore Investment Protection Agreement (EUSIPA), which is projected to take two years. EUSIPA was signed at the same time as EUSFTA. EUSIPA is currently before the regional and national parliaments of the EU member states. Further, the Partnership and Cooperation Agreement, which began in 2005, was signed in 2018, and hoped to be ratified by all EU member states. The agreement will serve as a unifier for future agreements between the EU and Singapore.
By Emily Castleman, Junior Staffer