The EU and Singapore today (20/9/2013) release the text of one of the most comprehensive trade agreements they have ever negotiated. It is the first EU deal with a Southeast Asian economy and has the potential to open the door to Free Trade Agreements (FTAs) with other countries from the region. The release of the texts follows their initialling, earlier today in Singapore, by the chief negotiators from the European Commission and Singapore's Government.
"We are pleased to present today one of the most comprehensive free trade agreements ever negotiated, and to submit it to our respective authorities for approval”, said Rupert Schlegelmilch, the EU’s chief negotiator of this trade agreement. “The EU and Singapore are already trading €1 billion worth of goods every week, and the agreement lays the foundations upon which business ties can prosper further. This is also the first step towards closer economic ties between the two major integrated regions in the world, the Association of Southeast Asian Nations (ASEAN) and the EU, and their 1.1 billion citizens."
EU Trade Commissioner Karel De Gucht sealed the deal with Singapore's Minister of Trade and Industry Lim back in December 2012. Today's ‘initialling’ consolidates what has been negotiated, but is without prejudice to a later decision by either side on whether or not to approve an agreement. In the case of the EU, the European Parliament has the final say on approving all free trade agreements.
Benefits of the Agreement
An economic analysis prepared by the Chief Economist Unit of the European Commission's Directorate General for Trade predicts that EU exports to Singapore could rise by some €1.4 billion over 10 years. Singapore's exports to the EU could rise by some €3.5 billion in the same period, including exports from the many European companies established in Singapore.
Reflecting the large differences in the sizes of the two economies, the analysis estimates EU real GDP will grow by around €550 million in comparison to an increase of €2.7 billion for Singapore.
Beyond the bilateral economic effects, the EU-Singapore Free Trade Agreement (EUSFTA) also has to be seen in the regional perspective. The EUSFTA has the potential to open the door into Southeast Asia, where the EU is currently pursuing negotiations on free trade agreements with ASEAN-members Malaysia, Vietnam and Thailand. With their expanding middle class, the dynamically growing ASEAN economies are key markets for Europe's exporters and the comprehensive free trade agreements the EU is negotiating tap into the region's growth potential. For these negotiations, the EUSFTA sets a valuable point of reference.
The next steps in the process
The draft agreement is currently being translated into all 24 EU languages and will then be submitted to the European Commission for formal approval. Afterwards, the Council of Ministers must first approve it before the agreement passes before the European Parliament for final ratification in a plenary vote.
Negotiations on investment protection, which started later, based on a new mandate under the Lisbon Treaty, are making progress. The aim is to integrate the investment chapter into the rest of the text before its final adoption.
EU-Singapore trade relations
Singapore is the EU's largest trading partner in ASEAN, and in 2012 the EU was Singapore's second largest trading partner, after neighbouring Malaysia. Trade in goods between the EU and Singapore in 2012 amounted to €51.8 billion, an increase of 9.7% from 2011 results. In 2012, the EU recorded a trade surplus of €8.8 billion.
Singapore is the EU's largest services trading partner in ASEAN. In 2011, total trade in services between the EU and Singapore amounted to €27.7 billion, which represents more than half of total EU-ASEASN trade in services. The EU holds a surplus of €4.5 billion vis-à-vis Singapore.
Download relevant documents here:
- overview of EU-Singapore FTA
- full text of the agreement