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SINGAPORE – Singapore signed a free trade agreement (FTA) with the United Kingdom on Thursday (December 10) to ensure that companies from both countries continue to enjoy the same benefits they are receiving under the Republic’s FTA with the Union. European.
The deal will cover more than £ 17bn (S $ 30.4bn) of current bilateral trade in goods and services.
The two countries also agreed to evaluate the modules of a digital economy agreement (DEA) between the UK and Singapore, with a view to starting negotiations on the DEA in 2021. They also pledged to start talks and conclude an investment protection agreement within two and four years respectively from the entry into force of the FTA.
The FTA was signed in Singapore by the Minister of Trade and Industry, Chan Chun Sing, and the Secretary of State for International Trade of the United Kingdom, Elizabeth Truss.
Speaking at the event, Mr Chan noted that the UK is Singapore’s third and second largest trading partner for goods and services, respectively, as well as its top investment destination in Europe. In turn, Singapore is the UK’s largest trading and investor partner in Southeast Asia.
As the first FTA between the UK and an Asean member state, it represents the UK’s deepening commitment to the region and provides British companies with a platform to access opportunities in the region through Singapore, he said. Chan.
“In these volatile times, the UKSFTA gives Singapore and UK companies the certainty they need to find and access new growth opportunities,” he added.
The immediate and tangible benefits of the agreement include the elimination of tariffs for 84 percent of all tariff lines for Singapore’s exports to the UK following the UKSFTA’s entry into force, with virtually all remaining tariffs removed by November 2024, the same deadline under Singapore’s FTA with the EU (EUSFTA), Mr Chan said.
It will also improve market access for Asian food products made in Singapore, such as har gow (shrimp dumplings) and sambal ikan bilis (spicy crunchy anchovies), he added.
“We hope this will allow our friends in the UK to taste more of our distinctive Asian food products,” said Chan.
Truss, in an interview with The Straits Times, said that the FTA will go into effect on January 1 next year, which is when the UK leaves the transition period for its exit (Brexit) from the EU.
“We want to secure a Canada-style agreement with the EU, but if we cannot assure that we will trade with the EU in terms of Australian style. Neither of those two agreements will affect the agreement with Singapore, the agreement with Singapore is done,” he said in the interview.
A Canada-style deal will remove most but not all tariffs, while an Australian-style deal is not basically a trade deal and will be supported by the terms of the World Trade Organization.
The Ministry of Trade and Industry (MTI) in a statement issued after the signing of the FTA said that the benefits of the FTA between the United Kingdom and Singapore include the elimination of tariffs for the trade of goods and greater access to the respective services and public procurement markets.
The FTA will provide Singapore and UK companies with certainty and clarity in trade agreements between the two countries by reducing non-tariff barriers in at least four main sectors: electronics, motor vehicles and vehicle parts, pharmaceuticals and medical devices. , and generation of renewable energy.
The trade deal will also support regional operations and supply chains for companies in the UK and Singapore.
Under the current agreement under the FTA with the EU, UK and Singaporean companies can continue to use materials and parts from the EU-27 and ASEAN in their exports to each other’s markets, referred to as accumulation of the Asean.
Similar to the EUSFTA, the UK-Singapore FTA requires ASEAN countries to provide cooperation and compliance commitments to enable ASEAN build-up.
Once the relevant cumulation agreements are in place, Singaporean exports using ASEAN materials and parts may qualify for preferential tariff treatment upon entering the UK.
“This will strengthen the roles of Singapore and the United Kingdom as business centers in our respective regions,” MTI said.
As the first FTA between the UK and an ASEAN member, the UK-Singapore FTA will also serve as a pioneer for the UK’s engagement with the ASEAN region, MTI said.
The proposed DEA between the UK and Singapore will also serve as such for the modern rules on digital trade and financial services between Europe and Southeast Asia.
“(DEA) will facilitate smoother digital commerce and business between the UK and Singapore by promoting cross-border digital connectivity and interoperability of digital standards and systems,” said MTI.
The UK has indicated its interest in joining the Comprehensive Progressive Trans-Pacific Partnership (CPTPP), which Singapore supports and welcomes.
In addition to the FTA, the United Kingdom and Singapore have also committed to initiating negotiations and striving to conclude a high-level investment protection agreement within two and four years, respectively, of the entry into force of the FTA between the United Kingdom. and Singapore.
“This will ensure that bilateral investments are covered by robust and up-to-date treaty safeguards, in addition to providing companies and investors with the certainty of investment protection,” the MTI said in its statement.
Singapore and the United Kingdom will now work on their respective ratification processes for the entry into force of the United Kingdom-Singapore FTA, MTI said without giving a timeline for the ratification process.
Ho Meng Kit, executive director of the Singapore Business Federation, said NAFTA will allow companies here to enjoy greater certainty and security after Britain’s exit from the EU.
“However, companies should be aware that independent UK business regulations may differ from those of the EU. They will also need to ensure that they comply with changes to UK national regulations and customs procedures, ”he said.
“We look forward to working with both governments to help companies cope with these changes, especially those that may be using the UK as a hub for re-exporting to Europe or offering services to EU customers.”
The British Singapore Chamber of Commerce said Thursday that having this agreement in place at this time “will provide a sense of confidence to the business community, so that they can make critical decisions, strengthen their workforce, invest for the future and continue to grow.” “.
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