Opportunities and expectations
The new EU-Singapore Free Trade Agreement will open up new opportunities and increase Europe’s presence in Southeast Asia, explains Pedro Silva Pereira.
The European Union-Singapore Free Trade Agreement, which entered into force late last month, will open up new opportunities for both businesses and citizens, strengthen our partnership with Singapore and increase Europe’s presence in this fast-growing Southeast Asia region.
The agreement is significant in both political and economic terms. At a time of uncertainty and many challenges to the global trading system, this trade agreement emphasises the European way of trade policymaking: trade that is open, fair and based on values and rules.
The entry into force of the agreement, on November 21, came with the clear expectation of full and efficient implementation. The agreement, approved by the European Parliament with a solid majority earlier this year, is the first EU trade agreement with an ASEAN country (Association of Southeast Asian Nations).
The EU-Singapore Investment Protection and Partnership Cooperation Agreement - still pending ratification by EU Member States - will also help put the relationship on a more solid and broader foundation.
Singapore plays an important role within the region, not only as the current coordinator for EU-ASEAN relations, but also as a commercial hub. The trade agreement therefore serves as a model for other bilateral trade agreements with ASEAN members. Indeed, it can become a stepping stone for a future region-to-region deal.
Singapore is a small island state but by far the EU’s largest ASEAN trading partner. Over 10,000 EU companies are established in Singapore while More than 50,000 companies, 83 per cent of which are small and medium-sized enterprises, export goods from Europe to the country.
"At a time of uncertainty and many challenges to the global trading system, this trade agreement emphasises the European way of trade policymaking: trade that is open, fair and based on values and rules"
The agreement is expected to have a positive effect on trade, income and employment. Above all, the agreement ensures that companies from EU Member States will not find themselves at a competitive disadvantage compared to businesses from other countries with existing or upcoming trade agreements.
This is the case for the two mega-regional agreements in the Asia-Pacific region: the Comprehensive and Progressive Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. The agreement is a comprehensive, ‘new generation’ trade agreement that eliminates all remaining tariffs on EU products.
It addresses non-tariff barriers in key areas such as cars, electronics and pharmaceuticals as well as clothing and textiles. EU companies also have better market access to financial services, the postal and courier sector, telecommunications, transport, information technology and environmental services.
Singapore is the EU’s fifth biggest agri-food export market in Asia and the new trade agreement has the further advantage of protecting 138 EU Geographical Indications. The agreement also touches on matters relating to public procurement, competition and sustainable development.
Singapore has embraced the digital industrial transformation over recent years and the country offers opportunities in various industry 4.0 sectors and in sustainable innovation. Outreach campaigns are now essential to ensure that small and medium-sized enterprises can gain maximum benefit from the agreement.
As requested by the European Parliament in its February 2019 resolution, trade and sustainable development are key areas for action during implementation.
The agreement includes very important commitments to pursue ratification of the eight Core Conventions of the International Labour Organisation (ILO), to implement the Paris Agreement on climate change, to conserve and sustainably manage natural resources, as well as contributing to corporate social responsibility and the promotion of vital green technologies.
"The trade agreement will certainly strengthen EU economic relations with Singapore. It should also have a ‘catalytic effect’ on EU-ASEAN relations more widely"
The European Parliament will continue to push the Singaporean government to move towards the ratification of the three missing ILO Core Conventions: freedom of association and protection of the right to organise, discrimination (employment and occupation) and abolition of forced labour.
It is also crucial that we continue looking for ways to increase the enforceability and impact of the Trade and Sustainable Development chapter, particularly in light of the 2017 European Court of Justice’s Opinion on the Singapore trade agreement.
The Court concluded that parties could terminate or suspend the liberalisation provided in the agreement for breaches of labour and environmental provisions. In this context, the European Parliament should, in the interest of businesses, workers and consumers, fully explore the new role of the Chief Trade Enforcement Officer.
In conclusion, Singapore is an important partner who believes in a multilateral rules-based order. One with whom the EU can cooperate in many areas, including sustainability and the digital agenda. The trade agreement will certainly strengthen EU economic relations with Singapore.
It should also have a ‘catalytic effect’ on EU-ASEAN relations more widely. The deal offers numerous opportunities that now have to be used for mutual gains. Singapore is known for taking its international commitments seriously. We therefore expect a full and efficient implementation of the agreement.
The European Parliament will ensure regular follow-up to ensure that this trade agreement truly works for small and medium-sized enterprises and that labour and environmental commitments are translated into practice.
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