21 Nov 2019
EU Singapore Free Trade Agreement Enters into Force on 21 November 2019
On 14 November 2019, the Official Journal published a Notice concerning the date of entry into force of the Free Trade Agreement (“FTA”) between the EU and Singapore. The Notice states, simply, that the Free Trade Agreement between the European Union and the Republic of Singapore, signed in Brussels on 19 October 2018, will enter into force on 21 November 2019.
On 8 November 2019, the EU Member States today endorsed the trade agreement between the EU and Singapore, paving its way to entry into force. The soon to be departing President of the European Commission, Jean-Claude Juncker, hailed the agreement as “the European Union's first bilateral trade agreement with a Southeast Asian country, a building block towards a closer relationship between Europe and one of the most dynamic regions in the world. It crowns the efforts of this Commission to build a network of partners committed to open, fair and rules based trade.” His words were echoed by that of outgoing Trade Commissioner Cecilia Malmström, who said that “The agreement will benefit workers, farmers and companies of all sizes, both here and in Singapore. It also includes strong clauses protecting human and labour rights and the environment. This agreement means that in the last five years we have put in place 16 EU trade deals. This brings the total to 42 trade agreements with 73 partners, accounting for a third of total EU trade. This is the largest such network in the world.”
Singapore is said to be, by far, the EU's largest trading partner in the Southeast Asian region, with a total bilateral trade in goods of over €53 billion and another €51 billion of trade in services. Over 10,000 EU companies are established in Singapore and use it as a hub for the whole Pacific region. Singapore is also the number one location for European investment in Asia, with investment between the EU and Singapore growing rapidly in recent years: combined bilateral investment stocks reached €344 billion in 2017.
Under the trade agreement, Singapore will remove all remaining tariffs on EU products. Singapore has also agreed to remove obstacles to trade besides tariffs, in key sectors, for instance by recognising the EU's safety tests for cars and many electronic appliances and by accepting labels that EU companies use for textiles. The EU and Singapore have also concluded an investment protection agreement, which can enter into force after it has been ratified by all EU Member States according to their own national procedures.
The EU-Singapore trade agreement is claimed, by the Commission, to be one of the first “new generation” bilateral agreements. Besides the classical removal of customs duties and non-tariff barriers for trade in goods and services, it contains important provisions on intellectual property protection, investment liberalisation, public procurement, competition and sustainable development.
On the day the trade agreement enters into force, 21 November this year, over 80% of all imports from Singapore will enter the EU duty-free. For the rest, EU tariffs will be removed within three or five years, depending on the product category. Sectors that will benefit from the immediate removal of tariffs are electronics, pharmaceuticals, petrochemicals, and processed agricultural products. Tariffs on certain types of textiles and carpets will be dismantled over three years; tariffs on bikes, fruits, cereals, and sports footwear will be removed over five years.
Under the FTA, Singapore will remove all remaining tariffs on certain EU products (such as alcoholic beverages, including beer and stout) and will commit to keep unchanged the current duty-free access for all other EU products.
Hong Kong sellers will appreciate that in today's global economy, all kinds of companies frequently operate along global value chains, with their products generally containing domestically produced components as well as inputs sourced from other countries. The rules of origin agreed in the FTA seek to strike a prudent balance between leaving companies some degree of flexibility to source parts from other countries, and establishing sufficient clarity on the minimum conditions to be met for products to qualify as European or Singaporean and benefit from preferences under the agreement. The EU-Singapore trade agreement recognises the integrated nature of supply chains in Southeast Asia. It includes the concept of ‘ASEAN cumulation’ to allow Singapore-based manufacturers to include components sourced from other ASEAN Member States as originating content when determining whether a specific product can meet the rules of origin requirements.
As regards product sectors, in the field of electronic goods for example, the EU and Singapore have agreed to base their standards, technical regulations and conformity assessment procedures on relevant international standards. This, it is believed, will avoid duplicative and unnecessarily burdensome conformity testing procedures with respect to product safety and electromagnetic compatibility. The idea is that a product that is considered to be safe to market in the EU should also be considered to be safe in Singapore. The agreement will also eliminate mandatory third party conformity assessments for product safety schemes for certain categories of electronic products and prioritise other forms of conformity assessment, such as the supplier's declaration of conformity and post-market surveillance mechanisms that are the norm in the EU.
Please click on the following hyperlink for more details on the FTA between the EU and Singapore.