The European Parliament approved on Wednesday (13 February) the EU-Singapore Free Trade Agreement (EUSTFA), the bloc’s first bilateral trade agreement with a southeast Asian country.
The trade deal removes all existing tariffs on goods from the EU, removes trade barriers by recognizing EU safety tests and will make the business environment more predictable, according to the European Commission.
The trade agreement provides new opportunities for Europeans in sectors such as telecommunications, environmental services, engineering, computing and maritime transport. It will also make the business environment more predictable.
Singapore 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 or accepting labels that EU companies use for textiles.
In addition, the investment protection agreement will include an Investment Court System for resolving investment disputes.
There are more than 10,000 European companies in Singapore with total bilateral trade in goods of over €53 billion and €51 billion-worth of trade in services. Singapore is the number one location for European investment in Asia, according to the Commission.
Besides the Free Trade agreement, the EU-Singapore Investment Protection agreement, which replaces already standing treaties, and the EU-Singapore Partnership and Cooperation agreement which is designed to reinforce the existing relationship between the two governments.
The Investment treaties will be replaced by a modern common investment protection framework and the Partnership agreement sets sustainability and trade standards.
“This is yet another win-win trade agreement negotiated by the European Union, an agreement that will create new opportunities for European producers, workers, farmers and consumers, while at the same time promoting cooperation and multilateralism,” Commission President Jean-Claude Juncker said in a press release.
This new agreement was praised by EuroCommerce which noted the quick evolution and development of Singapore resulting from free trade.
“The European Parliament’s approval today opens a further avenue for mutual benefit through open and free markets, and confirms the EU as a promoter of the world trading system where important partners seem to be turning away from it,” said Director-General of EuroCommerce, Christian Verschueren.
The Greens/EFA party was less enthusiastic, saying that the Commission was putting profit over people.
“The EU is relying on old mistakes around investment protection and prioritising large foreign investors, while small and medium-sized enterprises are left behind in Singapore,” said Heidi Hautala, Vice-President of the Greens/EFA Group. “It’s very regrettable that the European Commission has pushed through privileged investor protection.”
After the vote today, the EU member states need to ratify the agreement and is also waiting for Singapore’s procedures to conclude for the deal to go into force.
The Singapore Embassy in Brussels was not immediately available for comment.
The EU had signed trade agreements with South Korea, Canada, Mexico and Vietnam, and is currently negotiating with Australia, New Zealand and Mercosur countries.