Singapore has signed a free trade agreement (FTA) with the United Kingdom to ensure that companies from both countries continue to enjoy the same benefits that they are receiving under the Republic’s FTA with the European Union.
The agreement inked yesterday will cover more than £17 billion (S$30.3 billion) of current bilateral trade in goods and services.
The two countries also agreed to assess the modules of a UK-Singapore digital economy agreement (DEA), with a view to launching negotiations on the DEA next year.
They also committed to start talks on and conclude an investment protection agreement within two and four years, respectively, of the FTA’s entry into force.
The FTA was signed in Singapore by Minister for Trade and Industry Chan Chun Sing and British Secretary of State for International Trade Elizabeth Truss.
Ms Truss, in an interview with The Straits Times, said the FTA will come into force on Jan 1, which is when Britain ends the transition period for its exit from the EU – the so-called Brexit.
Ms Truss said: “We want to secure a Canada-style deal with the EU, but if we are not able to secure that, we will trade with the EU on Australian-style terms. Neither of those two arrangements will affect the deal with Singapore, as the deal with Singapore is done.”
A Canada-style pact will get rid of most but not all tariffs, while an Australian-style agreement is basically no trade deal at all and will fall back on World Trade Organisation terms.
Speaking at the event, Mr Chan noted that Britain 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 Britain’s largest trade and investment partner in South-east Asia, he said.
The deal’s immediate and tangible benefits include tariff elimination for 84 per cent of all tariff lines for Singapore exports to Britain upon the UKSFTA’s entry into force, with virtually all remaining tariffs eliminated by November 2024 – the same timeline under Singapore’s FTA with the EU (EUSFTA).
It will also enhance market access for Asian food products made in Singapore such as har gow (prawn dumplings) and sambal ikan bilis (spicy crispy anchovies), Mr Chan said.
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The Ministry of Trade and Industry (MTI), in a statement issued after the signing of the FTA, said the benefits of the UK-Singapore FTA include tariff elimination for goods trade, and increased access to respective services and government procurement markets.
It will also reduce non-tariff barriers in at least four major sectors: electronics, motor vehicles and vehicle parts, pharmaceutical products and medical devices, and renewable energy generation. The trade deal will also support the regional operations and supply chains of firms in Britain and Singapore.
In line with the current arrangement under the FTA with the EU, companies in Britain and Singapore can continue to use materials and parts sourced from the EU-27 and Asean in their exports to each other’s markets.
The proposed UK-Singapore DEA will also serve as a pathfinder for modern rules on digital trade and financial services between Europe and South-east Asia.
Singapore will also support Britain’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Mr Ho Meng Kit, chief executive officer of the Singapore Business Federation, said the FTA will allow businesses here to enjoy greater certainty and assurance after Britain’s exit from the EU.
“However, businesses should note that UK’s independent trade regulations may differ from that of the EU’s. They will also need to ensure that they comply with changes in UK’s domestic standards and Customs procedures,” he said.
“We look forward to working with both governments to support businesses coping with these changes, particularly those which may be using the UK as a hub to re-export to Europe or to offer services to EU customers.”