SINGAPORE – An overwhelming majority of European companies operating in Singapore and across the Asean region would welcome a digital trade agreement (DTA) between the European Union and the Republic, a survey has found.

Most of the 96 per cent of respondents who would welcome the DTA believed that paperless trading and e-payment systems would be the most important potential benefits of the pact.

The agreement is currently being negotiated between Singapore and the 27-member bloc.

The survey of 50 companies operating here was conducted by the European Chamber of Commerce (EuroCham) in Singapore and the results were released on Tuesday as part of the organisation’s Digital Economy Whitebook 2023-2024.

It identifies potential touchpoints for private-sector involvement in the light of the EU-Singapore Digital Partnership (EUSDP) deal – which was signed in February this year – and the DTA negotiations that started in July.

The EUSDP is a framework agreement aimed at promoting digital cooperation in areas such as trade facilitation, trusted data flows, data innovation, digital trust, standards, digital skills for workers, and the digital transformation of businesses and public services.

The partnership will create opportunities for joint efforts to forge an understanding of the governance of new and emerging technologies such as 5G/6G, artificial intelligence (AI) and digital identities. However, the EUSDP is not legally binding.

An EU-Singapore DTA will be legally binding and hence provide legal certainty for end-to-end digital trade and enhance protection for people and companies in digital transactions between the two economies.

The two sides also agreed on a Digital Trade Principles pact at the same time when they inked the EUSDP deal.

The principles set the path to negotiate an ambitious and modern DTA that contributes to digital transformation and enables companies and people to keep pace with the fast-evolving digital economy.

Speaking at the launch of the whitebook, Singapore’s Minister for Trade and Industry Gan Kim Yong said: “Hopefully we will have a very meaningful and impactful agreement with the EU.

“I am confident that if we do it carefully and deliberately, it will have the potential to become a pathfinder agreement... a model or an example for many future digital agreements.”

Mr Gan said that as new technologies such as AI and generative AI emerge, Singapore has been looking to update digital agreements it has already concluded.

Singapore has inked four such pacts in the past few years – the Digital Economy Partnership Agreement with Chile and New Zealand; the Singapore-Australia Digital Economy Agreement; the United Kingdom-Singapore Digital Economy Agreement; and the Korea-Singapore Digital Partnership Agreement.

“We are constantly looking at reviewing and upgrading those agreements because the digital landscape is evolving so quickly. As soon as you sign the agreement, it is a little bit outdated already,” said Mr Gan.

The EuroCham whitebook also highlighted that the EUSDP, as well as the DTA talks, signals that Singapore and the EU are set to embark on collaboration on a wide range of issues pertaining to the digital economy.

In the EuroCham survey, most respondents highlighted the principles pertaining to digital trade as important – including electronic transactions and electronic contracts, electronic invoicing, paperless trading and transferable electronic records.

Respondents also indicated that addressing cyber-security threats was important to their organisations.

Most respondents also rated blockchain as particularly useful for their operations, with only about 2 per cent saying the technology was not useful to them at all.

The survey also showed that 43 per cent of respondents already rely on AI for their operations and 27 per cent of them reported a reliance on selected supply chain operations as the areas in which they mostly use AI technology.

Still, many companies believe implementation of AI was limited amid concerns over privacy and security.

For businesses that rely on AI, 21 per cent of respondents said they faced issues with limited implementation for reasons such as initial costs, capital required to use AI in business operations, lack of expertise and opacity around the transparency of algorithms.

The EU is Singapore’s fourth-largest goods trade partner, with the relationship underpinned by a free trade agreement which took effect in 2019.

In 2021, bilateral trade in goods came to $102 billion, representing 8.8 per cent of Singapore’s total goods trade.

The EU is also Singapore’s second-largest services trade partner globally, with bilateral trade in services exceeding $67 billion.

It is Singapore’s second-largest foreign investor.