Coming at a time of rising global trade tensions, the signing of the EU-Singapore Free Trade Agreement (EUSFTA) in Brussels last week is worth celebrating for both its symbolism and its substance. That the world's second-largest economy is pressing ahead with a free trade agreement with Singapore, as a building block towards a broader agreement with Asean, sends a positive signal and keeps the flag of free trade flying. The agreement is also substantively significant for the European Union and Singapore. Singapore is the EU's largest trade partner and investment destination in Asean, while the EU is Singapore's third-largest trading partner globally.
Once the EUSFTA takes effect, which is expected to happen early next year after ratification by the European Parliament, more than 80 per cent of imports from Singapore will enter the EU tariff-free, with the remaining tariffs being phased out over three to five years. Singapore already maintains a near-zero tariff regime, but the few remaining tariffs on EU products, such as alcoholic beverages like beer and stout, will be eliminated. However, the agreement, which is described as a "new generation FTA", goes beyond just tariff-cutting. It also contains important provisions related to services, investment, intellectual property protection, government procurement and non-tariff barriers to trade such as product and manufacturing standards - all of which will improve market access and reduce time-to-market for a range of goods and services.
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