The European Union-Singapore Free Trade Agreement (EUSFTA), which will go into effect on Nov 21, will add new dimensions to an already flourishing trade relationship. EU-Singapore trade now exceeds €100 billion (S$150 billion), comparable with the trade between the EU and large economies such as Australia and Mexico. Singapore is the EU's biggest investment destination in Asia, accounting for more than half of its investments in Asean. The EU is also Singapore's largest foreign investor with more than 10,000 EU companies based here. With the EUSFTA - the first trade agreement between the EU and any Asean member-country - the bilateral trade and investment relationship will deepen. Within the first year, Customs duties on about 84 per cent of Singapore's exports to the EU will be eliminated, including in key areas of manufacturing such as electronics, pharmaceuticals, petrochemicals and processed foods. The remaining tariffs will be removed over five years.
As a "new generation" trade agreement, the EUSFTA recognises the role of supply chains in trade and will, in the case of some products, allow raw materials sourced from Asean countries to be classified as Singapore-originating - which means the agreement will potentially boost trade between Singapore and Asean as well. The EUSFTA will also widen market access in both the EU and Singapore for a range of services. In the area of government procurement, the two parties will broaden the scope for each other's firms to bid for government contracts. Provisions for intellectual property protection and the maintenance of high standards on labour rights and environmental practices are other key features of this new agreement.