SINGAPORE - The European Parliament has given the green light to a landmark trade agreement with Singapore that is set to remove nearly all customs duties between the two jurisdictions.
Following a majority vote in favour of the European Union-Singapore Free Trade Agreement (EUSFTA) on Wednesday (Feb 13) in France, the pact can be ratified and entered into force. Meanwhile, two other agreements were also given the go-ahead.
Prime Minister Lee Hsien Loong said in a Facebook post on Thursday that the FTA will give Singapore and the EU - the Republic's largest investor and a major trading partner - better access to each other's markets, and boost investment and business opportunities.
"We hope it will also lead to an EU-Asean FTA and promote cooperation between both regions," Mr Lee added.
He also thanked the teams involved "for their hard work and perseverance over the past nine years" on the project.
Calling this an important milestone in Singapore's bilateral relations with the EU, Minister-in-charge of Trade Relations S. Iswaran said in a statement that "Singapore and EU companies, in particular our small- and medium-sized enterprises, can look forward to significant benefits from the reduction of tariff and non-tariff barriers".
The agreements are also strategic pathfinders to an eventual EU-Asean trade and investment agreement, he added. He said: "They are a tangible demonstration of the EU and Singapore's shared commitment to open and rules-based trade and will anchor the EU's presence in Asean."
Mr Iswaran added that Singapore looks forward to when the agreements enter into force, as this will "benefit EU citizens and Singaporeans by creating good jobs and new opportunities".
The EUSFTA eliminates duties, allowing 84 per cent of Singapore exports to enter the EU duty-free once it comes into force. This includes that on Asian food products and electronics.
Tariffs on the remaining products, such as selected meat and seafood produce, will be removed in the third to fifth years after the pact has been ratified.
Other benefits include having materials from Asean countries be deemed as originating from Singapore when incorporated into certain final products, enabling these items to quality for preferential tariff treatment as well.
There are over 10,000 European companies in Singapore and the EU is Singapore's third-largest trading partner. Bilateral trade between both parties amounted to about €53 billion (S$81 billion) in 2018.
Besides the EUSFTA, two other agreements received majority support on Wednesday but unlike the trade pact, they will need to be approved by regional and national Parliaments of all member states before they can enter into force.
One of them is the EU-Singapore Investment Protection Agreement (IPA), which will replace 12 existing bilateral investment treaties between Singapore and various EU member states, encouraging investments and setting out rules giving investors protection.
The other is the EU-Singapore Partnership and Cooperation Agreement, which provides a framework to deepen cooperation in key political areas from transport to science and technology.
The FTA is a positive development given uncertainties on how long US-China trade tensions may last, OCBC Bank's head of treasury research and strategy Selena Ling told The Straits Times. She added that the EU market can provide some buffer to companies here.
The EU-Singapore FTA has been over a decade in the making, with member of the European Parliament David Martin saying in a parliamentary debate on Tuesday that the FTA "sends a message that the EU is committed to a rules-based trading system".
"While (US President) Donald Trump wants to build walls to separate nations, we are… keeping fair and free trade alive," said Mr Martin, who is also an EUSFTA rapporteur and has been in charge of drafting and presenting reports on the pact to the European Parliament. "Singapore is a safe harbour for EU trade and investments."
The Republic is also a gateway for EU firms to access other major economies such as China and India, said another rapporteur Antonio Lopez-Isturiz White. He added that the trade pact opens new business opportunities as well.
With the EUSFTA being the first bilateral trade agreement signed between the EU and an Asean country, leaders noted it is also a model for future agreements with others in the region.
Some, however, raised concerns during the debate, including those over workers' rights, as Singapore has yet to ratify several conventions of the International Labour Organisation (ILO).
EU trade commissioner Cecilia Malmstrom replied that although it is true that Singapore has yet to ratify three ILO conventions, work is under way to ensure compliance.