SINGAPORE - The European Union hopes that its free trade deal with Singapore will enter into force this year, which will pave the way for a wider agreement with Asean.
The EU is keen to press on with open trade, said its top trade official Cecilia Malmstrom on Friday (March 2), a day after US President Donald Trump announced steep tariffs on steel and aluminium imports.
“We see that openness to trade can no longer be taken for granted so it is all the more important tobuild bridges between nations,” said the EU trade commissioner, who was in Singapore for consultations with Asean economic ministers.
The trade deal, which had been delayed due to legal issues, will be the first between the EU and an Asean member nation to take effect.
An agreement with Vietnam is also pending ratification.
“If all goes well, we hope the agreement can enter into force late this year, which is not a day too early,” Ms Malmstrom told reporters.
“It will be an important building block in our future regional trade negotiations, and will also send an important signal to this region and the rest of the world that we want to deepen ties and facilitate trade even further,” she added.
The Singapore-EU deal will pave the way for a wider agreement between the 10-member Asean and the 28-member EU.
Said Singapore’s Trade and Industry Minister (Trade) Lim Hng Kiang: “This is an important step towards closer relations with the EU... It also reinforces the EU’s economic engagement in the Asean region.”
The EU is Singapore’s biggest investor and third largest trading partner, while the city state is the EU’s largest trading partner in Asean.
Bilateral trade last year grew 5.6 per cent from the previous year to $98.4 billion, which is slightly more than 10 per cent of Singapore’s total trade.
The time is right for Asean and the EU to renew their pursuit of greater integration between their regions, said Mr Lim.
Asean and the EU last year resumed talks on a free trade agreement which had been put on hold in 2009.
Mr Lim, who chaired the Asean Economic Ministers’ Retreat, said there was “strong political will” to embark on the free trade deal, but it was also a complex endeavour with areas of differences that need to be overcome.
“The better prepared we are to scope out and understand the aspirations on both sides, the smoother the eventual negotiations will be,” said Mr Lim.
Asean and EU are now working on a framework for the agreement and will be consulting experts and holding dialogue sessions.
“We’re working very hard and will report (on our progress) to the next consultation meeting in 2019,” said Mr Lim.
He said this political will to conclude a deal was also present in another free trade agreement in the works - the Asean-led Regional Comprehensive Economic Partnership (RCEP).
“Our (RCEP) negotiators are telling us that they sense a mood of optimism and renewed vigour. Momentum is building in our favour.
“What we want to do is capture this momentum, make steady progress and try to achieve a significant, if not substantial, conclusion before the end of this year,” he added.
Ms Malmstrom said last year was a challenging year for the multilateral trade system, but the EU and Asean can demonstrate the importance of close business relations in bringing peace and prosperity for their people.
"We can together demonstrate the importance of preserving the multilateral trading system based on rules and institutions."