Out-Law News | 14 Dec 2020 | 1:36 pm | 2 min. read
The UK and Singapore have signed a trade agreement which will cover over $224.8 billion (£17bn) of current bilateral trade in goods and services when the UK's departure from the European Union takes full effect.
UK secretary of state for international trade Elizabeth Truss and Singapore trade and industry minister Chan Chun Sing signed the UK-Singapore Free Trade Agreement (UKSFTA) on 10 December.
The agreement retains the measures in the existing EU-Singapore FTA, including measures on trade tariffs on goods, access to services and government procurement markets, and low non-tariff barriers in four sectors – electronics; motor vehicles and vehicle parts; pharmaceutical products and medical devices, and renewable energy generation, a joint statement said.
Once the UKSFTA enters into force, 84% of tariffs on Singapore exports to the UK will be removed with remaining tariffs eliminated by November 2024. The UK exporters have largely tariff-free access to Singapore with 99% of imports tariffs removed.
The UKSFTA will be effective from January 1, 2021. The UK and Singapore will negotiate an investment protection agreement within two and four years respectively of the UKSFTA coming into force.
The two countries also agreed to negotiate for a digital economy agreement (DEA) in 2021, to set the "modern rules on digital trade and financial services between Europe and Southeast Asia". It is reported that the DEA will be Singapore's first agreement of this kind with a European country.
Trade expert Bryan Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: "The UK and Singapore are historically strong trading partners, and the FTA signifies a commitment for the countries to preserve the status quo post-Brexit by preserving the same trading conditions that were present pre-Brexit. In addition, the countries are also working towards a digital economy agreement that will set the stage for the ‘next-generation’ free trade agreement, which focuses on digital economy areas that are important for both countries. These in turn send a signal to industry as well as to countries in Asia where Singapore is seen as a trendsetter."
Trade expert Dr. Totis Kotsonis, also of Pinsent Masons, said: “UK’s deal with Singapore, a state with which it shares close historical ties, is the second in Asia and the first with an ASEAN country. Although the agreement is based on the EU-Singapore Free Trade Agreement which entered into force in 2019, the UK is likely to use these new bilateral trade arrangements as the basis to develop relations with Singapore further, not least in the light of both countries’ importance as services hubs with open and digitally advanced economies."
"The UK has made no secret of its intention to use the so-called 'continuity' agreements with Japan, signed in October 2020, and now Singapore but also Vietnam, signed a day after the Singapore deal, as a means of further strengthening the UK’s involvement in the region and ultimately as a springboard for joining the Trans-Pacific Partnership trade agreement. With Singapore and Vietnam both members of ASEAN, UK is also keen to use these agreements to strengthen its ties with the Southeast Asian trade block, becoming an ASEAN 'dialogue partner' in due course,” he said.
Nicholas Hanna of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said that trade between the UK and Singapore will also face coronavirus-related challenges.
"Singapore is taking initiatives to bring back international commerce by introducing a safe procedure for international travel, reinventing health security so that business can resume between the UK and Singapore. Conferences in the Garden City are most likely to resume with C-19 testing stations to be part of the safe measures, to ensure that seminars can be held here in Singapore. "