EU and Singapore in a multi-billion trade agreement
It is the first EU deal with a Southeast Asian economy and has the potential to open the door to Free Trade Agreements (FTAs) with other countries from the region. The release of the texts follows their initialling, earlier today in Singapore, by the chief negotiators from the European Commission and Singapore's Government.
EU Trade Commissioner Karel De Gucht sealed the deal with Singapore's Minister of Trade and Industry Lim back in December 2012. Today's ‘initialling’ consolidates what has been negotiated, but is without prejudice to a later decision by either side on whether or not to approve an agreement. In the case of the EU, the European Parliament has the final say on approving all free trade agreements.
An economic analysis prepared by the Chief Economist Unit of the European Commission's Directorate General for Trade predicts that EU exports to Singapore could rise by some €1.4 billion over 10 years. Singapore's exports to the EU could rise by some €3.5 billion in the same period, including exports from the many European companies established in Singapore.
Reflecting the large differences in the sizes of the two economies, the analysis estimates EU real GDP will grow by around €550 million in comparison to an increase of €2.7 billion for Singapore.
Beyond the bilateral economic effects, the EU-Singapore Free Trade Agreement (EUSFTA) also has to be seen in the regional perspective. The EUSFTA has the potential to open the door into Southeast Asia, where the EU is currently pursuing negotiations on free trade agreements with ASEAN-members Malaysia, Vietnam and Thailand.
With their expanding middle class, the dynamically growing ASEAN economies are key markets for Europe's exporters and the comprehensive free trade agreements the EU is negotiating tap into the region's growth potential. For these negotiations, the EUSFTA sets a valuable point of reference.
The draft agreement is currently being translated into all 24 EU languages and will then be submitted to the European Commission for formal approval. Afterwards, the Council of Ministers must first approve it before the agreement passes before the European Parliament for final ratification in a plenary vote. ■