The FTA is estimated to enable tariff-free status for over 80% of Singapore exports to the EU.
According to the ‘Guide for Singapore-based companies to understanding the EUSFTA’ published by Singapore’s Ministry for Trade and Indstry (MTI): “The EUSFTA […] marks the first bilateral FTA where Asian food products made in Singapore can enter the EU tariff free under liberal Rules of Origin (ROOs), up to a combined quota of 1,250 tonnes annually.”
The guide also explained that the EUSFTA will incorporate a concept termed ‘ASEAN cumulation’ for Singaporean exports to the EU.
This concept will allow Singapore manufacturers to include raw materials/parts sourced from ASEAN countries in their products and still qualify for tariff exclusions.
“The EUSFTA is [also] the first bilateral FTA concluded by Singapore to have the concept of ASEAN cumulation in its ROO regime,” added the guide.
“Singapore will stand to benefit from the progressive elimination of customs duties on all qualifying exports to the EU once the FTA is fully implemented.”
Over a five-year transitional period, all tariffs on qualifying Singapore exports will be eliminated progressively.
There are three stages of tariff elimination within the FTA. The first is immediate, where the EU will remove custom duties on 84% of Singapore exports to its shores.
The second stage will take place within three years, and cover 90% of products including selected produce and meats such as duck and liver.
The final third stage will enter into force within five years and cover items such as selected seafood, pork, and fruit. By this fifth year, all customs duties will be fully removed for qualifying Singapore exports.
On the other hand, Singapore will grant immediate tariff-free access to all EU imports. This includes beer and stout.
Both sides have also agreed to not increase any existing duties or introduce new ones for goods imported from the other side once the EUSFTA comes into force.
EU Ambassador to Singapore Barbara Plinkert said to ChannelNewsAsia: “With this agreement, the EU has made an important stride towards setting high standards and rules for the important and fast-growing South East Asian region.”
The EUSFTA will be voted on by the European Parliament in 2019 before it officially comes to pass. According to MTI, it is the first FTA ever concluded between the EU and an ASEAN country.
Singapore-EU trade relations
Globally, the EU is Singapore’s third largest trade partner, and Singapore is EU’s 15th largest.
According to MTI, bilateral trade between the two countries reached S$ 97bn (US$ 70.1bn) in 2013, which is roughly 10% of Singapore’s global trade value.
Additionally, the EU is the largest foreign investor in Singapore with a total of roughly 10,000 companies and S$ 227bn (US$ 164bn) worth of investments. Conversely, Singapore is the second largest Asian investor in the EU after Japan.
Singapore happy to extend FTA to UK
Meanwhile, via an interview with BBC Radio 4, Prime Minister Lee Hsien Long said: "It is an ambitious trade deal, it is a high quality arrangement, and it is one which will fly the flag and encourage others, I hope, to do the same."
"We are prepared to transfer it over [to the UK too]. If the UK were in the EU, it would apply […] straight away," he added.
“If you are not and you do not mind, it continues to apply to you from Singapore's point of view. We are happy to have it apply to us, between us and you.”