The European Union, one of the powerful trading blocks in the world, and Singapore, the leading international financial center, have agreed lately to set up one of most competitive free trade zones in the globe.
It is the EU’s second major agreement with a key Asian trading partner, after the EU-Korea Free Trade Agreement, effective since July 2011.
According to some experts, the new FTA, which will enter into force in 2015, will create new opportunities for companies from both Europe and Singapore. The growing Singaporean market offers great export potential for EU, industrial, agricultural and services businesses.
Singapore’s economy, which is based on exports of services, will also benefit greatly from the removal of tariff barriers, getting wider access to the EU market.
Once the FTA goes into effect, Singapore exports to the EU are expected to increase by 3.5 billion euros over a ten-year period, while the Union’s exports to Singapore will go by 1.4 billion euros over the same period, according to financial forecasts.
For EU trade Commissioner Karel De Gucht, Singapore is an important market for EU companies and a business gateway to the Southeast Asia region. He also said that the EU-Singapore FTA will create new opportunities in many sectors such as banking, insurance and other financial services industries. It will also facilitate the access of industrial and agricultural products to an important Asian market.
Under terms of the FTA, Singapore will have to accept importing European manufactured cars based on EU technical and safety standards. Electronics and telecommunication products respecting Singapore or EU standards can be sold in the respective countries without additional testing or certification requirements which save businesses a lot of time, energy and headaches.
Singapore is the EU’s 13th largest trading partner and major client in the Association of South-East Nations (ASEAN). EU-Singapore trade in goods and services each grew by some 40 pc during the past three years.
Singapore is also a major destination for European investments in Asia and second largest Asian investor in the EU after Japan.
The FTA sealed between the EU and Singapore opens the doors for other Asian countries to follow suit and lift any persist fears. As the EU is already engaged in FTA talks with Malaysia, Vietnam and Thailand, the free trade will continue to gain momentum to include all Asian countries for shared economic dividends.
