Singapore, UK to begin talks on digital economy deal soon

Both countries are working to provisionally apply the UK-Singapore FTA immediately after the Brexit transition period ends on Dec 31

Lee U-Wen
Published Thu, Dec 10, 2020 · 09:50 PM

Singapore

WITH a bilateral free trade agreement (FTA) now in the bag, Singapore and the UK plan to launch negotiations early next year for a new digital agreement to facilitate more seamless digital trade and business between the two sides.

Having this digital economy agreement (DEA) - the first such deal that Singapore will sign with a European country - is timely, said Trade and Industry Minister Chan Chun Sing, given how the ongoing Covid-19 pandemic has underscored the growing importance of digital connectivity.

"This is an opportunity for the UK and Singapore to set high standards in digital trade rules within Europe and South-east Asia, and we hope that this will also be a pathfinder for global standards of the same nature in the same domain." said Mr Chan.

"A UK-Singapore DEA could address modern and forward-looking trade issues including cross-border data connectivity for our respective financial services sectors."

Mr Chan made these remarks on Thursday at the signing ceremony of the UK-Singapore FTA, the first such bilateral trade deal between the UK and an Asean member state.

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With Singapore and the UK about to scope the modules of the DEA, Mr Chan said the agreement will strengthen the linkages between the two countries as "global digital hubs", and facilitate digital trade for the future.

The UK's Secretary of State for International Trade Elizabeth Truss, who was in Singapore to ink the FTA alongside Mr Chan at the Shangri-La Hotel, said the DEA will focus on many key areas such as fintech, cybersecurity and the free flow of data across borders.

The UK is currently Singapore's third and second-largest trading partner for goods and services respectively, as well as the top investment destination in Europe.

On the flip side, Singapore is the UK's biggest trade and investment partner in all of South-east Asia.

Bilateral trade in goods and services between Singapore and the UK is worth over £17 billion (S$30.2 billion) a year.

Last year, more than 10,000 UK businesses exported goods to Singapore. Nearly 5,000 British companies are already present in Singapore in various industries or as a regional headquarters for their operations across Asia.

The Ministry of Trade and Industry said that, under the FTA, companies will continue to benefit from tariff elimination for goods trade, and greater access to services and government procurement markets.

There will also be a reduction of non-tariff barriers in sectors such as electronics, motor vehicles and vehicle parts, pharmaceutical products and medical devices, and renewable energy generation.

The UK and Singapore have also committed to maintain the same timeline for tariff reductions as the European Union-Singapore FTA (EUSFTA), which entered into force in November 2019.

Once the UK-Singapore FTA takes effect, tariffs will remain eliminated for 84 per cent of all tariff lines for Singapore exports to the UK. Almost all of the remaining tariffs will be eliminated by Nov 21, 2024, similar to the EUSFTA.

Local Asian food products such as har gow (prawn dumplings) and sambal ikan bilis (spicy crispy anchovies) will continue to enter the UK tariff-free under flexible rules of origin, up to a combined quota of 350 tonnes per year.

Singapore will also continue to bind its current level of duty-free access for all UK products entering Singapore, and maintain protections on UK goods such as Scotch whisky.

The UK and Singapore are working together to provisionally apply the UK-Singapore FTA immediately after the Brexit transition period ends on Dec 31 this year.

"Beyond the significant benefits to our respective businesses, the UK-Singapore FTA is a strong statement against protectionism and nativism," said Mr Chan.

"Such support for the open and rules-based trading system will be crucial in ensuring a strong and resilient post-pandemic recovery for the world."

Ms Truss, in a separate interview with The Business Times before the signing ceremony, said she views FTAs as providing a layer of protection against protectionism itself.

"They are a good way of giving security to businesses that their trade can continue, that there are not going to be barriers put up," she said.

In a statement issued after the signing, Singapore Business Federation CEO Ho Meng Kit said Singapore businesses should note that the UK's independent trade regulations may differ from that of the EU's.

They will also need to ensure that they comply with changes in UK's domestic standards and customs procedures in order to continue trading with the UK, he said.

"We look forward to working with both governments to support businesses coping with these changes, particularly those which may be using UK as a hub to reexport to Europe or to offer services to EU customers," said Mr Ho.

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