Singapore is set to be the first country in the world to have a Free Trade Agreement (FTA) with the European Union (EU), that will promote the green technology sector.
It’s one of six key chapters that will feature in the FTA, where a sixth round of talks is under way here.
The EU said this will be the most advanced and ambitious FTA it will sign, and expects to seal the deal by the end of the year.
Trade between the Euro zone and Singapore hit a record level in 2010 at S$76.9 billion, an increase of 22 per cent from 2009.
This is according to figures by the Delegation of the European Union to Singapore.
EU ambassador to Singapore Marc Ungeheuer said: “2010 was a particularly strong year for EU-Singapore trade, with trade in goods having fully recovered from the recent economic crisis.
“I am convinced we can do even better and this is the reason why the EU and Singapore are negotiating new trade and cooperation agreements”.
In addition, the EU hopes to double this if all goes to plan, in as early as five years.
Both sides are aiming to sign an FTA in a few month’s time.
There are six key chapters being formed under the deal.
This includes a new one that aims to liberalise the sector for green technology, management of water resources and areas of energy saving.
EU-Singapore FTA chief negotiator Rupert Schlegelmilch said: “We are trying in this FTA to make a special effort to improve trade rules for the goods and services of the future, which are green technology, energy creation, sustainable production.
“This is also a first which we’ll try to do here. Let’s see how far we can work on that
“There is a clear potential to liberalise our classical trade. Singapore companies still pay several hundred billion euros in tariffs.
“When goods enter the EU, we are going to get rid of those tariffs which will further boost key exports from Singapore to the EU”.
The other key chapters include one to lower tariffs, another to promote the services sectors such as finance and banking, and one to open up access to government procurement tenders.
The FTA will also try to tackle technical barriers such as differing industry standards for health and safety, and improve investment rules.
Singapore will be the first ASEAN country to sign a bilateral FTA with the EU.
This is expected to pave the way for more in the region.
DBS senior economist Irvin Seah said: “Singapore being a relatively easy candidate for an FTA, will fit towards their bill of a first step towards a more proper engagement with Asia, via the trade and investment route.
“Singapore essentially has very minimal trade barriers, so it has a very free trade regime; it has a wealth of experience in trade negotiations.
“Given that template, they will eventually be able to achieve out of an FTA with Singapore. It can actually be fine-tuned… to fit into other FTAs with other countries”.
Another FTA currently in the pipeline by the EU is one with Malaysia, which is at an early stage.
It aims to pursue such bilateral deals first, before working towards an integrated ASEAN FTA.
