EU, Singapore Clinch Trade Pact Aimed at Boosting "Green Growth"

19 December 2012

The EU and Singapore have completed final negotiations for a bilateral trade deal, which includes language aimed at promoting "green growth," the two sides announced on 16 December. The draft agreement is the EU's first to include such a clause, which is part of the bloc's "2020 strategy" for boosting the economy and reducing unemployment.

Accounting for some €74 billion in goods and services trade between the two parties, Singapore is Europe's largest trading partner in Southeast Asia. The EU is the top destination for Singapore's exports.

The deal is "a stepping stone to greater engagement across South-East Asia," the EU has said. More than 8,000 European companies dealing in a range of goods and services - including green technologies - are already present in Singapore.

"Singapore is a dynamic market for EU companies and is a vital hub for doing business across Southeast Asia," said Karel De Gucht, the EU's trade commissioner. "This agreement is key to unlocking the gateway to the region and can be a catalyst for growth for EU exporters."

The green growth aspect of the FTA aims to remove trade and investment barriers pertaining to renewable energy generation. The deal also contains commitments to liberalise environmental services trade and new rules on green tendering. Provisions on cooperation for addressing issues related to illegal fishing and timber are also reported to be in the deal.

The EU-Singapore deal includes a commitment to the principles of sustainable development to "ensure that trade supports environmental protection and social development, and does not come at the expense of the environment or of labour rights." Each party will be required to establish a Board on Trade and Sustainable Development and be open to the involvement of civil society.

According to Singapore's trade ministry, the EU will remove tariffs on all imports from Singapore over five years, with 80 percent of tariff lines being covered upon entry into force. Singapore, however, will immediately allow duty-free access for all imports from the EU.

A key sticking point in the negotiations, which have been ongoing since March 2010, was protection of the numerous "geographic indications" held by European producers. The exclusive right to use distinctive place names - such as Champagne, Parma ham, and Roquefort cheese - to identify the origin of certain products was seen as a crucial issue for Brussels due to "considerable competition" by third country producers.

While Singapore traditionally holds its strongest protections for trademark holders, rather than geographical indications, the city state agreed to offer "a high level of protection" for the most valuable examples on the market.

According to Brussels, the draft agreement should be signed by spring 2013, once both sides have received approval from their respective parliaments.

Region-to-region deal?

While the pact is Brussels' first with a member of the ten-country Association of Southeast Asian Nations (ASEAN), both De Gucht and Singapore's Minister for Trade and Industry Lim Hng Kiang say the deal could be the first step in forging a trade liberalising deal between their two respective regional blocs.

"There are numerous opportunities and benefits that EU and Singaporean companies can look forward to, once the agreement enters into force," said Singapore's Minister for Trade and Industry Lim Hng Kiang. "Singapore is confident that the EUSFTA will further enhance our bilateral economic relations, and pave the way for a region-to-region trade deal between the EU and ASEAN."

"After our agreement with South Korea, sealing this deal with Singapore clearly puts the EU on the map in Asia. But we do not intend to stop here - I hope it will open the doors for FTAs with other countries in the ASEAN region," De Gucht added. The trade chief has, in earlier speeches, noted that the strong economic growth expected in both the ASEAN countries, and Asia as a whole, can help serve as a solution to the EU's ongoing economic challenges.

The EU is currently negotiating trade deals with two other members of ASEAN - Malaysia and Vietnam. Outside of ASEAN, the European Commission is also in the midst of negotiations for a trade deal with India, and recently received a mandate to begin formal trade talks with Japan. (See Bridges Weekly, 5 December 2012)

The ten members of ASEAN are Brunei Darussalam, Burma/Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand, and Vietnam.

ICTSD reporting; "EU, Singapore Agree on FTA," WALL STREET JOURNAL, 16 December 2012; "EUSFTA is the first bilateral free trade agreement concluded by the EU with an Asean country," BUSINESS TIMES, 17 December 2012.

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