(MENAFN- Asia Times) SINGAPORE – Singapore hopes to begin negotiations on a digital free trade agreement with the European Union, one of its major trading partners, as soon as this year, building on a non-binding digital partnership agreed between the two sides in February, according to Singapore's Minister-in-charge of Trade Relations S Iswaran.
Addressing a business outreach event on Monday (May 29), Iswaran said Singapore and the EU are in the process of identifying projects to pursue through the partnership, which aims to strengthen the interoperability of digital markets and policy frameworks between the two sides, with the ultimate goal of enabling consumers and businesses to transact online at a lower cost.
The principles established in the EU-Singapore Digital Partnership (EUSDP) represent“the first step towards a bilateral digital trade agreement between the EU and Singapore [that] will give our citizens and businesses the clarity and legal certainty they need to transact confidently in the digital economy,” said Iswaran, who is also Singapore's transport minister.
“We look forward to launching negotiations on a digital trade agreement with the EU soon hopefully, during Sweden's Presidency of the EU Council,” Iswaran added, potentially placing digital trade talks in the first half of 2023 when Stockholm serves as rotating council chair, building on an existing Singapore-EU bilateral free trade agreement that entered into force in November 2019.
Known as the EU-Singapore Free Trade Agreement (EUSFTA), the deal was
the first of its kind
between the EU and a member state of the Association of Southeast Asian Nations (ASEAN) and is regarded as a template for a wider future trade pact with regional economies. Trade experts, however, note that an EU-ASEAN agreement is highly ambitious and remains a long way off.
A future EU-Singapore digital trade agreement would similarly be seen as a stepping stone for closer region-to-region connectivity. The EU's digital partnership with Singapore is the third such agreement signed with a key trading partner in Asia after partnerships with Japan and South Korea were concluded last May and November, respectively.
Singapore Prime Minister Lee Hsien Loong; President of the European Council Donald Tusk; Jean-Claude Juncker, president of the European Commission; Mr Sebastian Kurz, Austrian Federal Chancellor, sign the EU-Singapore FTA agreement in Brussels, Belgium. 19 October 2018. Photo: EU
The EUSDP aims to facilitate research and regulatory cooperation in areas ranging from 5G and 6G service adoption, artificial intelligence (AI) governance and semiconductor supply chain resilience. It also seeks common rules on cross-border data flows, electronic invoicing and payments to provide small and medium-sized enterprises (SMEs) with more open access to overseas markets.
“The Singapore-EU partnership is not a binding agreement yet. It should be viewed as the first steps of potentially creating one,” Deborah Elms, founder and executive director of the Asian Trade Centre, a Singapore-based trade research and advisory firm, told Asia Times.“While Singapore clearly has no particular issues signing binding commitments on digital and has done so repeatedly already, the same is not true for the EU.”
Elms, who is also president of the Asia Business Trade Association, added that the EU has the challenge of managing“27 member states with varying levels of readiness and enthusiasm for digital trade. This always makes it hard for the EU to act, particularly on new issues like digital. Getting the EU to a comfortable place for signing up to commitments can be time-consuming.”
Data privacy differences may prove difficult to bridge said Elms, pointing out that Singapore has not made a binding commitment to align with Europe's General Data Protection Regulation (GDPR), considered the toughest privacy and security law in the world, while instead implementing a different standard known as Cross-Border Privacy Rules (CPBR).
“The two systems are not incompatible but they aren't exactly aligned either. Figuring out how to bridge the gaps could take time. If you stick to a framework, it may not be a problem to have two systems, but if you want to create legally binding commitments, fudging the differences can be harder. Time is also not standing still while the EU and Singapore sort out the partnership,” Elms said.
The EUSDP, which essentially serves as a set of digital trade principles, builds on Singapore's extensive network of free trade agreements and digital cooperation initiatives, reinforcing its role as a global business hub. Key priorities for implementation in 2023 include common approaches in electronic identification and AI governance and facilitating the digital transformation of SMEs.
Singapore is a major destination for European investments in Asia, with bilateral foreign direct investment stock between the EU and Singapore expanding to an estimated 434 billion euros (US$464 billion) in 2022. Singapore is also the EU's second-largest commercial partner in ASEAN, with more than 10,000 European companies headquartered in the city-state to serve the wider region.
“Integration with the rest of Southeast Asia is key for our companies who are looking to grow and expand. We need to have everyone working seamlessly together – not just the EU and Singapore, but the rest of the region,” said Jenny Egermark, chargé d'affaires at the Embassy of Sweden in Singapore.“That is the dream and long-term goal that we are working towards.”
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