The EU Singapore Free Trade Agreement will boost ties with a partner who believes in multilateralism and a rules-based international order. Now it’s time to focus on implementing its provisions, especially those on labour and environment. By MEP Pedro Silva Pereira.
Today’s entry into force of the free trade agreement between the European Union and Singapore is important in both practical and symbolic terms: it kicks off the implementation phase of the agreement.
As requested by the European Parliament in its February 2019 resolution accompanying the approval of the agreement, full and efficient implementation of the agreement is key. Implementation of notably labour and environment commitments is crucial for the credibility of EU trade policy and for a positive perception of trade by civil society.
The EUSFTA is a comprehensive, ‘new generation’ trade agreement that sends out a much needed message in support of free and fair trade. At a time of increasing protectionism and use of ‘muscular power politics’, notably by the United States, this agreement is also a symbol of a trade relationship based on values, the rule of law and sustainable development.
The agreement is, after those with South Korea and Japan, the third free trade agreement entering into force between the EU and an Asian partner country. It is also the first EU trade agreement with a country of the Association of Southeast Asian Nations – or ASEAN It is not only a benchmark for other bilateral agreements with South-East Asian countries, but also as a stepping stone for a future region-to-region trade deal.
‘Catalytic effect’ on EU ASEAN relations
In practical terms, this trade agreement will bring benefits to both citizens and companies, including small and medium-sized enterprises. A 2018 study prepared for the European Parliament estimated that, over the next five years, bilateral trade volumes would grow by 10 per cent. Moreover, as Singapore is a hub in South-East Asia, the agreement is likely to have a ‘catalytic effect’ on EU-ASEAN relations more widely.
Over 10.000 European companies are established in Singapore, and more than 50.000 export to the country.
The EUSFTA will ensure that EU companies will not find themselves in a competitive disadvantage compared to businesses from countries with trade agreements in place. This is the case for the Comprehensive and Progressive Trans-Pacific Partnership, which involves 11 Asia-Pacific countries and is in force since end 2018. It will also be so for the Regional Comprehensive Economic Partnership, that was recently concluded by a group of 15 Asia-Pacific countries and is expected to be signed in 2020.
In February 2019, the European Parliament ratified the EUSFTA, along with the Investment Protection Agreement and the Partnership Cooperation Agreement. The trade agreement was a long time in the making as it was affected by a 2107 Opinion of the European Court of Justice that clarified the division of competences in trade policy. It also had to pass a last hurdle regarding Singapore’s registry for the protection of 138 EU Geographical Indications.
The trade pact is the first of the three EU-Singapore agreements to come into effect. The IPA and the PCA are of course also important agreements to place the EU-Singapore relationship on a more solid and broader foundation, but their ratification is more complex as it requires completion by the EU member states.
The European Parliament approved the EUSFTA by a solid majority, reflecting the agreement’s high quality and progressive nature that even includes some further improvements compared to the EU-Canada Trade Agreement.
Highlights of the agreement
To highlight just a few important elements of the pact this is what it will do:
– Eliminate all remaining tariffs on EU products by Singapore from day one of entry into force
– Remove ‘non-tariff barriers’ , for example in in renewable energy generation to remove obstacles to trade and investment in green technologies
– Encourage effective implementation of the Paris Agreement on climate change.
The agreement also contains a review clause to improve the Trade and Sustainable Development chapter.
With today’s entry into force, EU businesses and citizens can start using these and other advantages of the trade agreement. It will be important that the EUSFTA becomes a good implementation model.
Outreach campaigns are now essential, notably to ‘unpack’ the agreement to small and medium-sized enterprises that account for 83 per cent of the EU companies exporting to Singapore. This concerns issues such as services, GIs, the removal of non-tariff barriers in key EU export sectors and public procurement.
More to do on labour and environment
The sectoral committees and bodies to be established under the agreement, including the Domestic Advisory Group and the Trade and Sustainable Development Board, also need to be swiftly put in place and function in a transparent manner.
Trade and Sustainable Development are also key areas for action during implementation. In this sense, the European Parliament will continue to push the Singaporean government to move towards the ratification of the three missing International Labour Organisation’s Core Conventions: Freedom of Association and Protection of the Right to Organise; Discrimination (Employment and Occupation) and Abolition of Forced Labour.
As regards environmental protection, the EUSFTA can be used in particular to intensify the action and investment needed for a sustainable and low-carbon future. In addition, more can and should be done to step up gender equality, corporate social responsibility, animal welfare and the implementation of the Sustainable Development Goals through this agreement.
Last but not least, a stronger enforceability of labour and environmental provisions must be developed in this and other EU Trade Agreements via the review clauses, particularly in light of paragraph 161 of the European Court of Justice’s Opinion on the EUSFTA. The Court concluded that Parties could terminate or suspend the liberalisation provided in the agreement for breaches of sustainable development provisions.
The future European Chief Trade Enforcement Officer will be key to improve compliance and enforcement of trade agreements. The European Parliament should explore this new role fully, in the interest of businesses, workers and consumers.
In conclusion, this trade agreement will boost the EU economic relations with Singapore and lead to an increased presence of EU business in one of the most dynamic regions in the world. Singapore is a partner who believes in multilateralism and a rules-based international order. It is a partner country with whom we can cooperate in a number of areas: trade, investment, but also sustainable development, climate change, connectivity and digital issues.
From now on, EU companies and citizens can take advantage of this trade agreement. The entry into force of the agreement comes with the clear expectations of a full and efficient implementation, including on labour rights and environmental protection.
A new phase in the work of the European Parliament therefore starts now – the close monitoring of the EUSFTA’s implementation.
Pedro Silva Pereira is an MEP (S&D) from Portugal and Chair of the Friends of Singapore Group in the European Parliament.