UK-Singapore free trade agreement: securing bilateral trade in goods and services post-Brexit
Upon the UK’s exit from the European Union in January 2020, it entered into an 11-month transition period ending on 31 December 2020. In readiness for this window coming to a close, the UK has been actively seeking trade deals in order to secure its new trading position. On 10 December 2020, the UK and Singapore signed a free trade agreement (UKSFTA) which aims to continue trade relations between the UK and Singapore post-Brexit.
The UK is Singapore’s third largest trading partner for goods, second largest for services and its top investment destination in Europe. Hence, the UK-Singapore free trade agreement is important in that it will serve to continue trade relations between the two countries, covering more than £17 billion of bilateral trade in goods and services. Under the UKSFTA, both countries will enjoy the same benefits that they are currently entitled to under the European Union-Singapore free trade agreement (EUSFTA). This includes:
- The elimination of tariffs for the trade of goods, allowing 84% of Singaporean exports entering Britain to continue to be duty-free, as they were under the EUSFTA. These exports include Asian food products such as shrimp dumplings and spicy anchovies, which will enter the UK tariff-free and as up to a combined quota of 350 tonnes annually. Singapore will also maintain its current level of duty-free access for all UK products entering Singapore, and will support existing protections on unique UK exports such as scotch whisky.
- A reduction of non-tariff barriers for major sectors: namely electronics, automobile parts, pharmaceuticals and renewable energy. This involves reducing the number of duplicative testing and certification procedures for Singapore and UK exporters in order to lower the operational costs of exports and facilitate trade. By November 2021, tariffs on virtually all remaining products will be eliminated, such as those on textiles, fruits, and selected meat and seafood produce. The UKSFTA will also provide for liberal and flexible rules of origin (ROO) for the UK and Singapore’s key exports to each other’s markets (these include clothing and textiles, machinery, electronics and petrochemicals).
- Enhanced market access to a range of service sectors for service providers, professionals and investors. Examples of such sectors are engineering, advertising, computer-related services, architecture, maintenance and repair of ships and aircrafts, international maritime transport services, and hotel and restaurant services. As service sectors are crucial for both the UK and Singapore economies, the enhanced market access will help to further improve the services trade between the two countries.
- An enhancement in intellectual property rights, allowing both countries to continue experiencing the benefits of a comprehensive intellectual property rights chapter covering copyright, enforcement and geographical indications.
- Singaporean companies will also have increased access to Government procurement markets in Britain. Singapore-based organisations specialising in transport, utilities and financial services will get the opportunity to bid for more Government projects in the UK at both city and municipal levels. Both countries have also agreed to start drafting the modules of a UK-Singapore Digital Economy Agreement (DEA). The proposed DEA, which is planned to launch in 2021, will serve as a pathfinder for modern rules on international digital trade and financial services. The Singapore Ministry of Trade and Industry stated its hope that the DEA will facilitate more seamless digital trade and business between the UK and Singapore through promoting cross-border connectivity in a safe digital environment for both consumers and businesses. With the UKSFTA coming into force and more UK-based financial firms looking to operate in Singapore, the Monetary Authority of Singapore (MAS) is planning a review to consider raising the e-wallet payment limits under the Payment Services Act (PS Act), which would impact firms like TransferWise and Revolut. MAS will also consider if UK firms would be able to apply for digital wholesale bank licenses (DWB) in Singapore in the future.
Moving forward, firms in Singapore and the UK can expect more business opportunities across their two jurisdictions. One of the key service sectors that could benefit from this would be the maritime services sector, as Singapore is a world trading hub. The UK sits at the heart of the international shipping industry; it is unmatched in its expertise in ship chartering, insurance, consultancy, ship management, finance and legal services, and is recognised by ship owners and charterers worldwide. With the UKSFTA coming into effect and providing a wider pool of potential clients, maritime firms from both jurisdictions will seek to secure new business deals in the near future.
This article has been co-written with Sri Azali, a paralegal in the marine, trade and energy team.
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