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Summary
- New trade deal with Singapore will strengthen UK’s relationship with South-East Asia
- The FTA will enable Britain to reach closer to its goal of becoming a digital hub
- It will bring the UK closer to joining the CPTPP, a preferential trade deal among 11 pacific nations
- Britain will also be signing a free trade deal will Vietnam to strengthen its relationship in the Indo-Pacific region
The UK has signed a free-trade agreement (FTA) with Singapore, paving its way into the Asian market. Liz Truss, the International Trade Secretary of the UK, was in Singapore today, December 10, to strike an FTA deal that would amount to mutual trade worth £17.6 billion (US$22 billion) every year between the two nations.
With the Brexit transition period coming to an end on December 31 and talks of the EU-UK trade agreement still under a big question mark, Britain is rightly seeking to forge its own path after having left the European Union early this year.
The UK-Singapore deal is an extension of the already existing EU-Singapore pact which was signed way back in 2012. Singapore is considered to be the largest trading partner of the UK in the South-East Asian region. At the same time, the UK is the top investment destination for Singapore in the whole of Europe.
The trade ministry of Singapore said that the free trade agreement will allow both the countries to gain access to each other’s markets, remove tariffs, and eliminate non-tariff barriers in sectors such as electronics, renewables, automobiles, auto parts, medical devices, and pharmaceutical products, apart from many others. Duties will be removed from both the sides by November 2024.
Chan Chun Sing, Minister for Trade and Industry of Singapore said that the FTA would also provide the British businesses with a platform to explore further opportunities via Singapore.
(Image Source: ©Kalkine Group 2020)
Significance of the deal:
- Liz Truss and Chan Chun Sing revealed their intentions to launch negotiations for a Digital Economy Agreement soon. On the one hand, it will help the UK in becoming the centre for digital trade by launching its first Digital Trade Network in the Asia Pacific, increasing digital trade and investment opportunities, on the other hand, it will be the first such agreement that Singapore ever struck with any European nation. Both countries are global leaders in the digital economy space. Last year, 70 per cent of UK services exports worth £3.2 billion were delivered to Singapore.
- The FTA will enable Britain to move closer to joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP. Singapore is one of its 11 member nations. The CPTPP agreement lays down the latest rules in the business services, digital, financial, professional sectors. In 2019, this multilateral trade body accounted for 13 per cent of the global GDP, and this contribution will jump to 16 per cent if the UK joins it.
- The free trade deal will also prove beneficial for the UK fintech firms in Singapore. UK’s proposal to consider an increase in the limits imposed on e-wallet payments has been agreed upon by Singapore, and it will begin to review next year.
The United Kingdom has been successful in signing trade deals with 57 countries that account for £193 billion of the nation’s bilateral trade, within a short time span of two years. No other country has been able to negotiate so many agreements simultaneously. Within three years, the British Government is aiming to close trade agreements with countries that cover 80 per cent of the UK’s overall trade.
After signing the trade deal with Singapore, Liz Truss will be moving to Vietnam to conclude another rollover trade agreement. The UK had entered into a bilateral trade agreement with Japan in October and with Canada in November this year.
