On Friday 19th October 2018, Singapore and the European Union signed a Free Trade Agreement, dubbed the EUSFTA.

The agreement – the first between the EU and an Asean country – will improve market access across many sectors, increase government procurement opportunities and progressively eliminate tariffs on exports.

European fans of Singapore food will be delighted to learn that lap cheong (Chinese sausage) and roti prata (South Indian flatbread) can now enter the EU tariff-free, but on a more serious note, it is felt that the FTA’s impact “goes to the heart of sectors and issues that matter for Singapore including electronics, pharmaceuticals, and chemical manufacturing”.

Negotiations on the Agreement between Singapore and the EU began in 2009. According to Singapore’s Ministry of Trade and Industry, the EUSFTA signals the EU’s commitment to step up its engagement with Southeast Asia: It is a pathfinder for the EU’s FTAs with other ASEAN Member States and an important building block towards a potential EU-ASEAN FTA.

A copy of the agreement, courtesy of Tang See Kit (twitter)

Significantly, the UK will only enjoy the benefit of the EUSFTA up to March 2019, when the country is due to leave the EU in the process known notoriously as Brexit. Obviously Britain will also have no access to any future EU-ASEAN FTA.

EUSFTA comes at a time when the post world war structures of rules-based international trade are under threat. The rhetoric of Brexiteers echoes a movement by states and citizens towards more independent and sovereign control over their socio-economic policies – especially in the mature economies of Europe and North America. US President Donald Trump’s “Make America Great Again” battle-cry has seen the dismantling and restructuring of the North America Free Trade Agreement (NAFTA) – or the new US-Mexico-Canada Agreement (USMCA) , the refusal to participate in the Trans Pacific Partnership (TPP) and the subsequent raising of tariffs on cheap Chinese goods.

On signing the Agreement, Prime Minister Lee Hsien Loong said that it sends a message that both parties remain committed to the values of free trade and cooperation. He also hoped that other countries will maintain this commitment and continue to uphold the rules-based multilateral system, which he said has benefited all countries.

Singapore business leaders have also noted the importance of EUSFTA in this worrying context. Singapore Business Federation (SBF) chief executive officer Ho Meng Kit called it “a timely development given the growing international trade tensions.

There can be no doubt that post-war moves to encourage and facilitate freer trade have had a dramatic effect on reducing global poverty levels. Billions of people – particularly in Asia – have benefitted from greater access to education, financing, opportunities and trade especially through  internationally-led programmes that made it possible for Asian economies to market their talent, products and energy. Today, in addition to India, Vietnam, Indonesia and the Philippines – dubbed the VIP nations – have been the shining growth opportunity stars for Western investors, market makers and enterprises.

As recently as 2009, the World Bank noted in a report that “sustained long-term poverty reduction depends on stimulating economic growth, which in turn depends on trade policy reform.”

And yet here we are, less than ten years later, looking at “reforms to trade policy” in some major economies that run completely counter to strategies that have been successful for more than 70 years.

The EUSFTA is therefore to be welcomed, not only because of its immediate positive impact on trade between Singapore and Europe, but because it is a clear statement of belief in the orderly, progressive, rules-based, multi-lateral trade arrangements that have served the world so well.