European Parliament Approves Landmark Trade Investment Agreements Between The European Union And Singapore

In February 2019, the European Parliament approved two landmark trade and investment agreements between the European Union (the "EU") and Singapore. The EU-Singapore Free Trade Agreement (the "EUSFTA") and the EU-Singapore Investment Protection Agreement (the "EUSIPA") will remove the majority of tariffs and duties between the trading areas and provide significant investment protection and political risk mitigation for businesses investing between jurisdictions. This article considers this important development and what it means for businesses trading and investing in these jurisdictions.

1. The EUSFTA will remove most duties and tariffs

   The EUSFTA is a broad-ranging free trade agreement between Singapore and EU which eliminates the majority of duties between the two trading zones. Once fully implemented, the agreement will allow 84 per cent of Singapore exports to enter the EU duty-free and Singapore will remove all remaining tariffs on EU products and will commit to keep unchanged the current duty-free access for all other EU products. Other key benefits of the EUSFTA will be a robust regime for protection of intellectual property rights which will provide for 70 years of copyright protection, 20 years of patent protection and 10 years of trademark protection. Singapore will also recognise EU safety tests and inspections for a range of productions, include for cars and many electronic appliances and accept labels that EU companies use for textiles.

   The EUSFTA is the first trade agreement between the EU and a member of the Association of Southeast Asian Nations ("ASEAN"). The agreement will allow materials sourced from ASEAN Member States to be deemed as originating from Singapore when incorporated into certain final products in Singapore, which can enable such products to qualify for preferential tariff treatment. Essentially this will turn Singapore into a quasi-free zone for the ASEAN-region selling into the EU. The EUSFTA is also being seen as a potential first step towards creating a broader EU-ASEAN free trade agreement and trading area.

2. The EUSIPA will provide investment protection for businesses and create an investment dispute court

   The EUSIPA, which still needs to be ratified in each of the EU member states, is anticipated to replace 12 existing bilateral investment treaties between Singapore and EU member states and extend investment protection to investors in all EU member states investing in Singapore and vice versa. Similar...