There are clear signals from member states that the EU-Singapore free trade agreement, concluded in 2015, is on track to be ratified in the coming months. MEP Sorin Moisa shares his views with Borderlex’s editor Iana Dreyer on why and how the accord could and should be ratified.
Where are we in the ratification process of the EU-Singapore trade pact?
We are very close to the formal conclusion of the process. The negotiations have been finalised for both the trade and the investment parts of the free trade agreement. The texts have been translated and reviewed by lawyers. We are now at the stage where the European Commission should be ready to make a formal proposal to the Council. Once the member states adopt their decision, the texts will be signed and sent to the parliament for consent.
The process was delayed in 2015, when the commission decided to request the opinion of the Court of Justice of the European Union in order to get the necessary clarity on the distribution of competences between the EU and the member states on trade and investment following the entry into force of the Lisbon Treaty.
It was nothing special about EUSFTA as compared to other FTAs concluded by the EU – it was just the first trade agreement for which negotiations had been finalised at the exact time when internal clarity was needed within the EU. The need for internal clarity inside the EU temporarily prevailed over the common interest of the EU and Singapore to have the economic benefits of the agreement in place as soon as possible.
After the CJEU issued its opinion on 16 May 2017, it became clear that the overwhelming part of the provisions negotiated between the EU and Singapore – the trade part – fall under the EU exclusive competence and do not require ratification by member states.
In practical terms, this means .they can enter into force immediately after endorsement by the Council and the European Parliament. Only the provisions on investment protection and the resolution of investment disputes, which are now technically separated from the rest of the FTA, still have to follow a different – and longer – path and be ratified by all EU member states.
This is, yes, a new development and a different process than the one that was followed in the case of the EU-Canada Comprehensive Economic and Trade Agreement, CETA. This new ratification process should been discussed properly among and within the EU institutions.
It also needs to be explained to the public as being fully consistent with both rule of law, as per the court’s decision, and democracy at EU level. It is natural for EU prerogatives to be exercised at EU level, and for EU institutions, including the European Parliament, to be held accountable by the public for their decisions and votes. A confused and confusing situation, whereby you don’t really know who is responsible – the EU or member states – is not good for EU democracy.
At the end of the day, having separate but parallel tracks for the conclusion of the trade and the investment parts of the FTA is nothing else than the logical consequence of the legal clarification provided by the CJEU. Why else ask for such clarification if not to optimise the process of concluding the FTA by providing for a different treatment of provisions that fall under EU exclusive competence and the provisions that fall under shared competence of the EU and its member states?
Will the institutions ratify the treaty?
There are good reasons for the Council and the European Parliament to endorse this deal.
It is good for Europe in economic terms: Singapore is a major hub in Asia for European companies, which use Singapore as a launching pad for exports throughout the region. That comes on top of the estimated plus of EU exports to Singapore of 1.4 billion euros over a 10-year period.
The trade pact belongs to a new generation of EU FTAs that promote fair trade and benefits to all. For example, it includes a strong chapter on trade and sustainable development and provisions on renewable-energy generation that were ground-breaking at the time they were negotiated.
The agreement reached with Singapore also takes into account the EU’s ‘sensitivities’. To offer but one example, Singapore has accepted to replace the investor-to-state dispute settlement or ISDS mechanism, which was initially negotiated between the parties but became unacceptable for the EU, with the new investment court system or ICS. This is in line with the overarching reform of the EU approach on investment protection which has been strongly advocated in the European Parliament.
The deal also enjoys strong support in Singapore. As chair of the Friends of Singapore group in the European Parliament, I recently organised a visit to Singapore. We met three ministers, elected representatives and trade unionists. In all these meetings, I heard nothing else but strong support for the swift conclusion of EUSFTA, which is seen as a key step for the internationalisation of Singapore’s companies and an instrument for economic and social progress.
What’s in it for the EU?
The EUSFTA contains ambitious provisions on trade in goods, including on the elimination of virtually all tariffs at the latest five years after the entry onto force of the FTA, provisions to address the so-called technical barriers to trade and modernised ruled of origin that take into account the complex patterns of today’s globalised economy. It also contains important commitments on services, notably telecom, environmental services, financial services, maritime transport and computer services. Access to public procurement markets will be improved significantly, and 196 EU GIs will be protected by Singapore.
The agreement is important not only for the new opportunities which it creates for companies from both sides, but also because Singapore is a key partner for the EU within the South East Asian ASEAN region. As of 2017, 14,045 EU companies are established in Singapore and use it as a hub for the entire region. As a result, although within ASEAN, Singapore is only the fourth-largest economy (GDP2016: $296 billion), it is by far the EU’s largest trade and investment partner, accounting for one-third of total EU-ASEAN trade in goods and services, and for two-thirds of the entire EU foreign direct investment stock in ASEAN.
The European Union has already launched in Singapore, in October 2014, a flagship initiative to help small and medium-sized enterprises do business in the country and the region, which seems to be a successful so far and is a good example of proactive EU-level trade diplomacy.
Should the ratification process be fast-tracked?
As an MEP, I strongly believe that the European Commission and the Council should move swiftly towards the conclusion of the EUSFTA, to give the European Parliament the opportunity to vote on the agreement before the end of this year.
It is not only a political and moral duty towards Singapore after long years of negotiations, delays and last-minute requests from the EU side. The swift conclusion of the EUSFTA is also in the interest of the EU as a whole, of its companies and of its citizens.
Sorin Moisa is an independent MEP from Romania. He chairs the Friends of Singapore group in the European Parliament.