The United Kingdom-Singapore Free Trade Agreement (UKSFTA) was signed on 10 Dec 2020. What does it mean for your as a business navigating trade between the two countries in this Brexit landscape? We have outlined 4 key areas including (i) tariffs (ii) material sourcing (iii) technical barriers, and (iv) enhanced market access to service sectors.
Once UKSFTA enters into force there will be a 84% elimination of tariffs for all Singapore products entering the UK market. The tariff elimination starts off with food products, electronics, pharmaceuticals, and processed agricultural products. By 21 November 2024 this tariff elimination is expected to extend to all products from Singapore coming into the UK.
If you are a Singapore exporter or have technology or services that have touchpoints with goods moving from Singapore into the UK, this is good news for you. There is also a possibility that this would subsequently lead to better trade movement on services and the digital economy front as well.
Under the Rule of Origin protocol the source of material and its trade origin matters. Under UKSFTA, Singapore and UK companies can continue to use EU materials in their exports between both markets. Singapore companies will also be able to cumulate materials from ASEAN member states when the relevant arrangements are put in place.
Once again this has advantages for exporters and importers of goods, and companies that have touchpoints providing services for movement of goods. Even if it is not directly applicable to your business providing only a service, the ethos of continuing to use standards and directives by EU, and ASEAN means that similar practices can be expected to be taken forward to other industries, especially digital industries under the proposed Digital Economy Agreement (DEA).
There is elimination of duplicative testing and certification for electronics, motor vehicles and vehicle parts, pharmaceuticals, and renewable energy. This is not the first time both countries have sought to eliminate double certification and standards and reduce technical barriers to entry. For instance, Cybersecurity standards in Singapore was largely modelled after UK’s CREST to reduce technical requirements for Cybersecurity firms offering their services in Singapore, before the light-touch licensing regime under the Cybersecurity Act was brought into place in 2018.
Businesses can hence expect further unification and reduction in certification and standards requirement that duplicates across borders, thereby reducing cost of movement of goods and services.
Enhanced Market Access for Services
Companies providing specific services can rejoice at this point because companies will have enhanced market access to several industries including engineering, advertising services, computer-related services, environmental services, aircraft and shipping maintenance services, maritime transport services, health and restaurant services.
This means a wider market for entry and expansion, and for diverse services to exist alongside each other. UK’s lean structure for company set-up also means that Singapore companies can now have access to a larger market than Singapore, in the UK, instead of considering other ASEAN markets which have a slightly more onerous model i.e. Joint Venture Partnerships
There are certainly other benefits from the UKSFTA, including more opportunities in Government procurement. For instance, during the pandemic Singapore companies in the UK could be listed under Crown’s list of suppliers for essential supplies as well as services they provided. Similarly, there will be access to bid for UK government procurement processes. Currently under Infocomm Development Authority’s Open Innovation Platform and Innovate UK’s initiatives, companies in the UK can jointly bid for projects with Singapore companies. In addition, there will be enhanced Intellectual Property (IP) protection under the UKSFTA, which will strengthen IP rights of companies in both countries.
As you look towards these opportunities, you can also look at UKSGBridge’s VAT guide, Regulation Navigator among other resources.