S Iswaran, Singapore’s Minister-in-Charge of Trade Relations spoke to Borderlex’s founder Iana Dreyer about his country’s’ vision for 21st century trade policy and how the European Union fits in all this. The conversation covers digital, tackling supply chain issues and the climate challenge.
How do you perceive the EU as a trading partner post-pandemic?
The European Union is a very valuable partner. Such partnerships have an even greater significance in an era of uncertainty – and we are going to see more uncertainty going forward.
The anchor for the partnership is our shared values and the fact that we already have worked together for mutual benefit. These are ‘values in action’.
It gives us confidence that we can do more together. We are looking forward to doing more with the EU.
We have been blessed for the last decades with the Bretton Woods institutions and the World Trade Organization.
These have really helped create a global environment that has been largely conducive for growth, for trade, for investment flows, and therefore for the uplifting of the standards of living in large parts of the world. This has benefited our part of the world, and certainly Singapore. This is also true for Europe and the United States.
These institutions and the architecture that has underpinned them are very valuable constructs. And this is something on which Europe and Singapore see eye to eye.
The challenge is that we are entering a more uncertain era.
If you just look back over the last few years: we’ve had a pandemic, we’ve had the outbreak of conflict, we’ve had supply chain disruptions. We can’t rule out the impact of climate events going forward.
This means that countries really need to have both the toolkit and the dexterity to navigate this environment. One important part of this is having strong partnerships around the world.
In the course of the pandemic we relied deeply on our partnerships to ensure that the vaccines flow and that the medical resources flow.
We need those sorts of partnerships to withstand these new challenges and shocks.
Is the EU-Singapore free trade agreement delivering?
The agreement – which came into force in 2019 – has had a good start.
The FTA gives both sides access to markets, not only in goods, but also in terms of government procurement and services. It creates new opportunities. There are good early signs of benefits already accruing from it.
The FTA is a very important economic bridge for our small-and-medium-sized companies. I think it is a very valuable channel through which they can access the growing opportunities in this part of the world – South East Asia.
As we know, this growth is going to continue and it’s going to be significant. ASEAN* is expected to become the world’s fourth largest economy by 2030.
Its middle class incomes are rising : the demand for the kind of products and services that come from Europe will continue to grow at an even faster rate because these are products that tend to appeal to people with more disposable income.
The EU-Singapore FTA is an opportunity for European businesses to access this market.
It is not an accident that there already are almost 12,000 EU companies in Singapore – and I think there will be more to come.
The other important part of the FTA is that we have created a platform for an ongoing dialogue and partnership between the EU and Singapore. We have a trade committee established under the agreement. I co-chair that with the European Commission’s Executive Vice-President Valdis Dombrovskis.
This platform is not just about implementation of the FTA. It’s also about thinking about new areas and keeping the agreement alive…. And this is the point of our ongoing Digital Partnership scoping exercise.
What are Singapore’s hopes for the coming digital partnership with the EU?
Singapore and the EU already work together on the the Joint Statement Initiative on e-commerce in the WTO.
As to the upcoming WTO 12th ministerial conference, we should ensure that the current moratorium on customs duties on on electronic transmissions is extended because businesses are relying on it.
If we look ahead, obviously these digital agreements or digital linkages are really the analogue of the linkages we already have for goods, for services, for capital on the basis of the traditional FTA.
We need to bring trade policy into the digital era. Whether it’s in the WTO or in bilateral and other agreements – we need to think hard about this.
Countries are still finding their way around the issue. In terms of agreements, it’s very hard to come up with a definitive negotiating outcome today and then say that this will stand the test of time.
Whether it’s cross-border data flows, whether it is newer technologies such as artificial intelligence, blockchain or the electronic ID – I think what we’re really seeing is an evolving landscape.
We need not just an agreement, but a mechanism that allows us to keep pace with the technological and regulatory evolution.
In terms of our digital partnership discussions with the EU we are quite keen to see how we can establish a flexible architecture with different modalities, so that we can evolve with time.
In some areas we may have sufficient clarity and certainty to anchor legally binding commitments in an agreement. Others may be so inchoate that we just want to have regular dialogues.
Somewhere in-between are areas which have somewhat evolved but not quite coalesced to the point where you think you can have an agreement. Here one can have memoranda of understanding.
Then there are those areas that are more challenging because the field is still evolving. Here we can engage in regular dialogue and bring the interested stakeholders together.
I would say to the EU that this digital partnership can play the role of pathfinder towards something larger with our part of the world.
What could a supply chain resilience conversation with the EU look like ?
After the pandemic, and also after some other disruptions, the matter is now very high on the agenda.
I would say that it’s important to get into this conversation first. There are different aspects of supply chain resilience. We’re quite keen to discuss it. The devil is in the details.
Singapore is a major shipping hub. Many trade flows go into the South East Asian region and also into North East Asia via Singapore.
In the the last two years, when you had the Suez Canal disrupted and problems in some ports, we became a very important catch-up port because ships lost a lot of time in these various disruptions – they needed to make up for the time.
Because we have a lot of capabilities, many shipping lines found our port services useful. We sometimes were able to save them days in terms of what they may have otherwise lost.
So there are ways to work together on supply chain resilience. This can involve digital overlays – so that you can minimise the disruptions. There also are overlays in terms of sustainability.
If you’re talking about specific supply chains, the conversation could be around semiconductors and around pharmaceuticals. I even think we need to explore food and agriculture.
What is your answer to EU and US digital approaches in their respective Indo-Pacific strategies?
We support these and welcome them. Whatever it is that we work on, we always start on the basis that we work with the partners who are like-minded. But we also want to work on the basis of an open and inclusive architecture.
We establish the standards. We aspire for high standards, we aspire for closer cooperation. And then if others are able to meet those requirements and are prepared to subscribe to them, they are welcome.
This is the approach we take with our digital economy agreements with partners such as New Zealand and Chile, Australia, the United Kingdom and the Republic of Korea. We have work going on with ASEAN on digital frameworks. In some cases you can go further and with others you may have a different thrust. But in the end, the hope is that all of these different streams will converge and become a big river.
As to whether it’s a European initiative or a United States initiative or some other initiative, if they all at the heart have the same sort of standards and values, then there should be a way to interoperate and perhaps eventually to merge.
Of course, if ultimately we can do this at the WTO level, that would be great – but that might take some time.
Singapore is pursuing ‘green economy agreements’. What do you have in mind with the EU in particular?
We need to work on technologies and solutions that reduce carbon emissions in absolute terms, technologies around carbon capture and sequestration. This is also about finding solutions on carbon credits, trading, pricing and green finance.
With the EU we could work from the research-and-innovation level all the way to downstream elements such as financing of green solutions, setting up carbon exchanges or pricing mechanisms.
Singapore has a carbon tax that is due to increase to between S$50 to S$80 (€34 to € 55; £29 to £46) a tonne by 2030.
