Mr Desmond Choo: To ask the Minister for Trade and Industry in view of Britain's membership of the EU lapsing in about six months, what is the impact on (i) trade between Singapore and the EU (ii) the Singapore-EU Free Trade Agreement and (iii) Singapore companies operating in Britain.
1. The UK is an important economic partner of Singapore; as the second largest economy within the EU, and the fifth largest globally. Brexit is expected to take place on 29 Mar 2019. What happens after will depend greatly on the terms negotiated between the UK and the EU.
2. A soft Brexit scenario will include an “Implementation Period” from the day the UK formally leaves the EU to 31 Dec 2020. This scenario offers the greatest predictability and stability. This is because during the Implementation Period, the UK will continue to be functionally treated as an EU Member State, and remain a party to EU international agreements. This will include the EU-Singapore Free Trade Agreement (EUSFTA) when it is ratified by the Euoprean Parliament as targeted in 2019. Disruptions to trade and investment flows would be minimised and business continuity would be preserved while the UK irons out its future trade and investment relationships with other partners, including Singapore.
3. In the event of a hard Brexit where there is no deal between the UK and the EU, the UK will cease to be a party to the EU’s agreements with third countries when it formally leaves the EU. This would mean that the EUSFTA will not apply between the UK and Singapore even after its ratification. This in itself would not impact our trading relationship with the UK as the current tariff and non-tariff regime for Singapore companies are based on WTO terms (pending EUSFTA ratification) which will continue to apply.
4. The UK Secretary of State for International Trade Dr Liam Fox and his officials have affirmed that the UK’s priority post-Brexit is to ensure that its bilateral trade ties, as well as companies operating in the UK, are not disrupted. MTI’s assessment is that trade between the UK and Singapore, as well as companies invested in the UK’s domestic sectors, will not be structurally affected. Nonetheless, as Brexit is a major development, some volatility is to be expected. In addition, companies based in the UK, which use the UK as a gateway to access opportunities in the EU single market, will be impacted. The magnitude will depend on where the UK and the EU land on their future trade and economic relationship where it pertains to their common market today. Access to talent and general labour supply could also be impacted if immigration conditions are more stringent between the UK and the EU.
5. MTI and Enterprise Singapore have continued to work closely with Singapore companies that remain keen to expand in the UK. The UK is home to a diverse range of Singapore companies from sectors such as engineering, infrastructure, medical technology, digital, transport, lifestyle, real estate and hospitality. In some sectors, Singapore companies have made new investments in the UK even after the referendum in 2016, after careful assessment of the UK’s continued potential alongside the attendant risks despite the imminence of Brexit, pointing to our companies’ continued confidence in the UK economy. Pending the final post-Brexit arrangements with the EU, MTI is in close discussions with the UK Department of International Trade on how we can strengthen our strong and multifaceted bilateral relationship.
6. Meanwhile, work on the EUSFTA is on track. The EUSFTA will deepen our robust bilateral trade and investments with the EU. Even as the UK prepares to leave the EU, British leaders have continued to reaffirm their support for the EU’s free trade agenda, including for the EUSFTA.