21 December, 2018
Singapore has a significant role to play in the success of The Association of Southeast Asian Nations (ASEAN) economic community. As Chair in 2018, the city-state made significant in-roads in negotiating and promoting free trade. It also strengthened regional economic cooperation and integration, which is key for ASEAN to realise its full potential.
Singapore has built its manufacturing sectors through deep integration into international production networks. Like other nations in the region, Singapore is vulnerable to a major upheaval in global value chains, but being a regional shipping and financial hub, it could benefit from stronger demand for re-exports, logistics and financial intermediation.
Countries with existing Free Trade Agreements (FTAs) encompassing the US and China could be partially insulated from the potential trade disruption and may even gain an additional competitive advantage from them. To safeguard its trade interests, Singapore has negotiated numerous bilateral FTAs. The other main ASEAN economies also benefit from FTAs negotiated between ASEAN and major regional trading partners such as China, South Korea, India, Japan and Australia/New Zealand (ANZ). Leveraging preferential trade access under the ASEAN-China Free Trade Area (ACFTA), ASEAN economies may be able to replace newly tariffed US exports to China.
ASEAN is actively pursuing broader regional trade agreements, chief among them the 11-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This replaced the previous TPP deal, abandoned by President Donald Trump. While China has not publicly expressed interest in joining the pact—originally designed to isolate China—observers suggest that Beijing is now exploring the possibility.
Singapore’s position as a gateway for European business to ASEAN has been reinforced through three recent agreements: the EU-Singapore Free Trade Agreement (EUSFTA), the EU-Singapore Investment Protection Agreement (IPA) and the EU-Singapore Partnership and Cooperation Agreement (PCA). The EUSFTA and IPA are the first of their kind signed between an ASEAN member and the EU. They will serve as a reference point and set the standard for future trade deals between ASEAN and the EU.
To read more about developments and trends in ASEAN please see 'ASEAN Insights – a report for business on the regional policy and regulatory environment'.
