Efforts to Ensure Singapore-European Union Free Trade Agreement Comes into Force
Ministry of Trade and IndustrySpeakers
Summary
This question concerns Asst Prof Mahdev Mohan’s inquiry on updates to ensure the Singapore-European Union Free Trade Agreement (EUSFTA) comes into force following a 2017 European Court of Justice ruling. Senior Minister of State Koh Poh Koon explained that the court designated the EUSFTA as a "mixed agreement," meaning provisions regarding non-direct foreign investments and investor-state dispute settlements fall under the shared competence of member states. To facilitate faster ratification, the European Union is considering splitting the EUSFTA into a standalone trade agreement and a separate Bilateral Investment Agreement, which requires approval from thirty-eight national and regional parliaments. Senior Minister of State Koh Poh Koon emphasized that Singapore’s priority is the expeditious ratification of the agreement so that businesses can benefit from its provisions as soon as possible. The European Commission is currently consulting with member states and stakeholders to determine the most effective modality for finalising and implementing these proposed agreement structures.
Transcript
16 Asst Prof Mahdev Mohan asked the Minister for Trade and Industry (Trade) if he can provide an update on efforts since May 2017 to ensure that the Singapore-European Union Free Trade Agreement comes into force in its concluded or an alternative form.
The Senior Minister of State for Trade and Industry (Dr Koh Poh Koon) (for the Minister for Trade and Industry (Trade)): Mr Speaker, on 16 May 2017, the European Court of Justice (ECJ) issued its legal Opinion of the EU-Singapore Free Trade Agreement (EUSFTA) as a "mixed agreement". Specifically, the ECJ ruled that all provisions in the EUSFTA fall under the exclusive competence of the EU with specific exceptions. These exceptions are provisions relating to, firstly, non-direct foreign investments, such as portfolio investments; and, secondly, the regime governing dispute settlement between investors and states. Both these provisions fall under the shared competence of the EU and its member states.
Since the release of the ECJ Opinion, the EU has been discussing internally on the modality for negotiating and ratifying FTAs, including the EUSFTA. This includes the possibility of having the FTA cover the provisions that belong to the EU's exclusive competence, while provisions that are of shared competence are incorporated into a separate Bilateral Investment Agreement.
This would allow for a more targeted ratification process. The FTA would then come into force after the approval of the Council of the EU and the European Parliament. The separate Bilateral Investment Agreement, which is of "shared competence", would have to go through the process of obtaining approval at the Council, the European Parliament, as well as the 38 national and regional parliaments of all EU member states.
The Commission is in the process of consulting internally with member states and other stakeholders on the best way to take the EUSFTA forward. Singapore has conveyed to the EU that our priority remains to ensure an expeditious ratification of the EUSFTA. We will continue to work closely with the Commission to have the FTA ratified in order for our businesses to benefit from the agreement as soon as possible.