FREE TRADE AGREEMENT BETWEEN SINGAPORE AND EUROPEAN UNION

Miss Penny Low asked the Minister for Trade and Industry (a) whether there has been any progress towards a bilateral Free Trade Agreement (FTA) between Singapore and the European Union (EU) or does the EU still prefer to work on a multilateral FTA framework with ASEAN; and (b) what is the probability of a successful conclusion of either FTA in the next three years or so.

BG George Yong-Boon Yeo: Mr Speaker, Sir, the European Commission has not yet replied officially to Singapore's proposal for an EU-Singapore FTA although Trade Commissioner Pascal Lamy commented publicly in February last year that Singapore has made a compelling strategic and economic case for such an FTA. In the past year, the European Commission has been holding consultations with industry on whether there is a strong business case for such an FTA. The Commission has indicated on various occasions that its current priority is to concentrate on the Doha Development Agenda and that it prefers to consider new FTA initiatives only after its completion in 2005.

As for the EU's economic engagement with ASEAN, Commissioner Lamy has informed me that he is working on a flexible framework which takes into account the different stages of development of the 10 ASEAN countries. This new framework should be ready by the time he meets the ASEAN Economic Ministers in early April in Laos at our informal retreat. Realistically, an EU-ASEAN FTA can only be a long-term objective.

Miss Penny Low (Pasir Ris-Punggol): Sir, how important is the EU-Singapore FTA to Singapore?

BG George Yong-Boon Yeo: It will be very important. The EU makes up a large part of our total economic account. They have vast investments here. We are by far their most important trade and investment partner in Southeast Asia.

My own sense talking to EU officials is that they understand the advantages of having such an FTA with Singapore but they are concerned about how they engage ASEAN generally. They are also concerned that they should not send a strong signal to the WTO that it is somehow less interested in the Doha Development Agenda. It is an important initiative for us and we are pursuing it. I believe it will take time but eventually it will come about.