Singapore and EU sign digital trade pact, deepening cooperation amid global uncertainties

Singapore and the European Union on May 7 inked a digital trade agreement designed to provide greater clarity and legal certainty for consumers and businesses on both sides to transact online more seamlessly.

Minister-in-charge of Trade Relations Grace Fu and EU Commissioner for Trade and Economic Security Maros Sefcovic signed the European Union-Singapore Digital Trade Agreement (EUSDTA) at The Treasury in High Street.

The agreement supplements the EU-Singapore Free Trade Agreement (EUSFTA) that entered into force in 2019.

The EUSDTA aims to set global standards for digital trade and cross-border data flows without unjustified barriers. It includes rules on e-signatures, spam and cyber security, among others. It should also lower costs for businesses, boosting services trade.

The EU is Singapore’s fifth-largest goods trading partner. In 2024, bilateral trade in goods grew to over $100 billion, representing 7.8 per cent of Singapore’s total goods trade.

The EU is also Singapore’s second-largest services trading partner, with bilateral trade in services reaching over $110 billion in 2023.

Investment ties remain robust, with the EU being Singapore’s second-largest foreign investor and second-largest overseas investment destination.

Singapore is the EU’s fifth-largest partner in services trade, and more than half of these services are delivered digitally.

Ms Fu said the signing of the EUSDTA is a significant step forward in deepening digital economic cooperation between Singapore and the EU, given the global uncertainties.

She said: “The EUSDTA reflects our shared commitment to foster a trusted, secure and inclusive digital economy, and create new opportunities for our companies and citizens in digital trade.

“As the EU’s first bilateral digital economy agreement with an Asean country, the EUSDTA will also support greater region-to-region digital connectivity.”

The EUSDTA follows similar partnerships with Australia, the United Kingdom, New Zealand, Chile and South Korea that put in place rules for digital trade and cross-border data flows.

Data from the World Trade Organisation showed global digital service exports surpassed US$4.2 trillion (S$5.42 trillion) in 2023, up 9 per cent from 2022.

Digitally delivered services trade globally has risen on average by 8.2 per cent per year from 2005 to 2023, outpacing increases in trade of goods and other services, its data showed.

Under the EUSDTA, businesses will be allowed to transfer data, including requirements to store data in specified locations, to support electronic commerce.

There will be a legal framework to protect the personal data of individuals, based on principles and guidelines developed by relevant international bodies.

It should be easier and cheaper for people and businesses to pay each other online, even if they are in different countries.

Both jurisdictions will use internationally accepted standards, promote interoperability, and encourage innovation and competition in electronic payment services. Electronic invoicing should also be easier, so businesses can send and receive e-invoices smoothly across borders without extra hassle.

Trade documents will be made available in electronic format and accepted as the legal equivalent of paper versions. No customs duties on electronic transmissions will be imposed under the EUSDTA.

To ensure software makers feel safe and trusted when they do business, their special computer instructions – called source code – need to be protected. Hence, Singapore and the EU have agreed that companies will not have to share their secret source code just to sell their software in each other’s countries. This helps keep ideas safe and encourages people to create new things.

To enhance consumer protection, Singapore and the EU will adopt measures that guard against fraudulent, misleading or deceptive commercial activities that cause harm to consumers engaged in electronic commerce.

Singapore and the EU will cooperate to help small and medium-sized enterprises (SMEs) participate in digital trade space.

Ms Nele Cornelis, executive director at EuroCham Singapore, which represents European businesses here, sees the partnership as “a catalyst for stronger government-to-business collaboration, regulatory alignment, and SME digital inclusion”.

“It enables businesses to trade more efficiently, scale globally with confidence, and operate within a secure and forward-looking digital environment,” she said.

Mr Kok Ping Soon, chief executive officer of the Singapore Business Federation, said the EUSFTA, which eliminates all tariffs on goods into the EU, was among the top three most utilised FTAs among Singapore businesses in 2023.

He is hopeful the EUSDTA will help create new opportunities for various sectors here, including e-commerce and financial services.

Mr Lim Chung Chun, group CEO of digital wealth platform iFast Corporation, said he is keen to explore opportunities to expand cross-border financial services into the EU.

For Singapore-based fintech firms specialising in cross-border payments like Nium, trusted cross-border data flows, aligned standards for payments and interoperable frameworks are essential to delivering seamless services across borders.

Mr Anupam Pahuja, Nium’s general manager for Asia-Pacific, Middle East and Africa, welcomes the commitment to protect personal data, promote cyber security, and enable greater SME participation in digital finance.

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

Generative AI a top priority for firms but privacy concerns remain: GIC survey Law don argues in inmates’ appeal that parts of Misuse of Drugs Act are unconstitutional