Singapore to Sign Free Trade Agreement with Eurasian Economic Union in October
Op/Ed by Chris Devonshire-Ellis
Singapore is scheduled to sign a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU) in October 2019, according to Veronika Nikishina, Minister of Trade of the EAEU at the Far Eastern Economic Forum.
Speaking at the session “Russia & The EAEU in the Asia Pacific”, Nikishina mentioned the ongoing negotiations were about to be concluded with an agreement. Singapore will become the second ASEAN nation after Vietnam to agree such a deal with the EAEU.
The EAEU is a free trade area that includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. The countries represent a market of some 183 million people and a combined GDP (PPP) of about US$5 trillion.
It effectively sits between the European Union and China, making it strategically important as a conduit for goods transported between China and Europe. China signed off an FTA with the EAEU last year, although this was non-preferential, meaning no products were included at this stage. However, negotiations between China and the EAEU over tariffs on goods are still in progress.
When announced, China-Russia trade and the transportation of goods between China and Europe is likely to expand considerably. Both Beijing and Moscow have recently signaled their desire to double their current bilateral trade volume to US$200 billion in the next four years, a China-EAEU deal including specific products will go a long way to achieving that.
The Vietnam-EAEU FTA has seen bilateral trade increase from zero to close to US$250 million per annum in just two years with Russia, with plenty of room for growth. Further liberalization of this FTA is expected next year, according to Trinh Dinh Dung, the Deputy Prime Minister of Vietnam, with additional categories in textiles and agriculture set to be added.In terms of Singapore, the city is a major financial services hub for Asia and ASEAN, and the FTA can be expected to include provisions for financial and related items. Russian and EAEU companies are looking to raise capital to fund expansion into Asia, doing so on the Singapore bourse makes a lot of sense. We will provide more details concerning the content of the Singapore-EAEU FTA when these are available. ASEAN as a trade bloc is also negotiating with the EAEU with indications dropped at the conference that there may be further developments in 2020.
Numerous other countries are also understood to be negotiating with the EAEU, among them Egypt and Turkey, while Serbia has announced it will be signing off on an EAEU FTA towards the end of next month.
The moves push Russia closer to the Asian markets of China and Southeast Asia, which are likely to see considerable Russian investment expand into the region. Russian businesses are looking to expand, curtailed by activities and sanctions imposed upon many of them by the EU, and largely made to feel unwelcome in the EU and the US in general.
Singapore makes an excellent regional base for Russian businesses wishing to develop throughout ASEAN, and the emerging markets of Indonesia, Malaysia, Philippines and Thailand, along with Vietnam, in particular. The main ASEAN economies are all showing strongly positive GDP growth figures in a global world that appears in parts at least, to be heading into a recession.
According to the Russian Trade office in Singapore, no date has yet been set for the official announcement of the FTA, although it will happen “probably in October”. Subsequent media reports indicated that the FTA will be signed on October 1.
The FTA is expected to deal with trade in goods and commodities in its initial phase and will not include financial services as this requires additional input from both Singapore and other EAEU members.
A version of this article was originally published on September 4, 2019 by Silk Road Briefing and was republished by ASEAN Briefing on September 10, 2019.