Singapore Set to Sign Free Trade Agreement with the Eurasian Economic Union by Year-End

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By: Dezan Shira & Associates

Russia-SingaporeSingapore Deputy PM Tharman Shanmugaratnam (right) with Russian Deputy PM Igor Shuvalov (left) 

Singapore is set to sign a Free Trade Agreement (FTA) with the Eurasian Economic Union (EAEU), a free trade bloc that includes Armenia, Belarus, Kazakhstan, Krygyzstan, and Russia. Commenting on the incoming trade deal, which is expected to be signed by the end of this year, Singapore’s deputy prime minister, Tharman Shanmugaratnam reiterated his country’s interest in economic and trade cooperation with Russia, noting that the two states have not been using the existing potential in full. Led by Russia, the EAEU essentially extends from the borders of China to the borders of the European Union.

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For his part, Russian First Deputy Prime Minister Igor Shuvalov said that while the timescale was tough, the Eurasian Economic Union and Singapore may sign a free trade agreement by the end of 2017, and ratify it in the first half of 2018. Current bilateral trade is about US$8 billion. “During the ASEAN-Russia meeting in Sochi in May, certain ASEAN (Association of Southeast Asian Nations) members suggested signing a free trade agreement, and we have clear instructions from the Russian president that the agreement with Singapore is a priority. I confirm that we have all possibilities to sign this agreement by the end of 2017 in order to carry out ratification procedures in the first half of 2018”, Shuvalov told an extended session of the Russian-Singapore intergovernmental commission. He described Singapore as one of Russia’s key partners in ASEAN. “This timeline is harsh, but it is possible. We will try to complete this work”, he added.

Vietnam is currently the only ASEAN nation to have an FTA with the EAEU, coming in to effect in early 2016. Since then, bilateral trade between Vietnam and Russia, in particular, has increased, with Russia investing US$10 billion in Vietnamese projects. Russian exports to Vietnam have also shown a sharp increase since the FTA was agreed:

russian-exports-vietnam-01 copy (002)

Singapore is a good base for Russian companies to reach out to other markets in Asia. As a member of ASEAN it acts as the de facto financial and services hub for the region, and is used to reach out into other key ASEAN markets such as Indonesia, Malaysia, Philippines, and Thailand as well as Vietnam. ASEAN also has FTAs with China and India, making it an ideal location for Russian businesses wanting to become regionally involved. Interestingly, Russia opened its Permanent Mission to ASEAN in Jakarta in early August.

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The EAEU is also in negotiations with China, India, and numerous other countries concerning Free Trade Agreements, coming partly as a Russian response to European sanctions, and also partly due to the increased opportunities being developed under the new Silk Road infrastructure ambitions. Russia remains a huge consumer market, and also possesses a great deal of resources and consumables of interest to Asian consumers. The Russian presence in Singapore is already significant with several Russian restaurants in the city.

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