Singapore, Australia sign free trade agreement

Singapore, Australia sign free trade agreement

Martin Abbugao
Agence France-Presse
Singapore

Singapore and Australia signed a free trade agreement Monday,
which will eliminate tariffs and open up market access for
services in a deal worth billions of dollars for both countries.

Officials said the Singapore-Australia Free Trade Agreement
(SAFTA), reached after more than two years of intense
negotiations, signals Australia's long-term commitment to
Southeast Asia.

Singapore's Trade Minister George Yeo and his Australian
counterpart Mark Vaile signed the agreement at a ceremony here.
It is Australia's first free trade deal since signing a closer
economic partnership with New Zealand 20 years ago.

Both ministers said their commitments to the agreement go
beyond those committed to under the World Trade Organization.

Their commitments include the elimination of tariffs on all
products, market access for services, transparent customs
procedures and mutual recognition in the education sector.

Previously, Singapore's exports faced tariffs of up to 25
percent when entering Australia.

With tariffs brought down to zero, SAFTA will allow up to
S$3.3 billion (US$1.9 billion) worth of Singapore products to
enter Australia a year, up from the current S$2.6 billion.

Singapore companies are expected to save about $S31.6 million
a year from the tariff concessions.

But Vaile said the agreement goes beyond savings from tariff
elimination to a potential surge in trade and investments between
the two countries.

He said the free trade deal Australia signed with New Zealand
has led to a 500 percent increase in total economic activity
between the neighbors, and that he was hopeful this will also
happen under SAFTA.

Yeo said bilateral trade between Australia and Singapore
totaled about S$9.9 billion Singapore last year "and we expect
this figure to grow in the coming years, as the FTA brings
greater market access opportunities and cost savings from tariff
reduction."

Yeo said the pact also "signals Australia's long-term
commitment to Southeast Asia."

SAFTA supports the goal of a closer economic partnership
between the Association of Southeast Asian Nations (ASEAN) as
well as Australia and New Zealand agreed upon in September last
year, he said.

The agreement, which will come into force this year, provides
a framework for mutual recognition of each country's technical
standards and professional qualifications aimed at benefiting
business.

For Australia, the free trade deal means it will have easier
access to Singapore's banking and financial sector. Wholesale
banking licenses are expected to be eased over time.

In the legal services sector, conditions for the establishment
of joint ventures between Singapore and Australian law firms will
be eased, putting them on the same level with U.S. and British
law firms.

Singapore agreed to recognize law degrees from four more
Australian universities, raising the total number to eight, while
Singapore lawyers can will also be allowed to practice in
Australia.

Singapore, a small city-state whose economy is driven by
trade, has signed FTAs with New Zealand and Japan and has wrapped
up talks with the United States.