On October 23, 2008, China and Singapore signed the China-Singapore Free Trade Agreement (CSFTA), which is the first comprehensive bilateral Free Trade Agreement between China and an Asian country. The Agreement will come into effect on January 1, 2009, once both sides have completed the necessary legislative processes. It is believed that the CSFTA, concluded after two years of negotiations, will enhance China-Singapore bilateral economic relations by further decreasing or removing barriers to trade.

The coverage of the CSFTA includes trade in goods, rules of origin, trade remedies, trade in services, movement of natural persons, investment, customs procedures, technical barriers to trade, sanitary and phytosanitary measures, economic cooperation and dispute settlement. The Agreement’s main outcomes involve:

1) All Chinese exports to Singapore will be granted tariff-free access on January 1, 2009. With regard to Chinese exporters, since most products imported into Singapore are already free of duty, the main beneficiaries under the CSFTA are for beer producers in China. On the other hand, more than 85% of Singapore’s exports to China will enjoy duty-free access upon the FTA’s entry into force on January 1, 2009. The tariffs on the other 10% of exports will be eliminated on January 1, 2010. Thus, in sum, about 95% of Singapore’s exports to China will enjoy zero-tariff, with a trade value of more than S$18 billion. Key exports that will benefit include processed foods, petrochemicals, and electronics and electrical products.  Click here for more resources.

2) As to the Rules of Origin, both countries agree that a product, under CSFTA, can qualify for the preferential treatment if at least 40% of value-add has taken place in the originating country.

3) China and Singapore will liberalize various services sectors, such as business services, hospital services and education services, beyond their WTO commitments.

4) China and Singapore have also agreed to simplify their Customs procedures, by means of the advance ruling, the third party invoicing and the risk management, to facilitate trade in goods.

5) The CSFTA will promote greater movement of business persons between China and Singapore. Both sides will allow eligible business visitors, intra-corporate transferees and contractual service suppliers to enter and stay in each other’s country for a fixed period.

6) Both parties agreed to further strengthen cooperation in areas such as trade and investment promotion, tourism cooperation, Singapore’s participation in China’s regional development, human resource development and facilitation of the "Go Global" efforts of Chinese companies.

Furthermore, China and Singapore also signed a MOU on Bilateral Labor Service Cooperation on the same day. The MOU provides for the protection of Chinese work-permit holders in Singapore, and both countries agree to enhance sharing of information, promote education of workers and employers, as well as exchange good labor practices.

Authored by:

Jun Xu

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