Enhancements to FTA among 24 deals signed to deepen Singapore, China cooperation

[TIANJIN] Singapore and China are enhancing the China-Singapore Free Trade Agreement (CSFTA) with more business-friendly and transparent rules, to deepen bilateral trade and investment links.

This is under the CSFTA Further Upgrade Protocol, which was presented with 23 other signed agreements during the 19th Joint Council for Bilateral Cooperation (JCBC) on Thursday (Dec 7). The agreements span a wide range of areas, including food security, health, energy and finance.

Singapore’s Deputy Prime Minister Lawrence Wong and Chinese Vice-Premier Ding Xuexiang, who co-chaired the meeting, witnessed the presentation of agreements.

This is the first JCBC – the apex bilateral meeting between both countries – to be held in China since the Covid-19 pandemic, and the first since both countries upgraded relations in March to an “all-round, high-quality, future-oriented partnership”.

The CSFTA came into force in 2009 as China’s first comprehensive bilateral trade agreement with another Asian country. It was last upgraded in 2019, giving Singapore businesses improved market access to the Chinese market, enhanced investment protection and simplified customs procedures.

Negotiations for further investment liberalisation started in 2020 during the 16th Joint Council for Bilateral Cooperation and concluded in November this year.

Under the upgraded CSFTA, Singapore will gain greater market access to China’s services sectors, said the Republic’s Ministry of Trade and Industry (MTI) in a statement.

China has also committed to not limiting foreign equity limits for Singapore investors in 22 sectors, including construction, retailing and wholesale, and architectural and urban-planning services.

Singapore investors and service providers will enjoy more liberal and transparent rules that “level the playing field for them to invest in and trade with China”, said MTI.

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The upgraded trade agreement will have a new Telecommunications Services Chapter to provide clearer and more transparent rules and regulatory processes for the sector, and facilitate industry collaboration for innovation and development.

Separately, both nations will set up a digital policy dialogue between Singapore’s Ministry of Communications and Information and China’s National Development and Reform Commission.

The idea of such a platform was agreed upon by Chinese Premier Li Qiang and Singapore Prime Minister Lee Hsien Loong during the latter’s visit to China in April.

The dialogue aims to identify potential synergies between Singapore’s Smart Nation initiative and China’s Digital China plan. To be established in the first half of 2024, it will facilitate discussions on developments and policy issues such as digital trade, artificial intelligence governance, and commercial data flows.

In addition, new digital finance and capital markets initiatives were announced to expand Singapore’s financial cooperation with China.

This includes an Exchange Traded Funds product link between the Singapore Exchange (SGX) and the Shanghai Stock Exchange. This builds on the success of a similar product link between SGX and the Shenzhen Stock Exchange, launched in 2022.

A pilot initiative will also allow travellers from Singapore and China to use China’s digital currency, the e-CNY, for tourism spending in both countries. This will enhance convenience for travellers when making purchases during their overseas travel, said the Monetary Authority of Singapore in a separate statement.

Singapore’s local banks and China’s UnionPay International have also begun early-stage discussions on a potential remittance linkage between PayNow and UnionPay to facilitate cross-border payments and remittances between the two countries.