The European Union and Singapore have reached a significant milestone in digital trade, concluding a comprehensive agreement designed to facilitate cross-border data flows and establish global rules for the digital economy. This agreement, supplementing the existing EU-Singapore Free Trade Agreement that came into effect in 2019, sets a new standard for digital trade, addressing key issues like e-signatures, consumer protection, and data security.
The agreement places strict limitations on spam and prohibits countries from demanding access or transfer of technology, including source code, a practice often employed by countries such as China. This provision is crucial for protecting intellectual property and ensuring fair competition in the global digital marketplace.
The agreement is expected to bring significant benefits for businesses, particularly in the services sector. Singapore, already the EU’s fifth-largest partner in services trade, relies heavily on digital services, which amounted to €43 billion ($47 billion) in 2022. Streamlining data flows and establishing clear rules will undoubtedly lead to cost reductions for businesses, fostering further growth in services trade.
For the EU, this agreement reaffirms its commitment to becoming a global leader in shaping digital trade standards, particularly in the Asia-Pacific region. The EU has already established digital trade agreements with countries like Britain, Chile, and New Zealand, and has a deal on cross-border data flows with Japan. Negotiations with South Korea are also underway.
The World Trade Organization reports a consistent rise in digitally delivered services trade, averaging 8.1% growth annually between 2005 and 2022. This growth outpaces increases in trade of goods and other services, highlighting the importance of digital trade in the global economy. The EU, as the world’s largest exporter of services, with nearly half of these services being digital, stands to benefit immensely from this growing sector.
The agreement now awaits ratification by Singapore and, in the EU, by national governments and the European Parliament. Once ratified, it will serve as a model for future digital trade agreements, promoting a more open, secure, and prosperous global digital economy.
