On May 6, 2016, Australia and Singapore signed a “landmark” deal – the Comprehensive Strategic Partnership (CSP). This agreement will enhance the economic and defence relations between the two countries and will focus on innovation and entrepreneurship. To mark the fiftieth year of their diplomatic relations, both the countries agreed on the CSP as an upgrade to the Singapore-Australia Free Trade Agreement (SAFTA) that they had signed in 2003.
This post will highlight the key elements of Singapore-Australia Free Trade Agreement (SAFTA), the signing of the CSP and how the two countries are strengthening their economic ties through these agreements.
The Singapore-Australia Free Trade Agreement (SAFTA) came into force on July 28, 2003. The main aim of the SAFTA was the elimination of tariff on all the goods that either Singapore or Australia import from each other. The agreement also provides relaxation of permit regulations and visas for citizens of both the countries. The agreement guarantees higher protection for mutual intellectual property rights such as patents, trademark, copyright etc. According to the agreement, tariff concessions are available only where the goods “originate” either in Australia or Singapore.
The preamble of the agreement states that the strengthening of the economic relations between the countries will accrue social and economic benefits, which will result in improved standard of living for the people of both nations. Both countries desire to improve their efficiency in the “goods and services sector” and expand mutual trade and investment. We anticipate that the agreement will lead to a higher of Australian entrepreneurs establishing businesses in Singapore because of its attractive tax regime and other doing business advantages.
Furthering these economic ties, the Comprehensive Strategic Partnership marks the 50th anniversary of diplomatic relations between the countries in the year 2015. The CSP is in fact, the third review of the 2003 Singapore-Australia Free Trade Agreement (SAFTA).
KEY FACTS ABOUT SINGAPORE-AUSTRALIA RELATIONS
1. Last year, Singapore was Australia’s fifth largest trading partner and the largest trade and investment partner in Southeast Asia.
2. The trade between the two countries in 2015 amounted to S$20.2 billion.
3. Singapore is one of the largest foreign investors in Australia. The total investment by Singapore amounts to A$80.2 billion.
4. 400,000 Singaporeans visit Australia whereas about a million Australians visit Singapore annually.
5. 50,000 Singaporeans live in Australia and 20,000 Australians live in Singapore.
Keeping in mind these facts, it is evident that both Singapore and Australia have long-standing interests in strengthening their economic relations and bilateral trade.
KEY FEATURES OF THE “COMPREHENSIVE STRATEGIC PARTNERSHIP”
The Comprehensive Strategic Partnership will have the following practical outcomes:
1. Recognition of medical and law degrees from universities in Australia and Singapore.
2. Funding of S$50 million in Science and Innovation between the countries over a five- year period.
3. A multi-year visa which allows entry of Singapore nationals to Australia. Currently, the visa has a one year validity.
4. Singapore to set up its military force training program in Australia to train for 25 years.
5. Early reviews of the SAFTA to build closer economic relations between the countries with an increase in investment opportunities and trade.
DEEPENING ECONOMIC TIES
The upgrade of SAFTA is a major step forward in deepening economic relations. The main aim of the enforcement of SAFTA was to remove tariff barriers. However, the CSP emphasises on additional features such as ease of mobility for Singaporeans and Australians in both the countries. Additionally, to improve business access in both countries, the agreement will allow businesses to bid for “government procurement contracts” in their markets. Pursuant to this agreement, Singapore will enjoy greater opportunities to invest in Australia due to the higher threshold for acquisitions as set by the Foreign Investment Review Board (FIRB) of Australia. These are the main factors that will help both the countries deepen their relations on the economic front.
The Prime Ministers of both Singapore and Australia are very upbeat on the CSP. On May 7, 2016 in a press statement by the Ministry of Foreign Affairs (MFA), the Prime Minister of Singapore, Mr. Lee Hsien Loong, stated that “Our two countries are politically like-minded, strategically-aligned and economic complimentary. We have much to gain by working closely together.”
Mr. Malcolm Turnbull, the Australian Prime Minister also extended his support to the agreement and highlighted the benefits it will bring. In his statement, he said “The upgrading of our agreement with Singapore will make it much easier for thousands of Australians to live and work in Singapore. It will see our two nations join forces in a new innovation drive, attracting investments and backing new technology.”
Please continue to visit our blog to track the latest developments of the Singapore-Australia Free Trade Agreement, the Comprehensive Strategic Partnership and other agreements between Singapore and Australia.