China-Singapore Free Trade Agreement (CSFTA)



The China-Singapore Free Trade Agreement (CSFTA) marks Singapore as the first Asian country to have a comprehensive bilateral Free Trade Agreement (FTA) with China. This is a major milestone in Singapore’s relationship with China since diplomatic ties were officially established in 1990. The agreement came into effect on 1 January 2009.1 The first review of the agreement was completed in July 2011 and negotiations for an upgraded CSFTA are still on-going.

Background
During a working visit to China in November 2003, Singapore’s then Prime Minister Goh Chok Tong announced that discussions on the China-Singapore Free Trade Agreement (CSFTA) would be launched once the ASEAN-China FTA negotiations were completed.2 China was then one of Singapore’s top importers and a major destination for Singapore investors, who had invested more than US$21 billion there.3 China also viewed the FTA as beneficial to both countries in the long term and that it would facilitate regional cooperation and integration.4

By 2005, China had become Singapore’s fourth-largest trading partner, while Singapore was ranked as China’s seventh-largest trading partner and its sixth-largest foreign investor, the largest among the ASEAN countries.5 Singapore’s then Deputy Prime Minister Wong Kan Seng and Chinese Vice Premier Wu Yi agreed to launch negotiations for a bilateral FTA in August 2006 during the Third Joint Council for Bilateral Cooperation meeting.6

In 2003, then Prime Minister Goh and then Chinese Premier Wen Jiabao launched the Joint Council for Bilateral Cooperation to facilitate political and economic cooperation. The economic links between the two countries were to be further strengthened with the FTA.7

Study and negotiations
The first round of talks was held in Beijing, China in October 2006, and covered the negotiating mechanism and scope of the agreement.8 The FTA aimed to be comprehensive, extending beyond trade in goods and services as well as investment, to encompass cooperation initiatives in various areas.9 It was expected to enhance the strong bilateral economic and political links between Singapore and China, as well as contribute to the development of the ASEAN-China FTA.10

After two years and eight rounds of negotiations, Singapore and China reached a free trade accord, concluding a comprehensive bilateral FTA. According to then Deputy Prime Minister Wong Kan Seng, the FTA was a “major achievement” and a milestone in Singapore’s relationship with China since diplomatic ties between the two countries were officially established in 1990.11 Singapore was also the first Asian country to conclude a comprehensive bilateral FTA with China.12 On 23 October 2009, both countries signed the CSFTA.13

Description
The CSFTA has a broader scope as compared to the ASEAN-China accord.14 Some of the key features of the CSFTA include the following:

Tariffs elimination
Tariffs for up to 85 percent of Singapore’s exports to China were eliminated from 1 January 2009, with a further 10 percent of exports going duty-free from 2010 onwards. Among the exports included in the FTA are items such as instant coffee, aviation kerosene and ornamental fish, with a total trade value of over $18 billion.15 Singapore manufacturers enjoyed a competitive edge over their ASEAN counterparts as the tariffs were reduced ahead of the ASEAN-China FTA,16 which only came into effect on 1 January 2010.17 However, 260 export products from Singapore are still subjected to tariffs; these include pepper, rice, sugar, tobacco and crude palm oil.18

Preferential access
Singapore companies that invest in China’s healthcare sector are granted preferential access, with up to a 70 percent stake in a mainland hospital.19

Traditional Chinese Medicine education
Singapore committed to recognise degrees from two more Traditional Chinese Medicine (TCM) universities in China, an increase from originally six such universities. China similarly committed to recognise TCM degrees from two Singapore medical institutions. Approved Chinese TCM universities could also conduct external degree programmes in Singapore, thus giving Singaporeans more opportunities to broaden their TCM training.20

Free movement of professionals
Professionals such as auditors, accountants and architects from Singapore and China now enjoy greater flexibility when working in both countries.21

Singapore’s Ministry of Trade and Industry noted that the CSFTA covers a range of areas including trade in goods and services, movement of people, investment, customs procedures, technical barriers to trade, food safety and economic cooperation.22

Developments
The first round of review was held on 14 and 15 April 2010.23 Both sides explored ways to expand trade and investment links, further improve access to each other’s market and implement the commitments.24 The first review was completed in July 2011 and addressed areas such as dealing with non-tariff barriers.25

In 2015, letters for the official launch of negotiations for the CSFTA upgrade were exchanged, whereby bilateral economic cooperation could be enhanced and Singapore businesses could gain more access to China’s growing services sector and greater investment protection in China.26

By June 2017, three rounds of negotiations had been held and the scope included enhancements in investment provisions, trade facilitation, trade remedial measures, and improved market access for businesses trading in goods and services. The upgraded CSFTA would also cover areas such as competition, e-commerce and the environment.27 The fourth round was held in October 2017, with discussions on service, trade, investment, rules of origin, customs procedures and trade facilitation, and trade remedy.28



Author
Ang Seow Leng



References
1. Highlights of agreement. (2008, October 24). The Straits Times, p. 1. Retrieved from NewspaperSG.
2. Leow, J. (2003, November 21). S’pore to focus on winding up Asean-China FTA talks. The Straits Times, p. 2. Retrieved from NewspaperSG.
3. Singapore-China ties looking up. (2003, December 9). The Business Times, p. 12. Retrieved from NewspaperSG.
4. Khin, N. (2005, October 26). S’pore-China trade could grow to US$50b in 5 years. The Business Times, p. 2. Retrieved from NewspaperSG.
5. Tan, C. (2006, August 26). Singapore, China to start FTA talks. The Business Times, p. 1. Retrieved from NewspaperSG.
6. Buenas, D. (2006, October 27). China, Singapore kick off free trade talks in Beijing. The Business Times, p. 20. Retrieved from NewspaperSG.
7. Khoo, L. (2007, October 9). Taking China trade to the next level. The Business Times, p. 3. Retrieved from NewspaperSG.
8. Buenas, D. (2006, October 27). China, Singapore kick off free trade talks in Beijing. The Business Times, p. 20. Retrieved from NewspaperSG.
9. Buenas, D. (2006, October 27). China, Singapore kick off free trade talks in Beijing. The Business Times, p. 20. Retrieved from NewspaperSG.
10. Buenas, D. (2006, October 27). China, Singapore kick off free trade talks in Beijing. The Business Times, p. 20. Retrieved from NewspaperSG.
11. Quek, T. (2008, September 5). S’pore, China reach free trade accord. The Straits Times, p. 1. Retrieved from NewspaperSG.
12. Quek, T. (2008, September 5). S’pore, China reach free trade accord. The Straits Times, p. 1. Retrieved from NewspaperSG.
13. Benefits under the China-S’pore FTA. (2009, September 24). The Business Times, p. 14. Retrieved from NewspaperSG.
14. Quek, T. (2008, September 5). S’pore, China reach free trade accord. The Straits Times, p. 1. Retrieved from NewspaperSG.
15. Chua, C. H. (2008, October 24). S’pore and China sign free trade pact. The Straits Times, p. 1. Retrieved from NewspaperSG.
16. Chuang, P. M. (2008, December 4). Tapping into the world’s markets. The Business Times, p. 10. Retrieved from NewspaperSG.
17. BPOC. (2016, May 30). ASEAN-China Free Trade Area. Retrieved from ASEAN-China Free Trade Area Business Portal website: http://www.asean-cn.org/
18. Lee, U. (2008, October 24). Zero tariffs for most items as S’pore and China ink FTA. The Business Times, p. 1. Retrieved from NewspaperSG.
19. Chua, C. H. (2008, October 24). S’pore and China sign free trade pact. The Straits Times, p. 1. Retrieved from NewspaperSG.
20. Lee, U. (2008, October 24). Zero tariffs for most items as S’pore and China ink FTA. The Business Times, p. 1. Retrieved from NewspaperSG; Ministry of Trade and Industry. (2008, October 23). Free Trade Agreement Between the People’s Republic of China and the Republic of Singapore (CSFTA) [Media Info-kit]. Retrieved 2018, Jul 24 from Ministry of Trade and Industry website: https://www.mti.gov.sg/NewsRoom/Documents/app.mti.gov.sg/data/article/15921/doc/MTI%20Media%20Kit%20Site%20(22%20Oct).pdf
21. Lee, U. (2008, October 24). Zero tariffs for most items as S’pore and China ink FTA. The Business Times, p. 1. Retrieved from NewspaperSG.
22. Quek, T. (2008, September 5). S’pore, China reach free trade accord. The Straits Times, p. 1. Retrieved from NewspaperSG.
23. Ministry of Commerce, PRC. (2010, April 17). Singapore, China hold 1st review of bilateral FTA [News release]. Retrieved from Ministry of Commerce, PRC website: http://fta.mofcom.gov.cn/enarticle/ensingapore/ensingaporenews/201006/2942_1.html
24. S’pore, China review trade pact. (2010, April 16). The Business Times, p. 13. Retrieved from NewspaperSG.
25. Lee, U. (2011, July 28). S’pore, China review FTA 2 years after signing pact. The Business Times, p. 8. Retrieved from NewspaperSG.
26. Sun, X. (2015, November 26). Celebrating 25 years of Singapore-China diplomatic ties. The Business Times. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/
27. China-Singapore FTA upgrade progressing well: DPM Tharman. (2017, June 28). The Business Times. Retrieved from Factiva via NLB’s eResources website: http://eresources.nlb.gov.sg/

28. Ministry of Commerce, PRC. (2017, October 18). The 4th round of China-Singapore FTA upgrading negotiations held in Singapore [News release]. Retrieved from Ministry of Commerce, PRC website: http://fta.mofcom.gov.cn/enarticle/ensingapore/ensingaporenews/201710/36018_1.html



The information in this article is valid as at 2018 and correct as far as we can ascertain from our sources. It is not intended to be an exhaustive or complete history of the subject. Please contact the Library for further reading materials on the topic.

 

Subject
Trade and industry
Commerce and Industry>>Trade
Economy
Commerce and Industry