The European Union and Singapore have successfully negotiated a Free Trade Agreement and Investment Protection Agreement that aims to streamline trade between the two and get rid of some of the bureaucracy that had previously existed.
Together, these agreements aim to remove all customs duties, improve trade for goods like electronics, food and pharmaceuticals, stimulate green growth and encourage investment.
Let's take a closer look at how the agreement came about and what exactly it means for the global economy.
Background to the deal
The EU-Singapore trade and investment agreements were officially signed on 19th October 2018 and the European Parliament gave its consent on February 13th 2019, meaning the agreements could continue their ratification process in line with EU treaties to allow for their entry into force.
Because Singapore already had low tariffs, the focus of the negotiations for these deals largely concentrated on barriers behind the borders, such as business rules, product standards and the services sector.
The EU and Singapore had been trying to negotiate such a deal since early this decade, showing its importance to both sides.
Importance of Singapore
Singapore might be the 20th smallest country in the world, but it is the EU's 14th-largest trade partner in goods and trade between the two is worth €53 billion a year.
Indeed, for a small city state, it is an economic powerhouse in South-East Asia thanks to its membership of the ASEAN group of nations. Together, these make up the third largest economy in Asia.
It is hoped that this new agreement could serve as a blueprint for more cooperation with South-East Asia and a stepping stone to more free trade deals there, particularly at a time when the EU has made clear that it cannot rely on the US as a trading partner.
What the FTA means
The EU is already a major exporter of goods to Singapore and, prior to this, almost all products from the EU could enter free of customs duties. However, the FTA cements this free access and will also eliminate all customs duties on remaining products within five years.
It also brings in new regulations covering customs, meaning the process will be simplified in terms of paperwork and physical checks.
This will make it easier for businesses of all sizes to import and export to and from Singapore, which should in turn mean they feel better able to invest more.
In particular, the creation of common safety and quality standards is likely to be a highlight for business owners, as this removes the need for testing at both sides and is likely to save money as well as time.
Meanwhile, the EU-Singapore Investment Protection Agreement sets out rules that will give investors more protection at the same time as safeguarding EU governments' right to pass new laws and update existing ones.
In the past, individual EU countries had their own investment treaties with Singapore, but these will be replaced by this single, EU-wide agreement that also includes extra provisions.
For example, investors will benefit from a modern Investment Court System to resolve investment disputes, which should provide reassurance for business owners in the same way that the World Trade Organization's dispute resolution system has done.
According to an EU study, the European economy could benefit from an extra €550 million over ten years as a result of the FTA, with European exports to Singapore expected to grow 3.6 per cent and Singapore's exports predicted to rise by 10.4 per cent.
Once the European Council has concluded on the agreement and finalised all the details, it can enter into force on the first day of the second month following the conclusion.
It is likely that the eyes of the world will be on its success to see if it can be used as a template for more such deals in future.