Ch. 07 Free Trade Agreements: Singapore Legal Developments

Updated on 17 November 2018

SECTION 1 INTRODUCTION TO SINGAPORE'S FREE TRADE AGREEMENTS

7.1.1 Singapore has entered into a number of bilateral Free Trade Agreements (FTAs) with its trading partners. These FTAs vary in scope and commitments. Some have also undergone regular reviews and updates. An example of changes to Singapore’s FTAs from reviews can be found here. As a result, Singapore’s legal environment and laws have seen some changes. Many of these changes would interest those who do business with or invest in Singapore. This section does not attempt to provide comprehensive information on all changes resulting from treaty commitments, and highlights only some salient developments for those trading or investing in Singapore. The developments highlighted here include changes made to Singapore legislation, as well as legal commitments made by Singapore as a result of its treaty obligations. Users are advised to consult the texts and related documents of each FTA for a full appreciation of the benefits that they or their countries may be eligible for. Key information about Singapore’s concluded agreements can be found here.

7.1.2 As a member of the Association of Southeast Asian Nations (ASEAN), Singapore has also entered into a number of regional trade and investment agreements.

7.1.3 This Chapter presents salient aspects of Singapore’s FTAs and the various agreements and laws themselves should be consulted for further details.

SECTION 2 CHANGES CONCERNING TRADE

7.2.1 Singapore has made a variety of commitments through its FTAs regarding treatment of imported goods, of services and foreign investments. In addition, the Association of Southeast Asian Nations (ASEAN) – of which Singapore is a member – has, as a bloc, entered into free trade agreements with other major trading partners, such as China, India, Japan, Korea, Australia and New Zealand, to promote trade by further eliminating and reducing trade barriers in the signatory countries. As part of ASEAN, Singapore is also party to the ongoing negotiations for the Regional Comprehensive Economic Partnership Agreement (RCEP).

7.2.2 Where necessary, Singapore laws have been amended to reflect its commitments made under its various FTAs. For instance, the customs legislation in Singapore has been amended to confer preferential tariff treatment and other treatment as agreed under the FTAs.

A. Customs laws amended to reflect FTA commitments

(1) Preferential treatment given to certain imports

7.2.3 In 1992, member States of the ASEAN agreed to establish the ASEAN Free Trade Area (AFTA), with a Common Effective Preferential Tariff (CEPT) system to be applied in the region. In 2010, the member States further signed the ASEAN Trade in Goods Agreement (ATIGA) to further provide for the elimination and reduction of tariff barriers in ASEAN member States.

(2) Procedures for issues of preferential certificates of origin provided

7.2.4 Apart from changes to reflect preferences in the importation of goods, customs law has also been amended to provide procedures for issue of preferential certificates of origin for relevant manufacturers or exporters of goods from Singapore to FTA partner countries.

7.2.5 In 2018, ASEAN countries also introduced a system of self-certification for traders in order to enjoy preferential treatment of their goods under the ATIGA.

B. Instances of amendments to customs laws

(1) Chewing gum with “therapeutic value” permitted

7.2.6 Following the entry into force of the US-Singapore FTA, while the general ban against importation of chewing gum still stands, Singapore import/export legislation now permits the import of chewing gum with “therapeutic value”. (See the Regulation of Imports and Exports (Chewing Gum) Regulations (Cap 272A, Rg 4, 1999 Rev Ed) s 3A, as amended by the Regulation of Imports and Exports (Chewing Gum) (Amendment No 2) Regulations 2003 (GN No S 632/2003).)

(2) Export of textiles to the USA regulated

7.2.7 Following the entry into force of the US-Singapore FTA, the export of textile and clothing products specified in the Annex of the WTO Agreement on Textiles and Clothing is now regulated under Singapore import/export law. The law requires that where any part of the manufacture of such goods is carried out or procured by any person in Singapore, for such goods to be exported to the USA from Singapore, such a person must be registered (See Regulation of Imports and Exports Regulations (Cap 272A, Rg 1, 1999 Rev Ed) Sixth Schedule).

7.2.8 On a separate note, the US-Singapore FTA broke new ground by including provisions on the Integrated Sourcing Initiative applicable to information technology (IT) products and medical devices.

(3) EU-Singapore FTA – ASEAN cumulation provisions

7.2.9 The EU-Singapore FTA, which was signed in October 2018 and is presently awaiting ratification, contains useful provisions permitting ASEAN cumulation for the purpose of satisfying rules of origin requirements by Singapore goods.

C. Government procurement

(1) More attractive procurement environment offered to FTA partners

7.2.10 Singapore is a party to the plurilateral Government Procurement Agreement of the WTO. As a result of FTA commitments, Singapore now offers a more attractive procurement environment to its FTA partners. The improvements include those relating to threshold values of procurement contracts. Government procurement commitments in such agreements provide Singapore businesses with more opportunities to participate in trade partners’ procurement activities. Examples of FTA agreements containing government procurement commitments by Singapore are the following:

Korea-Singapore FTA (seeChapter 16 of the FTA)

New Zealand-Singapore Closer Economic Partnership Agreement (EPA) (See Part 8 of the agreement)

Panama-Singapore FTA (See Chapter 8 of the FTA)

Trans-Pacific Strategic Economic Partnership between Singapore, Brunei, Chile and New Zealand (see Chapter 11 of the FTA)

US-Singapore FTA (see Chapter 13 of the FTA)

The Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP – this has been signed by 11 countries and to date, been ratified by six, including Singapore, and is expected to enter into effect at the end of 2018)

(2) Mutual Recognition Agreements (“MRAs”) entered into to promote trade

7.2.11 To further promote trade, a number of mutual recognition agreements (MRAs) on conformity assessment for a number of goods have been signed by Singapore with her trade partners, including Australia, Japan and the United States. These agreements deal with goods such as electrical and electronic goods, pharmaceutical goods, food and horticultural products and telecommunications equipment. (For more information on Singapore’s MRAs, please click here).

(3) Singapore’s involvement in MRA schemes within ASEAN

7.2.12 As a member of ASEAN, Singapore also takes part in MRA schemes within ASEAN. These include the ASEAN Harmonized Cosmetic Regulatory Scheme and the ASEAN Cosmetic Directive, and the ASEAN Sectoral Mutual Recognition Agreement for Electrical and Electronic Equipment. Singapore also participates in initiatives on harmonisation of standards in ASEAN to promote the integration process of the ASEAN Free Trade Area (AFTA).

SECTION 3 CHANGES CONCERNING INVESTMENT

7.3.1 FTAs signed by Singapore, together with a number of bilateral investment treaties (BITs) provide a number of legal commitments by Singapore with respect to investors and their investments.

7.3.2 With respect to ASEAN, an ASEAN investment guarantee agreement was first signed in 1987, providing certain basic protection for foreign investors.

7.3.3 In 1998, ASEAN member States signed the Framework Agreement on the ASEAN Investment Area, thereby establish the ASEAN Investment Area (AIA).

7.3.4 In 2012, with the coming into force of the landmark ASEAN Comprehensive Investment Agreement (ACIA), the 1987 and 1998 agreements were superseded. The ACIA contains a number of important objectives and guiding principles on the investment environment in ASEAN (found in Articles 1 and 2). The text of the ACIA is available here.

A. Commitments to ensure transparency undertaken

7.3.5 Singapore has undertaken commitments through several FTA agreements to ensure a certain level of transparency with respect to its laws and legal processes. The commitments are important for foreign businesses as they further strengthen Singapore’s legal system. Notification and consultation provisions are included in some cases to ensure that interested persons can provide input and feedback on proposed changes to law and policy. Examples of Singapore FTAs containing transparency commitments are those signed with the United States, with South Korea and with Brunei Darussalam, Chile and New Zealand. The ACIA also contains a transparency provision (Article 21).

B. Competition regulation

(1) The Competition Act

7.3.6 Pursuant to commitments made under FTAs such as that with the United States, Singapore enacted the Competition Act (Cap 50B, 2006 Rev Ed) in 2004. The competition legislation added to Singapore’s already open and competitive trading environment by ensuring that anti-competitive practices defined under the law are appropriately dealt with. The Competition Act added to Singapore’s then exisiting competition regulation regime, which already included sectoral competition provisions for the energy market (under the Electricity Act (Cap 89A, 2002 Rev Ed) and the Gas Act (Cap 116A, 2002 Rev Ed) and the telecommunications industry (Telecommunications Competition Code 2005 (GN No S 87/2005) (Cancelled by the Code Of Practice For Competition In The Provision Of Telecommunication Services 2005 (Cancellation) Notification 2011)).The law came into effect in three phases. The part dealing with merger notifications came into force in July 2007. (See Competition Law for more details.) In 2012, a new Code of Practice in the Provision of Telecommunications Services was issued by the then Info-communications Development Authority of Singapore (IDA). In 2016, the IDA became the Info-communications Media Development Authority of Singapore (IMDA).

(2) The Competition Commission of Singapore

7.3.7 The Competition Commission of Singapore was launched in August 2005. The Commission oversees enforcement of the law, which applies both to local and foreign companies. The CCS was renamed the Competition and Consumer Commission of Singapore (CCCS) in 2017.

(3) The Consumer Protection (Fair Trading) Act

7.3.8 Singapore also has enacted separate legislation for consumer protection in the form of the Consumer Protection (Fair Trading) Act (Cap 52A, 2009 Rev Ed).

C. Regulation of service sectors changed

7.3.9 As a result of Singapore’s commitments in bilateral and regional FTAs to liberalise various sectors beyond those made to fellow WTO members, there have been changes to the regulation of entry into and /or activities in various service sectors, such as the banking and legal sectors. As part of ASEAN, Singapore has also made commitments under the ASEAN Framework Agreement on Services (AFAS). A Tenth Protocol to the AFAS was signed in August 2018. The various FTAs and the AFAS should be consulted for the commitments made by Singapore.

7.3.10 In November 2018, negotiations on the ASEAN Agreement on Trade in Services (ATISA), which promises to further increase liberalisation of services markets in the region, were concluded. At the same time, a new ASEAN Agreement on E-Commerce was signed, which is in the process of ratification by member States.

D. Protection for investments enhanced

7.3.11 Singapore’s investment protection commitments in its FTAs and in the ACIA in respect of investors and investments of FTA partner countries enhance protection for investments, by offering treaty commitments that go beyond the WTO Trade-related Investment Measures Agreement (TRIMS). The benefits vary and investors from partner countries should consult the individual FTAs for the benefits that may be available to them.

7.3.12 Foreign investors and investments covered under the various FTAs enjoy certain assurances, such as those in relation to expropriation of property. The FTAs contain, for example, commitments on the circumstances under which such action may take place as well as on the compensation that must be given should such action occur. In some cases, “side letters” accompanying the FTAs provide further information about the parties’ stand on such action.

7.3.13 Singapore has also entered into a number of bilateral investment treaties which provide various other investment guarantees and dispute settlement options.

7.3.14 As a member State of ASEAN, Singapore is party to the ACIA which came into force on 29 March 2012. The ACIA is a region-wide investment treaty which contains a number of significant investment protection provisions, as well as investment dispute settlement options (such as ICSID arbitration). Its protection provisions include those relating to Most Favored Nation treatment, National Treatment, and guarantees relating to expropriation. In November 2018, a Fourth Protocol to amend the ACIA was agreed upon; the amendment provisions include the prohibition of performance requirements for the first time.

7.3.15 In October 2014, Singapore completed negotiations with the EU on investment protection commitments for the EU-Singapore FTA. Due to an Opinion of the Court of Justice of the EU issued on 16 May 2017, the investment provisions would require approval by individual EU member States. In October 2018, a new and separate EU-Singapore Investment Promotion Agreement (the EU-Singapore IPA) was signed (together with the EU-Singapore FTA, sans investment protection provisions) and it awaits ratification at the time of writing. The EU-Singapore IPA contains provisions on investor-State dispute settlement which will be new to Singapore. These include the introduction of a standing investment tribunal and appeals tribunal to deal with investor claims.

7.3.16 As a member of ASEAN, Singapore also has investment protection obligations in the various “ASEAN plus 1” agreements, which are investment agreements signed by ASEAN as a bloc wit external trade partners, such as Australia and New Zealand, China, India, Japan, Korea.

7.3.17 In addition, Singapore is currently participating in negotiations for the Regional Comprehensive Economic Partnership Agreement (RCEP) of which is expected to include investment protection provisions.

E. Intellectual Property

(1) Intellectual property treaties Singapore party to

7.3.18 Singapore is party to the following intellectual property treaties:

The Berne Convention

The Budapest Treaty

The Madrid Protocol

The Nice Agreement

The Patent Cooperation Treaty

The Paris Convention

The WIPO Convention.

(More information about each of these treaties can be found here).

7.3.19 Between 2004 and 2005, Singapore also acceded to the following treaties, following its FTA commitments (dates of accession indicated in bracket) :

The International Convention for the Protection of New Varieties of Plants (UPOV) (30 July 2004)

The WIPO Copyright Treaty (17 April 2005)

The WIPO Performances and Phonograms Treaty (1996) (17 April 2005)

The Hague Agreement Concerning the International Registration of Industrial Designs (17 April 2005).

(More information about each of these treaties can be found here.)

(2) Intellectual property legislation

7.3.20 As a result of Singapore’s FTA commitments, important changes were made to the Trade Marks Act (Cap 332, 2005 Rev Ed) in 2004. The changes include a change in the definition of a trade mark, to remove the requirement of visual perceptibility as a precondition for registrability. The new definition opens the door potentially to registration of non-visual marks. A definition of “well known mark” has also introduced. The amendments also include the addition of provisions relating to the dilution of marks. Changes have been made to Singapore’s Patents Act (Cap 221, 2005 Rev Ed), such as the introduction of limitations to parallel importation of patented pharmaceutical products. The Copyright Act was also amended in 2004 to reflect FTA commitments, including the extension of the copyright term from 50 years to 70 years after the author’s death.

7.3.21 In the area of patents, Singapore amended its Patents Act and Medicines Act in 2004 to reflect its USSFTA commitments in relation to pharmaceutical patents, introducing provisions on patent linkage, patent term extensions and data exclusivity.

7.3.22 Separately, in the same period, Singapore enacted the Plant Varieties Act 2004 in compliance with the International Convention for the Protection of New Varieties of Plants.

SECTION 4 DISPUTE SETTLEMENT

A. State-to-State Dispute Settlement

(1) Avenues for resolving State-to-State disputes provided

7.4.1 Under Singapore’s FTAs, State-to-State dispute settlement processes are often available to provide partner states and Singapore with additional avenues for resolving their disputes. The dispute settlement regimes vary from FTA to FTA in their scope and operation.

(2) The ASEAN Protocol on Enhanced Dispute Settlement Mechanism 2004

7.4.2 Singapore is part of the ASEAN Free Trade Area (AFTA). The ASEAN Protocol on Enhanced Dispute Settlement Mechanism 2004 provides a mechanism for ASEAN member States to settle disputes relating to ASEAN economic agreements, including AFTA-related disputes. The text of the Protocol can be found here.

B. Investor-State Dispute Settlement

(1) FTAs provide avenues for foreign investors to resolve disputes

7.4.3 These provisions provide alternative avenues for legal complaints. The scope and procedures for such dispute settlement may vary from one FTA to another.

(2) Investor-State dispute settlement processes committed to

7.4.4 Apart from dispute settlement mechanisms in the ACIA and other ASEAN agreements, FTAs entered into by Singapore are usually accompanied by investor-State dispute settlement provisions, such as ICSID arbitration and other mechanisms. These include the Singapore-Australia FTA, the EFTA-Singapore FTA,, the Korea-Singapore FTA, Singapore-India Comprehensive Economic Cooperation Agreement (CECA), the USSFTA, and the CPTTP (expected to enter into effect at the end of December 2018).

C. Mediation Provisions

7.4.5 Some recent agreements signed by Singapore include more detailed provisions on the use of mediation in the resolution of disputes. These include the EU-Singapore FTA and the EU-Singapore IPA (awaiting ratification).

7.4.6 The United Nations Convention on Mediation, to be named the Singapore Convention on Mediation, is expected to be signed in Singapore in August 2019. The Convention aims to facilitate the enforcement of mediated settlement agreements in signatory countries, increasing the attractiveness of mediation as a means of extra-judicial dispute resolution. Separately, in 2017, Singapore had enacted the Mediation Act to strengthen enforceability of such settlement agreements under domestic law.

D. General Development of Interest: New Court Structure to be Introduced

7.4.7 In January 2015, Singapore launched a new dispute settlement avenue within its court structure in the form of a new Singapore International Commercial Court (SICC). The new Court, a division of the existing Singapore High Court, hears international commercial disputes through specialist commercial judges, known as “International Judges”. It accepts cases referred to it by consent of the disputing parties, or where cases have been transferred to it from the Singapore High Court by The Honourable The Chief Justice of Singapore. Foreign counsel may be permitted to appear before it in certain cases. Decisions of the SICC will be appealable to the Singapore Court of Appeal. Further information regarding the SICC can be found here.

F. Third-Party Funding Provisions

7.4.6 Some recent FTAs signed by Singapore include provisions on third-party funding. These include the CPTPP. In a related development, in 2017, Singapore amended its legislation to permit the use of third-party funding in, inter alia, international arbitration proceedings, and mediation proceedings arising out of or in any way connected with international arbitration proceedings.

Updated as at 19 November 2018

By: Locknie Hsu
Professor
School of Law
Singapore Management University