At the 15th Joint Council for Bilateral Cooperation (JCBC) Meeting in Chongqing, China, Deputy Prime Minister Heng Swee Keat and People’s Republic of China (PRC) Vice Premier Han Zheng announced the entry into force of the China-Singapore Free Trade Agreement (CSFTA) Upgrade Protocol. The upgraded CSFTA will take effect from 16 October 2019 except for the articles relating to Rules of Origin, which will take effect on 1 January 2020.
Trade in Goods
The upgraded CSFTA enhances market access for goods through improvements in the Rules of Origin (ROO). These ROO improvements allow more petrochemical exports from Singapore to qualify for preferential treatment when imported into China. Petrochemical products are among Singapore’s top exports into China, accounting for approximately 28% of Singapore’s total exports to China in 2018. The articles related to ROO will take effect from 1 January 2020.
Trade in Services
- The upgraded CSFTA improves Singapore companies’ access into China’s legal, maritime and construction services sector.
- Legal. Singapore law firms that have established their offices in the Shanghai Free Trade Zone (FTZ) are permitted to form commercial associations with Chinese law firms in the Shanghai FTZ. These commercial associations can offer Chinese domestic and international legal services to clients anywhere in China.
- Maritime. Singapore shipping companies and ship management companies will be able to take on majority owned and form wholly-owned foreign enterprises respectively in China’s major port cities – Shanghai, Guangdong, Tianjin and Fujian FTZs.
- Construction. Singapore construction companies established in the Shanghai FTZ, China-Singapore Suzhou Industrial Park, SinoSingapore Tianjin Eco-city, or the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity will be able to undertake joint construction projects in the whole of Shanghai, Suzhou, Tianjin, and Chongqing respectively. These companies will be exempted from China's foreign investment ratio requirement.
- The upgraded Investment Chapter enhances investment protection for Singapore investors in China. Notable improvements to the Investment Chapter includes a more robust Investor-State Dispute Settlement (ISDS) mechanism. Under the Most-Favoured-Nation (MFN) treatment, Singapore investors will benefit from any preferential treatment accorded by China to other foreign investors in its future agreements.
- Both sides are also committed to discuss further investment liberalisation through a Work Programme to allow more investment opportunities for investors in both countries. Discussions for further liberalisation will start within one year after the Protocol enters into force
Source: Ministry of Trade and Industry