The service sector in the free-trade agreement between the EU and Singapore: closing the gap between policy and business realities

The aim of this paper is to investigate how new rules and practices in multilateral, regional and bilateral trade negotiations related to the services industries can be adopted and implemented at the business level, using the recently concluded free-trade agreement (FTA) negotiations between the EU and Singapore as an illustrative case. The purpose is to put the services sector into the larger framework of business service interaction between the EU and the outside world by identifying crucial sub-sectors within the services industries and their relations to physical, ‘visible’ production and trade. Furthermore, to assess the prospects of ‘multilateralising’ regional trade agreements within the service sector, through the ambitions by both parties to make bilateral and interregional FTAs and EPAs more compatible and mutually comparable with the multilateral GATS’ rules. The EU-Singapore FTA is an agreement that became a ‘second-best’ solution of the stalled interregional EU-ASEAN negotiation, taking place 2006–2009. It can nevertheless be seen as a ‘WTO-plus’ endeavour, since it aims at reaching beyond what is under negotiation in the likewise stalled Doha Development Agenda within the WTO framework, particularly in the fields of business services, public procurement, intellectual property rights, trade-related investment measures, and, generally, competition rules. Since both parties already apply low or zero tariffs in most sectors of manufacturing, the main issues in the negotiations were related to services in general and knowledge-intensive business services in particular, with an emphasis on technical barriers to trade. To what extent will there be a true mutual opening up of the service markets between the two parties as a result of the agreement, and what technical and mental barriers remain? This FTA, if successfully implemented, can also pave the way for a revitalisation of the ‘paused’ EU-ASEAN talks, in which issues related to services were most controversial. Furthermore, it should also be seen in the global context of parallel and overlapping existing agreements or proposed talks, e.g. FTAAP, RCEP, TTIP and TPP, as well as the plurilateral TiSA initiative. In this respect, it can also be considered a test of the EU ‘Global Europe’ initiative, launched in 2006, and its follow-up communications from the Commission—the latest so far by the ‘Trade-for-All’ document in October 2015. The paper takes a combined policy- and firm-level approach, by investigating the already reached as well as the potential future impacts by the actors at both sides of the agreement through interviews with diplomatic officials representing EU, ASEAN and separate member-states within both parties, as well as with EU-originated service firms operating in Singapore. A major conclusion is that the business sector sees little direct impact of the future FTA, and that most companies stick to an ‘ad-hoc’ approach to meet and to overcome trade barriers rather than building a comprehensive strategy regarding how to behave after that the agreement has come into force. On the other hand, most companies are positive to the agreement as such but would welcome resumed EU-ASEAN talks, since the most troublesome remaining barriers are related to doing business with neighbouring countries in the region, using Singapore as the hub for transfer of knowledge-based services.