SINGAPORE - The Gulf Cooperation Council - Singapore Free Trade Agreement (GSFTA) comes into effect on September 1.
The GSFTA covers trade in goods, trade in services, investments, rules of origin, customs procedures, government procurement, electronic commerce and economic cooperation.
Singapore is the first non-Middle East country to have a free trade agreement with the Gulf Cooperation Council (GCC).
The agreement will further enhance Singapore's growing economic relations and trade with the GCC, consisting of six countries in the Middle East - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
Here is the full statement by the Ministry of Trade and Industry, and the Ministry of Foreign Affairs:
The Gulf Cooperation Council - Singapore Free Trade Agreement (GSFTA) enters into force today, September 1, 2013.
The agreement will further enhance Singapore's growing economic relations and trade with the Gulf Cooperation Council (GCC), consisting of six countries in the Middle East - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).
The GSFTA is a comprehensive free trade agreement covering trade in goods, trade in services, investments, rules of origin, customs procedures, government procurement, electronic commerce and economic cooperation.
Singapore is the first non-Middle East country to have a Free Trade Agreement (FTA) with the GCC. This FTA is Singapore's second with the Middle East, after the Singapore-Jordan FTA in 2004.
For the first time, the GCC countries have committed to recognise the Singapore MUIS Halal Standards (SMHS) as similar and consistent to their domestic Halal Standards. Four out of the six GCC countries have already committed to recognise SMHS and another two countries (Bahrain and Saudi Arabia) will start negotiations shortly to do the same. This will open up more opportunities in Singapore's export of Halal products to the GCC states.
Highlighting the significance of the agreement, Mr Lee Yi Shyan, Senior Minister of State for Trade and Industry said, "The GSFTA coming into force will bring the strong bilateral and economic ties between Singapore and the six GCC economies to a new level. Already, there are many Singapore and GCC companies actively pursuing opportunities and partnerships with each other. The GSFTA will further enhance Singapore's role as a Gateway City by connecting the two large regions of Asia and the Middle East & North Africa."
The GCC is currently Singapore's fifth largest trading partner and accounts for 35 per cent of Singapore's oil imports. Bilateral trade with the GCC reached a record high of S$68.6 billion in 2012, an increase of 62 per cent since 2007.
Since 2004, Singapore companies have secured over S$20.8 billion of projects in the GCC states, some of which are mega projects worth more than S$1 billion each. Over the years, there has also been an increase in the number of bilateral forums between Singapore and GCC to facilitate regular visits and exchanges.
Key features of GSFTA
With the GSFTA entry into force on September 1, 2013, approximately 95 per cent of all GCC tariff lines will qualify for tariff-free concessions.
An additional 2.7 per cent of tariff lines will qualify for the same tariff-free concessions by 2018. Based on Singapore's latest bilateral trade figures in 2012, S$3.98 billion worth of Singapore goods will qualify for immediate tariff-free treatment, while S$49.1 million worth of Singapore goods will qualify after 2018.
Major sectors that will benefit from the elimination of tariffs are telecommunications, electrical and electronic equipment, petrochemicals, jewellery, machinery and iron and steel-related industries. Singapore will grant zerotariff treatment on all GCC imports with immediate effect.
Other key features of the GSFTA are:
1) Services: The GSFTA allows Singapore-based companies, Singapore Nationals and Permanent Residents to hold majority stakes in key sectors of the GCC markets. In particular, Singapore gained enhanced access in UAE, Saudi Arabia and Qatar for construction services, computer and related services, environmental services and professional services, such as legal, architectural, engineering, urban planning.
2) Investments: Singapore has Investment Guarantee Agreements (IGAs) in force with five out of six GCC countries, giving stronger protection to investments made in the markets on both sides. Singapore is currently negotiating an IGA with Qatar.
3) Cooperation: Both sides have agreed to enhance promotion and cooperation in key sectors like communications technology and air services. There will also be a greater exchange of business visits.
Singapore and the GCC jointly announced the launch of GSFTA negotiations on November 25, 2006 during Singapore Prime Minister Lee Hsien Loong's visit to Saudi Arabia.
The first round of the GSFTA negotiations started on January 17, 2007 and was concluded after four rounds of negotiations on January 31, 2008. The agreement was signed in Doha on December 15, 2008 between PM Lee and his GCC counterparts, then-President-in-Office of the GCC Ministerial Council and then-Qatar Prime Minister, Sheikh Hamad bin Jassim Al Thani, and then-GCC SecretaryGeneral, Abdurrahman bin Hamad Al-Attiyah.
International Enterprise (IE) Singapore and the Singapore Business Federation will be jointly organising two business seminars to share how companies can benefit from the GSFTA.