UK signs digital trade deal with Singapore strengthening their trading relationship and offering new business opportunities
On 25 February 2022 the UK and Singapore signed the UK-Singapore Digital Economy Agreement (DEA), the first digitally-focused trade deal signed by a European nation. The DEA aims to strengthen and increase the UK’s trading relationship with Singapore which was worth £20 billion in 2020.
For Singapore, this is its fourth digital economy agreement following deals with Chile and New Zealand, Australia and Korea. The DEA will support the UK’s bid to join Singapore and 10 other nations in the Trans-Pacific Partnership. Such membership would grant the UK access to an £8.4 trillion free trade area with associated business opportunities.
What are the key benefits of the DEA?
Open digital markets – The deal will help provide UK businesses with open access to Singapore’s digital economy so that they can operate in fair competition, including a commitment not to impose customs duties on the sale of electronic content to Singapore.
Digital trading systems – The deal will cut red tape by moving away from archaic requirements and pave the way for global trade in the modern environment. Border processes will be streamlined and labour-intensive and costly administrative paperwork for customs clearance for goods and services will be replaced by electronic versions. Electronic contracts, signatures and invoicing processes, as well as common digital systems for e-payment, will enable faster and cheaper cross-border transactions.
Data and data flow – Data is a key component of the global economy. Under the DEA, both countries have committed to banning unjustified restrictions on the cross-border flow of data, meaning that trade in services, such as financial services and legal advice, can continue to grow. However, this commitment is overlaid by the requirement for each country to have data protection frameworks in place to protect personal data, ensuring that the transfer of data is secure. Furthermore, neither country will introduce data localisation requirements, meaning UK businesses can choose where to store and process their data so avoiding unnecessary costs.
Financial services – UK financial services firms providing services in Singapore will not be required to store data there locally, thus avoiding risks and costs for multiple data servers. Both countries will co-operate further in innovative financial services such as FinTech and RegTech. It has been agreed that the existing FinTech Bridge between the UK and Singapore will be enhanced, allowing both jurisdictions to capitalise on their market leading FinTech sectors.
Legal services – The UK government notes that the DEA is the first trade agreement in the world to include specific commitments on technology in legal services (Lawtech). Both jurisdictions are renowned legal hubs and will share knowledge in this area and encourage LawTech providers to look at opportunities in the other jurisdiction.
Consumer and business protection – Laws will be adopted to protect consumers on-line against misleading, fraudulent and unfair conduct. Neither country will require businesses to transfer their intellectual property, such as source code and cryptographic algorithms, as a condition for market access, ensuring that businesses have confidence that their proprietary technology is protected when entering the market. Given the ever-increasing threat of cyber-attacks, the two countries have also signed a memorandum of understanding to work together to build stronger cybersecurity defences, ensuring a safe and secure cyberspace.
Linking two financial centres
The DEA links two global financial centres and hi-tech and service hubs. The UK expects this strengthened relationship to allow it to capitalise further on its position as a pre-eminent service exporter. According to the British Chamber of Commerce a third of the UK’s exports to Singapore are already digitally delivered, including in finance and engineering.
The signing of this innovative DEA provides both the UK and Singapore with the opportunity and framework to capitalise on the growing global digital economy, especially in the FinTech sector, and strengthen their trading relationship.
Disclaimer
This note reflects our opinion and views as of 14 March 2022 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.