Changes from report parliamentary committee draft to plenary report

The European Union and Singapore have a strong partnership built on shared values such as democracy, rule of law, respect for human rights and a joint commitment to open and rule-based trade and upholding the multilateral trading system. Since the entry into force of the EU-Singapore Free Trade Agreement in November 2019, bilateral trade relations have deepened, with significant developments in both traditional and digital trade domains. In 2024, Singapore was the EU’s second-largest trading partner in ASEAN and 21st largest trading partner worldwide for trade in goods, while the EU was Singapore’s fifth-largest trading partner, accounting for slightly under one third of EU-ASEAN trade in goods and services. Meanwhile the EU is the world leader in both exports and imports of digital services, and digital trade amounts to approximately 25% of all international trade and is growing at a faster pace than traditional trade. Today more than half of the trade in services between the EU and Singapore are digitally delivered. Against this backdrop it is important that the EUSFTA is complemented by an agreement on updated rules for digital trade, which is why negotiations for a modern, free-standing digital trade agreement were launched in July 2023 and concluded a year later.

The EU-Singapore Digital Trade Agreement (EUSDTA) is the first stand-alone digital trade agreement that the EU has concluded with a partner country, and the first provisions on digital trade with an ASEAN country. The agreement reflects the EU's ambition to establish modern digital trade rules with our global partners, as demonstrated in the digital trade chapters of recent free-trade agreements with the UK, Chile, and New Zealand, as well as the cross-border data flows agreement with Japan.

The EUSDTA aims to provide binding digital trade rules with the goal to enhance consumer trust, ensure legal certainty and predictability for businesses, and remove unjustified barriers to digital trade. The agreement ensures respect for fundamental rights, including the rights to privacy and personal data protection, while retaining the right for both parties to develop, implement and maintain policies to address emerging challenges in the digital economy. The agreement demonstrates the commitment of both parties to uphold open digital economies that are rules-based, competitive, transparent and fair, and it will further improve EU-Singapore relations, by strengthening bilateral economic links and support greater region-to-region digital connectivity between the EU and ASEAN.

The agreement facilitates cross-border data flows, permanently bans customs duties on electronic transmissions between the EU and Singapore, prohibits authorisation requirements specifically targeting online services, and recognises the legal effect and validity of contracts concluded by electronic means. The agreement also ensures legal certainty for the use of electronic authentication services and protects natural and legal persons from mandatory source code disclosures, while retaining the right for authorities to require, when necessary, access to source code for legitimate reasons. It furthermore guarantees consumer protection online and protects users from spam, and includes a discipline on open government data. Additionally, the agreement encourages regulatory cooperation on issues related to digital trade, supports the cross-border interoperability of e-invoicing standards, promotes coordinated action in the area of cybersecurity and recognises the importance of cooperation regarding standards, technical regulations and conformity assessment procedures for digital goods and digital services.

There have been some concerns that the provisions on access to source code, which are designed to avoid intellectual theft, might create an obstacle for authorities to ensure compliance with digital rules and other legislation. Another source for concern is the wording on data protection and cross-border data flows, which is feared to enable a weakening of fundamental rights such as privacy and data protection.

However, the European Commission has ensured that the agreement does not put the enforcement of EU legislation in jeopardy. The Commission has also underlined that similar provisions as those in the EUSDTA have been negotiated and included in agreements with the UK, Chile, New Zealand and, regarding data flows, with Japan. As these agreements have been applied in parallel to the EU negotiating and adopting new legislation in the digital sphere, there does not seem to be any substance to the concerns that the agreement would have a chilling effect on future EU legislation. On the contrary, this agreement is setting standards for digital trade, data flows, data protection and consumer rights online.

Finally, it is worth noting that the conclusion and signature of this agreement come at a time of great geopolitical shifts, when the multilateral rules-based order is being questioned and protectionism and isolationist ideas are overtaking the international trade landscape. This agreement does not only allow the EU to advance its vision for the digital economy and forming global rules for digital trade while strengthening our partnership with a strategic ally, but it also sends a signal that we are still interested in, and capable of, negotiating and concluding trade agreements.

For all these reasons, I recommend that the INTA committee gives its consent to the conclusion of the Digital Trade Agreement with Singapore.