Protocol for Further Upgrading the China-Singapore Free Trade Agreement to Take Effect on December 31, 2024

The "Protocol on Further Upgrading the Free Trade Agreement between the Government of the People's Republic of China and the Government of the Republic of Singapore" (hereinafter referred to as the "Protocol") will officially come into effect on December 31, 2024.

Aligning with international high-standard economic and trade rules, the Protocol further opens the service trade and investment markets between China and Singapore. It adopts a negative list approach for market access commitments in services and investments, marking the first upgraded FTA negotiation completed by China using this model. The Protocol also establishes high-standard institutional arrangements in areas such as services trade, investment, and telecommunications while expanding cooperation in emerging fields like the digital economy. Its implementation is expected to unlock the potential for enhanced cooperation in services trade and investment, advancing the forward-looking, high-quality partnership between China and Singapore.

Background and Development of the Protocol

China and Singapore signed their Free Trade Agreement (FTA) in October 2008 and subsequently upgraded it through protocols signed in July 2011 and November 2018. On December 8, 2020, the two nations jointly announced the launch of further negotiations to upgrade the FTA. The Protocol was signed in December 2023, and during the China-Singapore Bilateral Cooperation Mechanism meeting on November 11, 2024, Vice Premier Ding Xuexiang of China and Deputy Prime Minister Heng Swee Keat of Singapore witnessed the confirmation of its scheduled implementation. Both parties have since completed the necessary procedures to ensure its timely effect.

Key Features and Highlights of the Protocol

1. Core Provisions and Background

Building upon the original 2008 agreement and its 2018 upgrade, the Protocol aligns with high-standard international economic and trade rules, enhancing liberalization in services and investment. It includes seven sections: preamble, cross-border services trade, investment, telecommunications, digital economy cooperation, other provisions, and general provisions, along with annexes detailing the negative lists for services and investment commitments by both parties.

The Protocol strengthens China-Singapore economic and trade relations, with China remaining Singapore's largest trading partner for 11 consecutive years and Singapore being China's second-largest source of foreign investment and its top outbound investment destination. The Protocol provides businesses with more transparent and favorable policy guarantees, enhancing market access opportunities in trade and investment.

2. Key Innovations in Aligning with High-Standard Rules

1) Negative List for Market Access:

The Protocol is China's first FTA upgrade completed using a negative list approach. It allows enterprises from either side to engage in all service trade and investment activities except those explicitly prohibited or restricted in the negative list. It also includes "ratchet" commitments, ensuring that any liberalization measures adopted cannot be reversed in covered sectors, creating a more stable regulatory environment.

2) High-Level Commitments in Services Trade:

- Cross-border trade: Enterprises meeting the requirements will receive national treatment, market access, and Most-Favored-Nation (MFN) treatment, ensuring equal opportunities without discriminatory restrictions.

- Domestic regulations: Both nations commit to implementing reasonable, objective, and transparent rules governing trade-related laws, technical standards, and licensing requirements.

- Telecommunications: Provisions cover resource allocation, interconnection, portability, resale, and non-bundling of network elements, ensuring fair and transparent access to public telecom services.

3) Enhanced Investment Rules:

- Liberalization: The Protocol upgrades commitments on national treatment, MFN treatment, and performance requirement prohibitions, ensuring foreign investors are treated equally and free from conditions such as export ratios or local content requirements.

- Facilitation: Investment application processes are streamlined, and commercial matchmaking activities are encouraged, with mechanisms to prevent disputes and resolve issues effectively.

3. Market Access Benefits for Enterprises

Singapore has committed to broader market access for Chinese enterprises:

1) Manufacturing: Restrictions are lifted for most manufacturing sectors, except a few like beer, cigarettes, and drawn steel.

2) Professional Services: Restrictions on shareholding and control in fields such as construction and engineering (machinery, aviation, marine) are removed, offering greater opportunities for Chinese firms.

3) Key Sectors: Singapore has made high-level commitments in areas such as environmental protection, international shipping, and professional services (excluding legal services), enabling Chinese enterprises to engage in market research, technical testing, accounting, auditing, and tax services.

China has also expanded access for Singaporean enterprises:

1) Manufacturing: All foreign investment restrictions in manufacturing are essentially eliminated, with opportunities extended to high-end, smart, and green manufacturing sectors.

2) Key Sectors: Commitments include broader access in goods transportation, environmental services, distribution, tourism, healthcare, legal services, and energy distribution. For example, Singaporean law firms can establish representative offices in Shanghai's Free Trade Zone and collaborate with Chinese firms under joint agreements.

4. Steps for High-Quality Implementation

China's Ministry of Commerce has outlined the following priorities for effective implementation of the Protocol:

1) Guidance and Support: Collaborate with relevant departments and local governments to assist enterprises in fully leveraging the agreement's benefits.

2) Monitoring and Communication: Closely monitor the Protocol's implementation, address challenges promptly, and maintain open communication with Singapore to ensure adherence to the agreement's provisions.

3) Enhanced Interaction: Foster continued dialogue and cooperation to maximize the Protocol's potential benefits.

By further deepening bilateral trade and investment ties, the Protocol represents a landmark achievement in China-Singapore economic cooperation and serves as a model for advancing high-standard FTAs globally.