The UK has secured an agreement in principle with Singapore that will form the first digital trade deal signed by a European nation.
Known as the Digital Economy Agreement (DEA), the deal aims to cut costs, slash red tape, and strengthen the UK’s £16 billion trading relationship with Singapore, based on 2020 data.
In a press statement, the UK’s Department for Trade (DIT) said the deal will overhaul outdated rules that affect both goods and services exporters, making it easier for the UK to target new opportunities in Singapore and other Asian markets.
The deal was agreed in record time – after just six months of negotiations – by UK International Trade Secretary Anne-Marie Trevelyan and Singapore Minister-in-charge of Trade Relations S. Iswaran.
“Digital trade is creating a new global economy, but it is still largely governed by old-fashioned rules that pre-date the digital revolution of the past 20 years,” said Trevelyan.
“We’re using our independent trade policy to strike ground-breaking agreements that update these rules for the digital age and connect UK businesses to the biggest and fastest-growing markets in the world.”
Digital trade – a growing market share
According to the DIT, a third of UK exports to Singapore are already digitally delivered, including in finance, advertising, and engineering, but the DEA will create new opportunities to increase that market share.
Services companies are expected to benefit significantly from the DEA, including financial and telecoms companies such as Standard Chartered and BT Group, and software companies such as Wales-based Awen Collective.
The deal will further strengthen and expand the UK’s digital economy, which is worth some £151 billion per year, with digital economy staff also earning around 50% more than the UK average.
The DIT said that UK-founded tech unicorns are being created at a rate of almost one a week, and such companies will be able to follow the likes of digital banking firm Revolut and e-commerce firm Checkout.com, which are already active in Singapore.
Goods exporters will also benefit from streamlining cumbersome border processes, while time-consuming and costly paperwork will be replaced with e-signatures, e-contracts, and electronic invoicing.
Regional trading hub
Further benefits to UK trade are expected by way of Singapore’s role as a regional shipping, maritime, and financial hub.
Singapore is a gateway to the wider Indo-Pacific region, and the DEA will support the UK’s bid to join Singapore and 10 other nations in the Trans-Pacific Partnership (CPTPP).
Membership of the CPTPP would mean access to a £8.4 trillion free trade area with vast opportunities for UK business.
The DEA comes on the back of post-Brexit free trade deals signed by the UK with countries such as Japan, Australia, and New Zealand, all of which include advanced digital chapters.
Moreover, under the UK’s presidency, G7 countries agreed on a landmark Digital Trade Principles deal in October.
Trade for the Big Data era
Finally, the two countries are expecting wide-ranging data perks from the deal, including better data flows, stronger cybersecurity, and closer links between their hi-tech and services hubs.
Andy Burwell, international director of the Confederation of British Industry (CBI), said data flows are essential for providing services digitally.
“Enabling digital exports in its broadest sense, and importantly the free flow of data, is integral,” he said.
“This agreement is only the starting point for what can be achieved through global collaboration on digital.”
In 2019, the DIT said that 86% of the UK’s global financial services exports were digitally delivered, as were 84% of the UK’s global exports of telecommunications, computer, and information services.
The DEA will also promote personal data protection, and will lock in free and trusted cross-border data flows, enabling more efficient manufacturing and supply chains, more reliable infrastructure, and effective maintenance of jet engines.
Consequently, UK companies will not have to pay for expensive data storage and processing in Singapore to do business there.
Clare Francis, regional head of client coverage for Europe at Standard Chartered, said: “A modern digital trade agreement will help facilitate growth in trade for digital services as well as support digital platforms that make global trade in goods faster, more transparent and secure.”
The deal establishes a new partnership with Singapore to build stronger, shared cybersecurity defences against attacks by private operators and hostile states, which are a growing threat to individuals and businesses.
British cybersecurity firms such as CyberOwl and Awen Collective have set up in Singapore, and are poised to play a leading role protecting critical national infrastructure and businesses against cyber risks, fraud, money laundering, terrorism funding, and organised crime.