Mr Nicholas Fang: To ask the Minister for Trade and Industry given Singapore's open economy, whether the recent free trade agreement with the European Union will increase Singapore's risk to further exposure to fallouts from the current European financial crisis and such events in the future.
Written Reply by Mr Lim Hng Kiang, Minister for Trade and Industry
Singapore and the European Union (EU) concluded negotiations for the EU-Singapore Free Trade Agreement (EUSFTA) on 16 December 2012. Bilateral trade agreements such as the EUSFTA open new markets for goods and services, and reduce barriers to trade. Being a small and open economy, FTAs are an integral part of Singapore’s trade architecture. Our trade relations are well diversified, and our broad network of bilateral and multilateral FTAs connects us to both mature economies and new markets.
There is no evidence to suggest that trade agreements make countries more susceptible to external financial crises. Although the EU as a whole continues to face severe economic challenges, the EU is still Singapore’s second largest trading partner globally, and our bilateral trade with the EU grew by 22% between 2009 and 2011, even as the EU was in economic crisis.[1] The EUSFTA will further enable Singapore companies to tap into the various EU markets and continue to grow our trade with the EU.
Finally, contagion from financial crises is typically spread through the financial channels, such as links between banks. These risks can be mitigated through robust financial regulations and prudential requirements.
[1] Latest figures available. Source: IE Singapore.