Australia: Modernised Singapore-Australia FTA (SAFTA) eases export of goods and services to, and inbound investment from, Singapore

There are significant benefits to Australian businesses from a recent agreement to update and modernise the Singapore-Australia Free Trade Agreement.

Businesses that trade goods, or provide services, to Singapore - and Australia's economic relationship with one of its crucial trading partners - will be in a significantly better position following a recent agreement to amend the Singapore-Australia FTA (SAFTA).

This agreement, which also offers friendlier regulation of inbound investment from Singapore into Australia, will not have legal effect until ratified by both countries, but businesses trading with Singapore, or seeking inbound investment, should start looking now at the opportunities it presents.

The changes to the SAFTA at a glance

Australia and Singapore have developed strong economic ties and both countries have benefited greatly from the SAFTA, which entered into force in 2003.

The SAFTA has delivered stronger trade and investment between the countries due to tariff eliminations and cheaper inputs on a range of products, resulting in more open and predictable outcomes in a range of areas relating to the export of goods and services. Singapore, which has one of the highest per capita gross domestic products in the world, is now one of Australia's largest trade and investment partners.

However, it was always intended that the SAFTA would remain a living document that would be updated as bilateral trade and investment evolved over time.

On 13 October 2016, Australia and Singapore signed an agreement to formalise the third review of the SAFTA. The agreement addresses issues of commercial interest to Australian businesses, and will enter into force once Singapore and Australia have completed their domestic treaty processes including the approval and the passing of necessary legislation.

The agreement provides a comprehensive update to the SAFTA, providing deeper market access and new rules that give greater certainty to exporters of goods and services, and for investment. Singapore has offered commitments on better terms than have been offered previously to any other trading partner.

Modernising inbound investment from Singapore

The agreement updates the existing investor-state dispute settlement service to modernise certain aspects, including safeguards to protect both Governments' rights to regulate the public interest.

There will also be an increase in the monetary thresholds used to determine whether an action is a significant action under the Foreign Acquisitions and Takeovers Act 2015 for Singaporean investment in non-sensitive sectors - from A$252 million to A$1094 million. This will harmonise the SAFTA thresholds with those agreed under the Trans-Pacific Partnership Agreement and the recent north Asian free trade agreements. Note, however, that the Foreign Investment Review Board will continue to examine all proposed investments by Singaporean Government entities without reference to that threshold.

Greater opportunities to export services and skilled labour to Singapore

Services are a significant part of Australian business with Singapore and make up over one-third of all Australian exports to this country. The agreement will result in greater certainty and less red tape in areas such as professional services, education, financial services and e-commerce. Examples include the increase in mutual recognition of standards, conformance and professional qualifications.

There will also be new visa arrangements to allow Singaporeans to stay and work in Australia. Similarly, reduced barriers for labour mobility into Singapore for certain categories of Australian workers will be introduced. These arrangements have the intention of increasing the flow of skilled labour and visitors between the two countries.

Preferential treatment and standardised requirements for exporters of goods

Although all Australian products exported to Singapore have been tariff-free since 2003 under SAFTA, the agreement makes it easier for Australian and Singaporean exporters to claim preferential treatment.

It also standardises labelling requirements for wine and distilled spirits, and requirements for medical devices and cosmetics.

What businesses affected by the agreement should consider

The agreement demonstrates a shared economic vision of the two countries and indicates that the existing strong and productive bilateral relationship is set to continue and will only improve over time.

Although it may take several months for the agreement to be reflected in the respective laws of each country, once the agreement does come into force, the SAFTA represents an increased opportunity for Australian businesses to trade with Singapore with friendlier regulation and more certainty.

If you are in a business that currently exports goods or services from Australia into Singapore, receives inbound investment from Singapore, or has plans to do so in the future, the agreement opens the door to enhanced opportunities for your business.

If you are currently engaging in contract negotiations with Singaporean businesses, you should have regard to the changes proposed under the agreement so that when the amendments to the SAFTA eventually come into force, you have full opportunity to take advantage of these changes.


Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

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