Singapore and the European Union (EU) have agreed to start negotiations on a free trade agreement (FTA), according to the Nikkei news paper on December 23.
An FTA with the EU will be a key addition to Singapore's network of free trade agreements, as the EU is Singapore's largest trading partner. Singapore already have bilateral FTA with US and Japan, and one of the states in AFTA. EU and Asean started FTA negotiation in 2007, but currently the negotiation is in stuck. Among Asean countries, Singapore is the first country to negotiate bilateral FTA with EU. Because Singapore have little agricultural industry, which is always sensitive area in FTA negotiation, the bilateral negotiation would be relatively easy for both parties.
During the first eleven months of 2009, Singapore's total trade with the EU stood at S$78.6 billion, accounting for 11.6 percent of Singapore's total trade. The EU is also the island nation's largest investor.