18 August 2023

On 1 August 2023, the Singapore Ministry of Trade and Industry (“MTI”) announced that it is seeking feedback on the ASEAN-China Free Trade Area (“ACFTA”) 3.0 upgrade negotiations.

ACFTA is ASEAN’s first free trade agreement (“FTA”) with an external dialogue partner and China’s first FTA. The first ACFTA upgrade negotiations that began in 2014, were concluded and signed in 2015, and entered into force for all ACFTA Parties in 2018. The current ACFTA upgrade negotiations, known as ACFTA 3.0, were launched at the 25th ASEAN-China Summit in November 2022 and is targeted for conclusion by the end of 2024.

This article provides an overview of the key items being considered in the MTI consultation.

Function of ACFTA

ACFTA eliminates tariffs for 94.6% of tariff lines of exports to China that originate from Singapore, creating market access and ensuring a more predictable operating environment for service suppliers. The Agreement also provides investors and investments with protection by establishing a more transparent, facilitative, and secure environment for investors.

Economic relations between ASEAN Member States (“AMS”) and China have strengthened considerably since the respective Agreements under ACFTA entered into force. The value of ASEAN-China trade in goods has increased more than five times from US$160 billion in 2006 to US$879 billion in 2021.

Current upgrade of ACFTA

The ACFTA 3.0 upgrade negotiations will review the following:

·            Trade in goods

·            Tariff liberalisation

·            Customs procedures and trade facilitation

·            Technical barriers to trade

·            Sanitary and phytosanitary measures

·            Investment

·            Micro, small and medium enterprises

·            Economic and technical cooperation

ACFTA 3.0 will also see AMS and China address trends such as supply chain connectivity, digitalisation, and sustainability.

Reference materials

The following materials are available on the MTI website www.mti.gov.sg: