The UK has signed a digital economy agreement with Singapore that is expected to encourage more digital businesses to set up shop in the Asian country and include cooperation in areas such as cyber security.
Described by the Department for International Trade (DIT) as the world’s most comprehensive agreement of its kind, the deal announced on 9 December is intended as a springboard for UK firms to target technologically advanced and lucrative Asian markets.
Sealed after six months of negotiations between UK international trade secretary Anne-Marie Trevelyan and Singapore minister-in-charge of trade relations S. Iswaran, the digital trade agreement (DEA) is expected to reduce trade-related costs and bureaucracy, while overhauling trade rules for goods and services exporters.
“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 groundbreaking agreements that update these rules for the digital age and connect UK businesses to the biggest and fastest growing markets in the world,” she added.
Under the deal, border processes will be streamlined for goods exporters, and physical paperwork can be phased out with signatures, contracts and invoices done electronically. According to the DIT, the agreement will also include better data flows, stronger cyber security and closer links between the high-tech and services hubs.
Personal data protection is one of the focus areas of the deal, which is expected to “lock in free and trusted cross-border data flows, enabling everything from more efficient manufacturing and supply chains to more reliable infrastructure and effective maintenance of jet engines”.
According to the UK government, one of the advantages for UK companies is not having to “pay for expensive data storage and processing in Singapore to do business there”.
The UK’s trading relationship with Singapore reached £16bn in 2020, according to the DIT. A third of the exports to the Asian country are delivered digitally, in areas such as finance, advertising and engineering.
The deal is hoped to facilitate the expansion into Asia of digitally native UK companies such as Revolut, Darktrace and Checkout.com, which are already operating in Singapore.
Cyber security companies such as Coventry’s CyberOwl and Caerphilly-based Awen Collective also have a presence in Singapore – the UK sees this as a boost to build cyber security defences against cyber risks, fraud, money laundering, terrorism funding and organised crime.
“Given Singapore’s longstanding status as one of the most innovative countries in digital trade policy, this agreement provides a strong platform for meaningful bilateral cooperation on tech and digital, allowing us to build common approaches to emerging issues,” said TechUK’s chief executive Julian David.
Seen as a gateway to the wider Indo-Pacific region, the digital economy deal with Singapore builds on the Fintech Bridge agreement between the two countries. It supports the UK’s bid to join the Trans-Pacific Partnership, which means getting access to 11 countries in the region across a free trade area worth £8.4tn.
Welcoming the DEA with Singapore, Andy Burwell, international director at the Confederation for British Industry, said the deal is “extremely promising”, and supports the development of key industries of the future, while driving forward the UK’s global competitiveness and growth.
“Services will underpin the UK’s economic growth and therefore the UK’s Global Britain ambitions,” said Burwell. “Enabling digital exports in its broadest sense, and importantly, the free flow of data, is integral.
“This agreement is only the starting point for what can be achieved through global collaboration on digital.”
The deal with Singapore is described as “the most ambitious digital trade win” for the UK after agreements with Japan, Australia and New Zealand, which all contain advanced digital trade chapters. It also follows an international trade conference led by the UK in October, whereby G7 countries agreed on digital trade principles.
The latest UK advances on the digital trade front follow the publication of a report on the subject released by DIT in November, where the government’s vision for Britain in relation to digital trade for businesses and individuals is outlined, as well as challenges such as the rise of digital protectionism and poor infrastructure.
In the report, trade secretary Trevelyan argues that countries have struggled to keep up with the pace of technological change, with “the global rulebook on digital trade still largely unwritten”.
She noted that digital is fast becoming the dominant form of trade, and said evolving the UK’s approach in this area was “fundamental” to the country’s prosperity.
In 2019, the digital sector alone contributed approximately £151bn to the British economy, employing almost 5% of the national workforce, according to the report. It also noted that digitisation of global trade could boost the UK’s global exports, worth £372bn in 2019.
The report was preceded by the launch of the UK’s digital trade strategy. Announced in September, the five-point plan is aimed at improving international digital trade for businesses and consumers and future-proofing the sector.
Actions under the strategy include the UK championing data flows internationally, and seeking to minimise data localisation, which is seen as harmful to competition. In addition, DIT will also champion consumer benefits and business safeguards in digital trade, as well as promote the digitisation of border and customs processes.
Moreover, the UK also plans to be “a strong advocate” for the World Trade Organization’s (WTO’s) moratorium on customs duties on electronic transmissions, opposing such customs duties permanently. It also plans to work with WTO partners to “advance new rulemaking on digital trade” and establish FTAs that include cooperation in areas such as innovation and emerging technologies, fintech, and cyber security.