The European Union and Singapore agreed terms of a free trade deal on Sunday (16 December), a move that should further open the Asian country's markets for financial services and make it easier for European automakers to export there.
"We have finalised the negotiations, and I'm very pleased with the result," EU Trade Commissioner Karel De Gucht said from Singapore.
After the completion of negotiations by the European Commission, member states and the European Parliament need to sign off for the agreement to come into force.
Though EU countries have in the past sometimes rejected such deals for political reasons, this is unlikely to happen with Singapore, as EU leaders in October called for a swift conclusion of negotiations.
"I don't expect that many problems," De Gucht said, adding he hoped for finalisation by the end of 2013.
Gateway to Southeast Asia
The EU hopes the agreement will give it better access to Singapore, one of Asia's richest countries per head of population, where currently the United States enjoys preferential access.
Singapore has a population of only 5 million, but it is also a gateway to the 600 million people in the fast-growing economies of the 10-member Association of South East Asian Nations (ASEAN).
"Singapore is a dynamic market for EU companies and is a vital hub for doing business across Southeast Asia. This agreement is key to unlocking the gateway to the region and can be a catalyst for growth for EU exporters", De Gucht said in a statement.
The EU is the city state's second biggest trade partner after neighbouring Malaysia, with bilateral trade in goods amounting to €46 billion in 2011. The EU had a trade surplus of €8 billion, with cars making up a large chunk of its exports.
Singapore's import tariffs are low. The deal will remove non-tariff barriers such as the double testing of cars, as Singapore would start to recognise EU standards, EU officials say.
Other key benefits would be the further opening of Singapore's banking and financial services sector, as well as better access to its public procurement markets.
The push for free trade agreements comes as the EU struggles with a sovereign debt crisis and tries to supplement stagnant domestic consumer demand with free trade pacts with major economies.
A deal with South Korea came into effect last year and one with Canada is near completion. EU trade ministers agreed in November to start negotiations with Japan, while preliminary talks are underway for an agreement with the United States.
EU trade officials want the Singapore deal to set a precedent for trade deals with other countries in ASEAN. The EU is currently negotiating free trade pacts with Malaysia and Vietnam, and hopes one day to forge a region-to-region trade agreement.
"What I think is more important" than just trade with Singapore, said De Gucht, is "setting a number of standards in services that we will try to enlarge to the whole region".
- 2013: EU Parliament and Council to sign off on Singapore free trade deal