Explanatory Memorandum to COM(2025)23 - Conclusion of the Digital Trade Agreement with Singapore - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2025)23 - Conclusion of the Digital Trade Agreement with Singapore. |
|---|---|
| source | COM(2025)23  |
| date | 31-01-2025 |
1. CONTEXT OF THE PROPOSAL
• Reasons for and objectives of the proposal
The Council authorised the opening of negotiations for digital trade disciplines with the Republic of Singapore (‘Singapore’) on 27 June 2023. 1 The Commission, on behalf of the Union, and Singapore launched the negotiations on 20 July 2023. 2 The negotiations were concluded in principle on 25 July 2024. 3
The outcome of the negotiations constitutes a modern, self-standing Digital Trade Agreement between the European Union (‘EU’) and Singapore (‘EUSDTA’), with ambitious and binding commitments on digital trade. The EUSDTA will enhance consumer protection online, provide legal certainty for businesses that want to engage in cross-border digital trade, and address unjustified barriers to digital trade. It will complement the existing EU-Singapore Free Trade Agreement 4 (FTA) by deepening and underpinning the existing bilateral trade relationship between the EU and Singapore from the digital perspective.
Digital trade accounts for around 25% of all international trade and has been growing at a faster pace than traditional trade. 5 The EU is the world's leader in both exports and imports of digitally deliverable services, which amounted to EUR 1.3 trillion in 2022, or 54% of the EU's total trade in services.
The EUSDTA will enter into force once the EU and Singapore have completed their respective requirements and procedures for signature and conclusion and have exchanged written notifications thereon.
• Consistency with existing policy provisions in the policy area
This proposal is consistent with the EU trade policy review of 2021 6 that recognised the contribution of the EU’s digital trade policy to the EU’s digital transformation and announced the EU’s intention to step up bilateral engagement and explore stronger frameworks for cooperation on trade-related digital issues with like-minded partners. It is also consistent with the objective of the 2023 EU economic security strategy to pursue partnerships with likeminded countries. 7 The EUSDTA constitutes a modern, self-standing agreement with ambitious and binding commitments on digital trade between the EU and Singapore.
The proposal builds on the EU-Singapore Partnership and Cooperation Agreement 8 (PCA) and the FTA, which already liberalised and enhanced bilateral trade relations between the EU and Singapore. The EUSDTA gives effect to the trade provisions of the PCA and, together with the FTA, forms the free trade area between the EU and Singapore.
The proposal is consistent with the EU strategy for cooperation in the Indo-Pacific 9 that recognised that the region is at the forefront of the digital economy and proposed establishing Digital Partnerships with key partners in the region, including with Singapore.
The EUSDTA builds on the EU-Singapore Digital Trade Principles, a key deliverable of the EU-Singapore Digital Partnership 10 . The EUSDTA recognises the EU-Singapore Digital Partnership as the key forum for regulatory cooperation on digital policies.
The EUSDTA is also consistent with the outcome of the Joint Statement Initiative on Electronic Commerce 11 , which is the result of plurilateral negotiations amongst more than 90 Members of the World Trade Organisation.
• Consistency with other Union policies
The proposal is in line with EU internal market legislation in the area of the digital and data economy. The proposal also ensures full respect of the fundamental rights for the protection of personal data and privacy and the EU regulatory framework in this area. The EUSDTA affirms the right to regulate and ensures sufficient regulatory space to pursue public policy objectives in these areas.
2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY
• Legal basis
The substantive legal basis is Article 207 TFEU.
The EUSDTA is to be signed by the Union pursuant to a decision of the Council based on Article 218(5) TFEU and concluded by the Union pursuant to a decision of the Council based on Article 218(6), following the consent of the European Parliament.
• Subsidiarity (for non-exclusive competence)
Not applicable.
• Proportionality
Trade agreements are the appropriate means to govern market access and the related areas of comprehensive economic relations with a third country outside the EU. No alternative exists to render such commitments and liberalisation efforts legally binding.
• Choice of the instrument
This proposal is in accordance with Article 218(6)(a) TFEU, which envisages the adoption by the Council of decisions on the conclusion of international agreements after obtaining the consent of the European Parliament. No other legal instrument exists that could be used in order to achieve the objective expressed in this proposal.
3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS
• Ex-post evaluations/fitness checks of existing legislation
The bilateral trade relations between the EU and Singapore have already been liberalised and enhanced by the FTA between the EU and Singapore which entered into force in 2019. Although this is a comprehensive FTA that provides for substantial commitments for trade in goods and services between the parties, it does not provide for comprehensive rules on digital trade.
• Stakeholder consultations
Stakeholders have been consulted in the context of a study on the potential impacts of an EUSDTA, conducted by an external contractor, in support of the negotiations. 12
Prior to, and during the negotiations, the EU Member States were regularly informed and consulted orally and in writing on the different aspects of the negotiation via the Council’s Trade Policy Committee. The European Parliament was also kept informed and consulted via its Committee on International Trade (‘INTA’), and notably its Monitoring Group for Singapore.
Furthermore, during the negotiations, the Commission has published on its website reports of the negotiating rounds, the EU text proposals and press releases, as well as the text of the agreement after the conclusion of the negotiations in principle.
• Collection and use of expertise
The study on the potential impacts of an EUSDTA was conducted by an external contractor. 13
• Impact assessment
The study on the potential impacts of an EUSDTA, conducted in support of the negotiations for the EUSDTA, confirmed the potential positive impact of the agreement. 14 The study was used to examine relevant aspects of Singapore’s digital economy as well as the EU’s and Singapore’s respective practices on digital trade, taking into account stakeholder’s views.
• Regulatory fitness and simplification
Not applicable.
• Fundamental rights
The proposal is fully compatible with the Charter of Fundamental rights. The EUSDTA fully preserves the regulatory space to protect fundamental rights, including the fundamental rights to personal data protection and privacy.
4. BUDGETARY IMPLICATIONS
Not applicable.
5. OTHER ELEMENTS
• Implementation plans and monitoring, evaluation and reporting arrangements
The EUSDTA makes applicable, by cross-reference, the institutional provisions of the FTA, which provide a structure for the relevant implementing bodies of the FTA to monitor the implementation, operation and impact of the EUSDTA.
The EUSDTA also includes dedicated provisions on stakeholder engagement that provide a basis for stakeholders to contribute to the implementation of the agreement.
• Explanatory documents (for directives)
Not applicable.
• Detailed explanation of the specific provisions of the proposal
The EUSDTA is a self-standing agreement that is to be applied in the framework of the PCA and that forms, together with the FTA, the free trade area between the EU and Singapore.
The general provisions of chapter one of the EUSDTA set out the objectives and scope of the agreement, and the definitions used throughout the agreement.
Chapter two of the EUSDTA comprises the body of the agreement and includes the digital trade commitments. The commitments are of a binding nature and range from commitments on cross-border data flows and online consumer protection, to commitments on the protection of source code of software. The commitments generally aim to enhance consumer protection online, provide legal certainty for businesses, and address unjustified barriers to digital trade.
Section A of chapter two, on data flows with trust, includes provisions that are in line with EU practice based on the 2018 horizontal provisions on cross-border data flows and the protection of personal data and privacy in trade agreements 15 , which recognise each Party's right to determine the appropriate level of privacy and personal data protection.
Chapter three of the EUSDTA provides for horizontal exceptions, a dispute settlement mechanism, an institutional framework, and the final provisions of the agreement. Where relevant, the title makes applicable, by cross-reference, the relevant provisions of the FTA which provide the framework for the application of the EUSDTA.