Why Is the Potential UK–Singapore Digital Economy Agreement So Groundbreaking?
Despite the fact that it only expands on a recent trade pact, the UK–Singapore digital economy agreement has received a lot of attention. So, what makes this deal so disruptive? Come check out our article to find out.
Since finalizing its exit from the European Union (EU) a year ago, the UK has been engaged in a seemingly constant flurry of trade talks. Some of these deals, both proposed and finalized, have been praised and harshly criticized in equal measures. And some have gone under the radar. Amid all these deals and potential deals, what makes the new UK–Singapore agreement noteworthy?
The Digital Economy Agreement
The new deal, called the Digital Economy Agreement, or DEA, builds on the UK–Singapore Free Trade Agreement signed just last year. So, what’s groundbreaking about an agreement between two friendly nations that merely expands a recently signed trade pact? The answer is in the name.
This new deal focuses on the digital economy and, as such, is the first ever agreement between a European and Asian country to focus solely on the digital economy. The agreement is a bold, future-facing one that looks to improve both nations’ already-strong digital economies. The deal in place, which is expected to be ratified, looks to cut costs, slash red tape, and increase security for digital services and business interactions between the two nations.
From Strength to Strength
The two island nations already have strong economic ties. Trade between the two was worth £16 billion in 2020 (approximately $21.4 billion). A third of British exports to Singapore are already digitally delivered, across sectors such as finance, advertising, and engineering. Given this, the DEA is a logical step forward. The British government is clearly proud of its claim that the UK is the world’s second largest services exporter and leading digital hub, and further claims that the deal will only strengthen the British digital economy, which adds £151 billion (approximately $202 billion) to the overall national economy. It will also lift wages, as workers in the digital economy earn around 50% more than the UK average.
As for Singapore, it, too, is already a tech-savvy nation. It also punches well above its weight in economic terms. It is at the heart of the Association of Southeast Asian Nations (ASEAN)’s digital economy, which is projected to hit a colossal $1 trillion (USD) by 2030. The deal also helps strengthen the UK’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The Future of Trade Agreements?
Various people and outlets have claimed the digital realm to be “the future of” just about everything since the early 1990s. Given this, it almost seems odd that a completely digitally-oriented deal like the DEA has taken this long to be designed. Nevertheless, the deal likely will provide a blueprint for similar future deals. In a world where physical goods are increasingly falling behind in importance to digital goods, for reasons of convenience and environmentalism, the DEA looks like a sensible move forward.
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