Page 8 - AEI Insights 2018 Vol 4 Issue 1

Furuoka et al, 2018

initiated by the Asia-Europe Meeting (ASEM) in 1996, could become more important than
ever.

The ASEM cooperation mechanism consists of 51 partner countries and two institutional
partners, i.e. the EU and the ASEAN Secretariat. More specifically, the promotion of trade and
investment is entrusted to three closely-connected organizations: first, the Asia-Europe
Business Forum (AEBF), a meeting of ASEM business leaders aiming to promote inter-
regional business partnerships; second, the Senior Official’s Meeting on Trade and Investment
(SOMTI), a meeting of senior trade officers to strengthen economic partnerships, including
FTAs; and thirdly, the Finance Ministers’ Meeting (FinMM), where the objective is to
coordinate inter-regional monetary and financial policies.

However, numerous trade negotiations in the ASEM have yet to produce any concrete results
in creating a comprehensive regional free trade agreement (FTA) between ASEAN and the EU.
In fact, no formal discussions on the ASEM-FTA have taken place since 2006 (Ministry of
Foreign Affairs, Thailand, 2015). This failure to develop a collective FTA has led to separate
discussions between the EU and individual ASEAN member countries to establish bilateral
FTAs. In this regard, Singapore was the first ASEAN country to formalise a bilateral FTA with
the EU, initialled in 2014 under the name of the EU-Singapore Free Trade Agreement or
EUSFTA (Sanderson, 2015). The country has been a very active advocate of trade liberalisation
and played a crucial role as a trade hub in the ASEAN region. On the other hand, it has also
established a close trade relationship with China by establishing a China-Singapore Free Trade
Agreement (CSFTA) in 2008. In spite of this, there has been little systematic empirical analysis
on the export-growth nexus in the country, particularly with respect to its international trade
with the EU and China.

Against this background, the current study examines the effects of Singapore’s export on its
economic growth, given the present state of ASEAN-EU trade relationship and its own bilateral
ties with the EU and China. The justification for studying Singapore is that it is the first ASEAN
member to establish a bilateral FTA with the EU. This move could be seen as Singapore’s
individual effort to re-activate its trade relationship with Europe, due to a lack of progress
achieved through ASEM. Hence the first research question is: Does Singapore’s “first mover
advantage” with the EU bring positive effects on its economic growth? At the same time, China
has been a dominant trade partner for Singapore since the late 2000s. Thus the second research
question is: Have Singapore’s exports to China been beneficial for its economic growth?

The paper consists of six sections. Following this brief introduction, the second and third
sections will discuss related literature in international trade and investment between ASEAN
and the EU, as well as trends in Singapore’s exports to the EU and China. The fourth section
will explain the data collection and data analysis procedures adopted in the current study, while
the fifth presents its empirical findings. The paper concludes with some policy implications
and recommendations for future research.

ASEAN-EU International Trade and Investment

ASEAN as a group represents the EU’s third largest trading partner, after the US and China
(European Commission, 2017). More than €246 billion of goods and services were traded
between ASEAN and the EU in 2014. On the other hand, the EU is ASEAN’s second largest
trading partner after China, accounting for around 13% of ASEAN’s trade (European
Commission, 2017). The EU's main exports to ASEAN are chemical products, machinery and

8