Introduction
In light of the increasing prevalence of digital trade, which now makes up around 25% of international trade, Singapore – as a global trade hub – has demonstrated a keen focus on developing stronger bilateral ties in the area of digital economy. Such trade ties are of particular importance against the current backdrop of uncertainty amid ongoing tariff implementation.
In line with this trajectory, Singapore’s Minister-in-charge of Trade Relations Grace Fu and European Union (“EU“) Commissioner for Trade and Economic Security Maroš Šefčovič signed the European Union-Singapore Digital Trade Agreement (“EUSDTA“) on 7 May 2025. The EUSDTA aims to enhance digital connectivity and facilitate end-to-end digital trade between the EU and Singapore.
The EUSDTA serves to strengthen bilateral economic connectivity and, when implemented, will provide greater clarity and legal certainty by establishing rules for digital trade, which cut across the provision of almost all forms of services and products digitally, and cross-border data flows. The EUSDTA also extends to digital trade effected electronically that additionally involves a physical aspect. Hence, all types of businesses need to be alert to and understand the advantages to be gained through the EUSDTA.
Businesses looking to the EU market or with cross-border links should take note of the benefits and initiatives available under the EUSDTA so as to capitalise on the advantages provided. This Update highlights the key features of the EUSDTA, including the commitments and cooperations set out therein.
Key Features of the EUSDTA
Enabling and Facilitating Open and Secure Data Flows
- Cross-border data flows: A central feature of the EUSDTA is the commitment to enable the free flow of data across borders for business purposes. Singapore and the EU commit to allow businesses to transfer data, including not to adopt or maintain measures that prohibit or restrict cross-border transfer of data (such as requirements to localise data or to store or process data in specified locations), except where necessary to achieve legitimate public policy objectives such as public security, privacy, or cybersecurity.
- Personal data protection: The EUSDTA recognises the importance of high and enforceable standards for personal data protection as a foundation for trust in the digital economy. Singapore and the EU agree to maintain a legal framework to protect personal data, ensuring non-discriminatory treatment and exploring mechanisms for regulatory convergence. In particular, Singapore and the EU commit to taking into account principles and guidelines developed by relevant international bodies or organisations – such as (i) the principles referred to in the Joint Declaration on privacy and the protection of personal data, and (ii) the Organisation for Economic Co-operation and Development (OECD) Guidelines Governing the Protection of Privacy and Trans-Border Flows of Personal Data – in the development of its legal framework for protection of personal data. The parties also commit to publishing information on the respective protection measures that they provide to individuals, including how businesses can comply with legal requirements, and the development of tools for businesses to demonstrate compliance with personal data protection standards and best practices.
- Open government data: Singapore and the EU will encourage the use of publicly available government data, especially for small and medium-sized enterprises (“SMEs“), by cooperating to enhance and generate business and research opportunities.
Facilitating End-to-End Digital Trade
- Electronic payments: Singapore and the EU will foster the adoption and use of internationally accepted standards, promote interoperability, and encourage innovation and competition in electronic payment services.
- Electronic authentication and electronic signatures: To foster confidence in digital commerce, Singapore and the EU undertake not to deny the legal effect, legal validity, or admissibility of electronic contracts or signatures solely on the basis of it being electronic. Singapore and the EU also commit to encouraging the use of interoperable electronic authentication.
- Electronic invoicing: Singapore and the EU will ensure that the electronic invoicing measures are designed to support cross-border interoperability.
- Paperless trading: Singapore and the EU will endeavour to make available trade documents required for the import, export, or transit of goods in electronic format and accept electronic versions of these documents.
- Customs duties: Singapore and the EU undertake not to impose customs duties on electronic transmissions.
- Prior authorisations: Singapore and the EU undertake to prohibit prior authorisation requirements solely on the ground that a service is to be provided online, subject to certain pre-identified services that involve a direct and specific connection with the exercise of public authority and on policy grounds. This is to ensure a fair balance and allow entry appropriately for businesses.
Establishing Trusted and Secure Digital Systems
- Source code: To foster trust and encourage innovation, Singapore and the EU will not require the transfer of or access to source code as a condition of market access. This does not affect the voluntary transfer of, or granting of access to, source code of software on a commercial basis, such as in the context of freely negotiated contracts, or under open source licenses, or requirements for modification of software by regulatory, law enforcement or judicial bodies for compliance with local laws and regulations.
- Cybersecurity: Singapore and the EU will collaborate to identify and mitigate cybersecurity threats and build the capabilities of their workforces. The EUSDTA also emphasises the importance of technical standards and conformity assessment procedures to ensure interoperability and reduce barriers to digital trade, including ensuring reasonable network management that does not block or in any other way impact traffic.
- Unsolicited commercial electronic messages: The EUSDTA mandates Singapore and the EU to put in place effective mechanisms to limit unsolicited commercial electronic messages (spam), requiring recipient consent and clear opt-out options.
Promoting Greater Participation and Access to Opportunities in the Digital Economy
- Digital participation of SMEs: Singapore and the EU will cooperate to exchange information and best practices in leveraging digital tools and technology, to enhance SMEs’ participation in digital trade opportunities.
- Digital inclusion: Singapore and the EU will cooperate to enhance digital inclusion, including through exchanges of information and best practices, as well as addressing barriers to accessing digital trade opportunities.
Online Consumer Protection
Singapore and the EU commit to adopting or maintaining measures that guard against fraudulent, misleading, or deceptive commercial activities that cause harm to consumers engaged in electronic commerce. This includes measures that ensure consumers are granted access to redress to claim their rights, and entrust consumer protection agencies with adequate enforcement powers.
Importantly, it is also necessary to ensure measures related to the safety of the goods to normal or reasonable use. This will require compliance with the local safety standards, and hence, ensuring a degree of mutuality between Singapore and the EU, which largely exists.
The parties also commit to making their consumer protection laws and regulations publicly available and easily accessible, and according consumers engaged in electronic commerce with a level of protection not less than that afforded to consumers engaged in other forms of commerce.
Concluding Words
The signing of the EUSDTA is significant in light of the valuable trade ties between Singapore and the EU. The EU is Singapore’s fifth largest goods trading partner and second largest services trading partner, and also stands as Singapore’s second largest foreign investor and second largest overseas investment destination. Further, more than half of the total trade in services between Singapore and the EU in 2022, worth over S$60 billion, was delivered digitally. By offering legal certainty, reducing regulatory and operational barriers, and supporting innovation and digital business models, the EUSDTA therefore creates a favourable environment for businesses that are seeking to expand or invest in Singapore or the EU.
Businesses with ties in Singapore and the EU, and those operating on trade lines between the ASEAN and EU regions, should thus be aware of the commitments under the EUSDTA and the opportunities that it brings. Following the signing of the EUSDTA, it will be ratified by Singapore and the EU. Yet, businesses should be taking steps to review their supply chains as well as modus in relation to how they do trade and make changes as appropriate. We will continue to monitor the implementation of the EUSDTA and the relevant opportunities that arise.
For more information, please see the following (available on the MTI website at www.mti.gov.sg):
For further queries, please reach out to our Team members set out on this page.