Singapore has inked a multilateral trade pact with Chile, Colombia, Mexico, and Peru, that aims to ease market access and explore opportunities in e-commerce and technology innovation, amongst others. The agreement will pave the way for Singapore companies to enjoy lower export costs with the four markets and see the development of various processes and regulations to drive trade.
The agreement with the four Pacific Alliance (PA) member states also establishes Singapore as the bloc's first associate member. This enables the nations to explore trade cooperation in sectors of mutual interest, such as digital economy, logistics and infrastructure, and food trade, according to Singapore's Ministry of Trade and Industry (MTI).
Comprising Chile, Colombia, Mexico, and Peru, the PA is the world's eighth largest economy, with a combined GDP of more than $2 trillion in nominal terms. This accounts for 40% of the Latin America and Caribbean region's total GDP and is projected to grow 3.3% over the next five years, above the regional average of 2.5%, said MTI, citing 2021 figures from World Bank and S&P Global Ratings.
The PA nations collectively have a population of almost 230 million, with a growing middle class and purchasing power. They offer opportunities for Singapore companies across several areas, including technology and digital economy, infrastructure, and maritime, MTI said.
It noted that the PA-Singapore Free Trade Agreement (PASFTA) included a chapter on international maritime transport services, marking the first time the sector was included in a Singapore FTA.
Amongst the key benefits of the multilateral agreement is the removal of tariffs for the majority of tariff lines. With Colombia, for instance, the pact would reduce or remove tariffs on 85.7% of tariff lines, MTI said. It added that Singapore companies also would have access to Colombia's government procurement market.
in addition, the PASFTA would ease access to markets through "transparent and non-discriminatory rules" for developing technical regulations, said the Singapore ministry. These would include rules to facilitate the acceptance of results, by the respective agencies in the PASFTA partners, of conformity assessment procedures.
To drive e-commerce transactions, the five markets would not impose custom duties on electronic transmissions and would put in place safeguards to protect personal information. Companies that sell products with embedded software also would not be obliged to release their source codes.
Businesses also could benefit from more trade and investment opportunities, specifically, in sectors such as innovation, science, and technology, information and communications technology, as well as urban mobility infrastructure.
Singapore's Minister for Trade and Industry Gan Kim Yong said: "The PASFTA is a demonstration of Singapore and the Pacific Alliance's shared commitment to greater economic integration and a rules-based, multilateral trading system. The PASFTA will allow us to create more opportunities for our businesses and support good jobs for our people."
The pact will enter into force once Singapore and two PA member states have ratified the agreement, MTI said. It added that the new multilateral agreement would complement the country's existing FTAs with PA countries, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Trans-Pacific Economic Partnership (P4), and Peru-Singapore FTA.
Singapore this week signed an agreement with Colombia to establish stronger economic ties and closer collaboration between companies in both markets. In particular, the two nations would aim to business partnerships in key areas of technology and innovation, including artificial intelligence, blockchain, and Internet of Things, as well as infrastructure such as smart city and smart governance.