SINGAPORE – Singapore signed a ground-breaking free trade agreement with four South American nations on Dec 8.
The deal with Argentina, Brazil, Paraguay and Uruguay – a group known by the Spanish acronym Mercosur – is Singapore’s first trade pact with these states and the bloc’s first such deal with a South-east Asian nation.
The agreement aims to facilitate greater trade flows through lowered tariffs and by establishing transparent investment conditions, noted Singapore’s Ministry of Foreign Affairs and the Ministry of Trade and Industry.
It will also foster cooperation in areas such as trade facilitation – a process that simplifies export and import procedures.
The pact – known as MCSFTA – is expected to engender entrepreneurship, speed up digitalisation, sustainable development, and food supply security while also helping small and medium enterprises (SMEs) develop across the five economies.
Foreign Affairs Minister Vivian Balakrishnan and ministers from the four Mercosur members signed the agreement at the 63rd Summit of Heads of State of Mercosur and Associate States in Rio de Janeiro, Brazil.
Mr Alvin Tan, the Minister of State for Trade and Industry was also at the event.
The five countries will now work on their domestic ratification processes to bring the new deal into force.
Dr Balakrishnan said: “This signing comes after more than four years of intensive negotiations. The MCSFTA creates a new bridge between South-east Asia and South America, bringing our regions closer together.
Trade and Industry Minster Gan Kim Yong – who was not at the Summit – added that the pact “strengthens Singapore’s growing trade-enabling architecture with Latin America”.
He noted that it will lower business costs for firms here, ease tariff and regulatory barriers and open doors to new business opportunities, such as in e-commerce, agri-trade and government procurement.
Mercosur collectively represents the eighth largest economy in the world, with a combined gross domestic product of US$2.7 trillion ($3.6 trillion) and a market of 272 million people.
Merchandise trade between Singapore and Mercosur in 2022 accounted for 45 per cent, or $13.8 billion, of Singapore’s total trade with the 33 independent economies in the Latin American region, while trade in services in 2021 accounted for 40 per cent, or $7.6 billion.