Singapore marked a significant milestone in its trade relations by signing a groundbreaking free trade agreement (FTA) with four South American countries – Argentina, Brazil, Paraguay, and Uruguay, collectively known as Mercosur. This agreement, signed on December 8, 2023, is Singapore’s first trade pact with these states and represents Mercosur’s first such deal with a Southeast Asian nation.
This FTA comes after Singapore’s earlier engagement with Latin America, where in January 2022, it signed an FTA with the Pacific Alliance, an economic bloc comprising Chile, Colombia, Mexico, and Peru. The latest agreement with Mercosur is set to enhance trade by lowering tariffs and establishing transparent investment conditions, as highlighted by Singapore’s Ministry of Foreign Affairs and Ministry of Trade and Industry.
A key focus of the Mercosur-Singapore Free Trade Agreement (MCSFTA) is to facilitate trade flows through simplified export and import procedures, thus promoting trade facilitation. Beyond just trade, the pact aims to encourage entrepreneurship, accelerate digitalisation, and support sustainable development and food supply security. It also holds significant promise for the development of small and medium-sized enterprises (SMEs) across the five economies involved.
Mercosur stands as the eighth-largest economy in the world, boasting a combined gross domestic product of USD 2.7 trillion and a market of 272 million people. The trade relations between Singapore and Mercosur are substantial, with merchandise trade in 2022 accounting for 45%, or USD 13.8 billion, of Singapore’s total trade with the 33 independent economies in Latin America. Additionally, trade in services in 2021 made up 40%, or USD 7.6 billion, of the total trade volume.
This FTA is a strategic move for Singapore, positioning it as a key trading partner in Southeast Asia for the Mercosur nations. It underscores Singapore’s continued commitment to expanding its global trade network and enhancing economic collaboration with diverse regions worldwide.
(Sources: Ministry of Foreign Affairs; The Straits Times)
