Free trade agreement between Singapore and Pacific Alliance enters into force for 3 countries
SINGAPORE: A free trade agreement (FTA) between Singapore and the Pacific Alliance came into force on Saturday (May 3) for three countries, the Ministry of Trade and Industry (MTI) said on Monday.
The Pacific Alliance is a Latin American trade bloc comprising Chile, Colombia, Mexico and Peru.
The FTA for Singapore, Peru and Chile was entered into force first, while Colombia and Mexico undergo their ratification processes.
Combined, the Pacific Alliance represents the ninth-largest economy in the world, with a total population of 235 million.
The agreement was signed in January 2022 by Singapore's Minister for Trade and Industry Gan Kim Yong and his counterparts from the Pacific Alliance member states.
Singapore and Peru ratified the agreement in July 2022 and February 2023 respectively. It was ratified by Chile on Mar 4, bringing the agreement into force.
This is Singapore's 28th free trade agreement.
Singapore's bilateral trade with the Pacific Alliance in 2024 was S$12.5 billion (US$9.6 billion), accounting for more than a third of Singapore's total trade with the Latin American and Caribbean region.
The top traded products include electric machinery, refined metal products, cocoa products, wine and seafood.
There are also about 100 Singapore companies operating in the Pacific Alliance's markets, in sectors such as technology and the digital economy, food trade, infrastructure as well as port management and logistics.
It is the first FTA between Singapore and Colombia. Singapore is already FTA partners with Chile and Mexico through the existing Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and with Peru through the CPTPP and the bilateral Peru-Singapore FTA.
KEY BENEFITS
Countries under the agreement will not impose tariffs on each other's goods on most tariff lines.
Colombia, in particular, will reduce or eliminate tariffs on 85.7 per cent of tariff lines after it ratifies the agreement.
Businesses can also use materials from any member country to contribute towards a good's originating status, making it easier for their exports to qualify for preferential tariff treatment, under certain conditions.
Singapore service providers can enjoy lower operating costs as they need not establish or maintain a local representative office in the Pacific Alliance for sectors which have been committed to liberalisation.
They will also have preferential market access in legal, construction and tax advisory services. Singapore companies can also bid for the Pacific Alliance's government procurement projects.
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