FRIDAY, February 23, 2024

Singapore inks trade deal with Latin American bloc for trade boost

Singapore inks trade deal with Latin American bloc for trade boost

On December 8, Singapore entered into a landmark trade agreement with Argentina, Brazil, Paraguay, and Uruguay ( Mercosur ). This marks Singapore's inaugural trade pact with these member states and represents the bloc's first-ever agreement with a Southeast 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 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 the Mercosur-Singapore Free Trade Agreement (MCSFTA), is expected to engender entrepreneurship, speed up digitalisation, sustainable development, and food supply security while also helping small and medium-sized enterprises (SMEs) develop across the five economies.

Foreign 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.

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 Southeast Asia and South America, bringing our regions closer together.

Trade and Industry Minister 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.

Around 100 Singapore companies are operating in the Mercosur markets, in sectors such as oil and gas, agri-business, digital solutions, manufacturing, hospitality, logistics and infrastructure.

These include Ascott, Changi Airports International, Grupo Kaybee, PSA International, SEA Group, Olam International, Wilmar International and Sakura Tech.

Peter Koh, group chief executive of Oceanus Group, an agri-business company listed here, said the new agreement will not only facilitate more effective cross-border trade but also contribute to greater food-supply resilience.

“This is firmly aligned to our belief that a world of food without borders is a food-secure world,” he said.

Govind Karunakaran, chief executive of Grupo Kaybee, which trades products such as textiles, home furnishings and packaged food, said the company had been doing business with Latin America since the 1960s.

“We welcome the signing of the (trade deal) that will provide us with opportunities to grow further trade flows between the Mercosur countries and Singapore,” he said. 

Ovais Subhani

The Straits Times

Asia News Network