SINGAPORE (The Straits Times/Asia News Network): A free trade agreement struck on Wednesday (Jan 26) between Singapore and a bloc of countries consisting of Chile, Colombia, Mexico and Peru is set to give the Republic greater access to what is collectively the world's eighth largest economy, scrapping most tariffs on goods and allowing local companies to bid for government projects in the Americas.
The Pacific Alliance-Singapore Free Trade Agreement, or Pasfta, is Singapore's first direct FTA with the Pacific Alliance, a bloc with a combined gross domestic product of more than $2.6 trillion.
It caps off negotiations that lasted more than four years, and is the first to be completed while the Pacific Alliance continues similar discussions with Australia, Canada, Japan and New Zealand.
Hailing the successful completion of the talks, Prime Minister Lee Hsien Loong said in pre-recorded remarks for the 16th Pacific Alliance Summit on Wednesday: "This is a landmark moment in Singapore's partnership with the Pacific Alliance. Our two regions are in fact more connected than people imagine.
"Let us encourage our businesses and our peoples to take advantage of this enhanced relationship to explore opportunities in each other's regions."
More than 100 Singapore companies currently operate in the Pacific Alliance, including e-commerce platform Shopee and high-tech software company Taiger.
Imports from the bloc include avocados from Mexico and blueberries from Peru. In return, Singapore has exported machinery and minerals to Peru, turbo jets and gas turbines to Chile and vehicle parts to Colombia.
The 25-chapter FTA seeks to create more opportunities for greater exchange, with agricultural trade, technology and infrastructure identified as possible areas of growth.
Under its current form, goods will be more smoothly processed at customs and Singapore service providers and investors treated as favourably as those from the bloc in Pacific Alliance countries.
Both Singapore and Pacific Alliance member states will also have to publish their government projects in a timely and non-discriminatory way so that suppliers can submit a bid with enough time for preparation. Investors and business visitors can enter countries in the Pacific Alliance for 30 days.
If ratified by all parties, the agreement is expected to have its most dramatic impact in exchanges between Singapore and Colombia, with which Singapore currently has no FTA.
Some 85.7 per cent of tariff lines the nation of 50.8 million people now has on Singapore goods will either be reduced or eliminated, the Ministry of Trade and Industry (MTI) has estimated.
Lee said he hopes the agreement will also encourage more Pacific Alliance businesses to come here.
They can use Singapore as a hub to explore economic opportunities in the region, he said, following precedents set by Colombian petrol company Ecopetrol, Mexican building materials supplier Cemex and Chilean mining company Codelco.
"Like the galleons that sailed across the Pacific and sustained trade between Asia and Latin America (500 years ago), the Pasfta will propel greater cross-Pacific links and grow our partnership further," Lee said.
"It demonstrates our shared commitment to improve the lives of people in both our regions."