8-12-2023 (SINGAPORE) Singapore has inked a groundbreaking free trade agreement with four South American nations – Argentina, Brazil, Paraguay, and Uruguay, collectively known as Mercosur. This marks Singapore’s first trade pact with these states and the bloc’s inaugural such agreement with a Southeast Asian nation.
The agreement, officially named the Mercosur-Singapore Free Trade Agreement (MCSFTA), aims to enhance trade by reducing tariffs and establishing transparent investment conditions. Singapore’s Ministry of Foreign Affairs and the Ministry of Trade and Industry highlight its potential to promote cooperation in trade facilitation, simplifying export and import processes.
Signed at the 63rd Summit of Heads of State of Mercosur and Associate States in Rio de Janeiro, Brazil, the agreement involves Foreign Affairs Minister Vivian Balakrishnan and ministers from the four Mercosur nations. Minister of State for Trade and Industry, Alvin Tan, was also present at the signing.
The comprehensive deal, a result of over four years of negotiations, is expected to stimulate entrepreneurship, accelerate digitalization, encourage sustainable development, and bolster food supply security. Additionally, it aims to provide support for the development of small and medium enterprises (SMEs) across the five economies.
Dr. Balakrishnan stated, “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 present at the summit, emphasized that the pact strengthens Singapore’s trade-enabling ties with Latin America. He highlighted its potential to reduce business costs, ease tariff and regulatory barriers, and open doors to new opportunities in areas such as e-commerce, agri-trade, and government procurement.
The signing signifies a major milestone as Mercosur collectively represents the eighth-largest economy globally, boasting a combined GDP of US$2.7 trillion and a market of 272 million people. In 2022, merchandise trade between Singapore and Mercosur accounted for 45% ($13.8 billion) of Singapore’s total trade with the Latin American region. Trade in services in 2021 contributed 40% ($7.6 billion).
Approximately 100 Singaporean companies operate in Mercosur markets, spanning sectors like oil and gas, agri-business, digital solutions, manufacturing, hospitality, logistics, and infrastructure. Prominent names include Ascott, Changi Airports International, Grupo Kaybee, PSA International, SEA Group, Olam International, Wilmar International, and Sakura Tech.
Industry leaders, such as Peter Koh, Group Chief Executive of Oceanus Group, anticipate that the agreement will not only facilitate more effective cross-border trade but also contribute to greater food-supply resilience. Govind Karunakaran, Chief Executive of Grupo Kaybee, emphasized the long-standing business relationship between his company and Latin America, welcoming the trade deal as an opportunity to further enhance trade flows between Mercosur countries and Singapore.
