Singapore concludes FTA with MERCOSUR bloc

On 7 December 2023, Minister for Foreign Affairs Dr. Vivian Balakrishnan joined ministers from the four MERCOSUR countries - Argentina, Brazil, Paraguay and Uruguay - to sign a free trade agreement with the South American bloc (the MCSFTA).

The move was a logical one, given that the MERCOSUR bloc has a combined market of more than 272 million people, a combined GDP of USD 2.7 trillion, and is the recipient of almost half of Singapore's trade with Latin America, estimated at SGD 13.8 billion (USD 10.3 billion) by 2022. There are more than 100 Singaporean companies operating in MERCOSUR markets.

Some of the key points of the MCSFTA are:

Reduction of import tariffs
The MCSFTA will reduce import tariffs on approximately 96 % of products over 15 years, with 25 % of products receiving immediate tariff-free access.
Market access and transparency
The agreement will improve market access and promote transparency in customs procedures, competition law enforcement, cybersecurity and e-commerce.
Improvements in e-commerce
The MCSFTA will promote digital trade and paperless transactions, as well as improved online consumer protection.
Flexible rules of origin
Singaporean exporters will benefit from flexible rules of origin, allowing preferential import tariffs in MERCOSUR countries.
Government procurement
Singaporean and MERCOSUR companies will receive fair and non-discriminatory treatment when competing for government contracts in their respective markets.
Expanding the services sector
The FTA focuses on improving the business environment for R&D, construction and IT services.
Enhanced support for MSMEs
The agreement aims to promote the growth of micro, small and medium-sized enterprises in both regions through joint capacity building initiatives.

The agreement is just the latest in Singapore's efforts to expand international cooperation and trade through free trade agreements. To date, the small nation has built an extensive network of 27 implemented FTAs. In Latin America, Singapore has also signed an FTA with the Pacific Alliance, which consists of Peru, Colombia, Chile and Mexico.