SINGAPORE – Singapore and South American trade bloc Mercosur have “substantively concluded” negotiations on a free trade agreement (FTA) that is expected to lower business costs, ease tariffs and facilitate new ways of doing business, such as through e-commerce.
The Mercosur-Singapore Free Trade Agreement (MCSFTA) will facilitate greater flows in investment, knowledge and innovation for people and enterprises, said the Ministry of Trade and Industry (MTI) on Thursday (July 21).
Singapore and Mercosur member states will now work towards the signing and ratification of the FTA to bring it into force expeditiously, it said.
Mercosur is a Latin American trade group comprising Argentina, Brazil, Paraguay, and Uruguay. It has a combined population of more than 295 million people and a gross domestic product of US$2.2 trillion (S$3.06 trillion).
Singapore’s trade with the bloc accounts for nearly half of its total trade with Latin America. Its goods trade with Mercosur countries amounted to $7.9 billion last year, while trade in services came up to $3 billion.
Its stock of direct investment abroad in Mercosur countries was $1.66 billion as at the end of last year. This refers to an investment where a Singapore entity owns at least 10 per cent of the voting power of an overseas enterprise.
The MCSFTA is the first trade deal between the bloc and Singapore and presents more opportunities for companies to trade and invest, said MTI.
Trade and Industry Minister Gan Kim Yong said the dynamics of international trade have shifted significantly since the FTA’s first round of negotiations in Buenos Aires, Argentina, in April 2019.
“There have been increasing tides against globalisation, tendencies towards protectionism, and supply chain uncertainties. Amid these trying times, the Mercosur member states and Singapore have persevered in building a strong trade architecture and staying plugged into global networks,” he said via videoconference on the sidelines of the Mercosur Summit in Paraguay on Wednesday.
There are more than 90 registered companies from the bloc’s countries here and nearly 70 overseas affiliates of Singapore businesses in Mercosur.
Singapore firms’ interests in Mercosur lie in the oil and gas, agribusiness, digital, manufacturing, hospitality, logistics and infrastructure sectors.
Local companies doing business with or in the bloc include lodging company Ascott, Changi Airports International, tech giant Sea Group, and agri-food giants Olam International and Wilmar International.
The MCSFTA can help such companies grow in Mercosur, reduce their business costs, and create more opportunities for them and other firms to enter the bloc’s markets.