S'pore and South American trade bloc Mercosur conclude FTA talks

Singapore and South American trade bloc Mercosur have "substantively concluded" negotiations on a free trade agreement that is expected to lower business costs, ease tariffs and facilitate new ways of doing business.

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.

Singapore and Mercosur member states will now work towards the signing and ratification of the FTA to bring it into force expeditiously, it added.

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, 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 video conference from Singapore 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 there lie in the oil and gas, agribusiness, digital, manufacturing, hospitality, logistics and infrastructure sectors. The firms include lodging company Ascott, tech giant Sea Group, and agri-food giants Olam International and Wilmar International.

The comprehensive agreement includes commitments by Singapore and Mercosur to provide greater access to each other's markets through lower tariff rates on products traded, enhanced market access for services that companies provide, and opportunities for firms to access government procurement projects.

Minister of State for Trade and Industry Alvin Tan said Singapore companies will benefit from simplified trade procedures, fair competition and investor protection.

"This will create good jobs for our people," he wrote in a Facebook post on Thursday.

A Singapore Logistics Association (SLA) spokesman said the deal might help local firms seize more opportunities in the transport of commodities and agricultural products in the bloc.

For example, Singapore agri-food giants have a presence in the bloc which logistics companies can tap. Brazil is also a key supplier of chicken to the city-state.

"Combined with other FTAs in Asia, we hope companies here can have opportunities to be connectors for this side of the world," said the SLA spokesman.

The agreement will also contain cooperation initiatives in a wide range of areas, including competition policy; micro, small and medium-sized enterprises; and intellectual property rights.

MTI said: "Notably, the parties to the MCSFTA will encourage greater transparency in Customs procedures and the exchange of information on the simplification of Customs procedures, with a view towards facilitating trade.

"These measures will benefit businesses by expediting the clearance of goods."

The FTA will also promote collaboration between governments in helping micro, small and medium-sized enterprises internationalise and develop entrepreneurial skills.

The latest trade pact follows an agreement struck in May between Singapore and the Pacific Alliance of Chile, Colombia, Mexico and Peru to strengthen economic ties.