Singapore’s Free Trade Agreements

Singapore is a relatively small country with a population of less than six million, however it is also one of the world’s most developed and thriving economies. Its economy is characterized by strong trade, finance, and manufacturing sectors. Singapore is among the countries leading the shift to Industry 4.0, due to its focus on innovation and technology, advanced high-tech industries, and strategic ecosystem support.

One of the important factors contributing to the strength of Singapore’s economy, next to its favourable geographical position, educated and skilled workforce, and efficient public policies, is its remarkably developed network of free trade agreements (FTAs). Numbering 27 implemented agreements, Singapore as of the moment has one of the most extensive networks of FTAs in the world. Free trade agreements significantly facilitate investments and trade in goods and services between countries and regions.

Free Trade Agreement Benefits

Due to FTAs, Singapore-based exporters and investors can enjoy numerous benefits including:

• Export tariff reductions: on average, FTAs allow for 80-100% reductions on export tariff for goods and services originating Singapore, including in some cases machined components, medical components, engineering and development, and manufacturing services, as specified in the agreement;
• Simplified trade procedures: with easier access to information and reduced required paperwork;
• Expedited export procedures: relating to customs clearance and release of goods;
• Easier access to foreign markets and fair operating environment: by elimination of regulations that restrict market access or provide favourable treatment to domestic firms;
• Enhanced safeguarding of Intellectual Property rights.

Most Important of Singapore’s FTAs

Singapore’s FTAs encompass numerous countries and regions, including the worlds’ major economies and its biggest investors and trading partners like the United States, European Union the UK, Japan, China, Australia, India, and others.

Regional Free Trade Agreements

European Union-Singapore Free Trade Agreement (EUSFTA)

European Union is the world’s largest single market with over 500 million consumers. For EU partners, the benefits of EUSFTA include the elimination of 84% of all tariffs for exports to the EU originating Singapore, including for electronics. Singapore exporters will have lower operational costs due to streamlined testing and certification procedures, along with reductions in non-tariff barriers across key sectors such as electronics, motor vehicles and parts, pharmaceuticals and medical devices, and renewable energy generation equipment.

European Free Trade Area (EFTA) – Singapore Free Trade Agreement (ESFTA)

European Free Trade Area (EFTA) includes four European countries: Iceland, Switzerland, Liechtenstein and Norway. ESFTA eliminates tariffs for 99.8% of Singapore exports to EFTA members, including engineering and research and development services.

ASEAN Agreements

Singapore actively participates in regional economic integration initiatives. One of them is the Association of Southeast Asian Nations (ASEAN) gathering Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Singapore benefits from FTAs within the ASEAN framework. These agreements enhance trade among ASEAN member states and with external partners.

Regional Comprehensive Economic Partnership (RCEP)

Regional Comprehensive Economic Partnership (RCEP) is one of the largest free trade agreements in the world. It comprises about one third of world population and 30% of global GDP, encompassing 15 countries: next to ASEAN member states there are China, Japan, South Korea, Australia, and New Zealand.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

The CPTPP is an FTA between 11 countries: Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. This FTA eliminates import tariffs even for Mexico and Canada, which Singapore has no trade agreement with.

Gulf Cooperation Council – Singapore Free Trade Agreement (GSFTA)

This is a free trade agreement between Singapore and the GCC countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates. Singapore is the first Asian country to sign an FTA with the Gulf Cooperation Council (GCC). This FTA eliminates tariffs on approximately 98.6% of Singapore’s originating exports to all the GCC countries, including the following sectors: electronics equipment, telecommunications, jewelry, iron and steel-related industries.

Bilateral FTAs

Singapore also has bilateral FTAs with countries beyond the ASEAN region, including its largest partners for trade in services – the US, the EU-27, China, Japan and Australia. The most notable examples include:

• China-Singapore Free Trade Agreement (CSFTA)
• Japan-Singapore New-Age Economic Partnership Agreement (JSEPA)
• US-Singapore Free Trade Agreement (USSFTA)
• Singapore-Australia Free Trade Agreement (SAFTA)
• United Kingdom-Singapore Free Trade Agreement (UKSFTA)
• India-Singapore Comprehensive Economic Cooperation Agreement (CECA)
• Korea-Singapore Free Trade Agreement (KSFTA)
• Turkey-Singapore Free Trade Agreement (TRSFTA)

The Importance of Free trade Agreements for Singapore and its Partners

At Team-Metal, we are pleased to be able to establish and nurture fruitful and mutually beneficial collaboration with many foreign partners thanks to the benefits of different free trade agreements, and offer our manufacturing and product design and development services to global leading OEMs from the medical, life sciences, analytics and other industries.

Free Trade Agreements (FTAs) serve as vital instruments not only for Singapore’s economic prosperity but also for its foreign partners. Through these agreements, foreign partners gain access to Singapore’s dynamic market of goods and services with reduced trade barriers, streamlined regulations, and enhanced protection of their intellectual property rights. Next to being a global leader in manufacturing and technology, FTAs contribute significantly to Singapore’s competitiveness and its reputation as a global trade hub and an attractive destination for business investment and innovation.

Resources:
https://www.singstat.gov.sg
https://www.singstat.gov.sg/modules/infographics/economy
https://www.mti.gov.sg/Trade/Free-Trade-Agreements
https://www.enterprisesg.gov.sg/grow-your-business/go-global/international-agreements/free-trade-agreements