Singapore last week joined the Pacific Alliance to form the Pacific Alliance-Singapore Free Trade Agreement (PASFTA), to strengthen economic integration of the countries involved.
Pacific Alliance is a trade pact between four Latin American countries formed in 2011 and owns the world's eighth-largest economy. Its signatories – Chile, Colombia, Mexico and Peru have a combined population of around 230mn people and a combined GDP of more than $2 trillion.
Singapore expects the FTA to create new opportunities and stimulate growth in the post-pandemic global economy. PASFTA is primarily expected by Singapore to enable greater market access and encourage trade flows to the Pacific Alliance's countries.
Singapore is also a member country of separate multilateral FTAs involving Chile, Mexico and Peru – namely the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Trans-Pacific Strategic Economic Partnership (TPSEP) and Digital Economy Partnership Agreement (DEPA). Singapore has a bilateral FTA with Peru. It has no existing trade agreement with Colombia.
Asian polyethylene and polypropylene producers are seeking new export markets amid growing concerns of overcapacity in Asia, with Latin America a hot spot for higher export netbacks. The PASFTA could drive Singapore's polymer exports to Chile, Colombia, Mexico and Peru, but details on goods' tariff elimination are unclear so far.
