Mercosur-Singapore FTA to boost trade

THE conclusion of negotiations for a free trade agreement (FTA) between Singapore and Brazil and its Mercosur partners in July this year is indeed a big milestone, which will contribute to further enhancing the Brazil-Singapore bilateral trade relationship, says Brazil’s Ambassador to Singapore Eugenia Barthelmess.

‘‘The Mercosur-Singapore Free Trade Agreement (MCSFTA) will ease reciprocal access to markets, improving competitiveness and productivity in our countries through the attraction of investments, trade facilitation and customs cooperation. As the economy which is responsible for half of the total gross domestic product of South America, Brazil is an attractive and fundamental player in any trade relationship or arrangement,’’ she tells The Business Times (BT) on the occasion of her country’s national day on Sep 7.

‘‘Singapore is one of the most developed global societies and a central economic actor in South-east Asia and beyond. Once in force, the FTA between Singapore and the Mercosur countries will play an important part in helping both Singapore and Brazil to fulfil the vast economic potential of our relationship,’’ the Brazilian envoy adds.

Singapore’s Minister for Trade and Industry Gan Kim Yong and Minister of State for Trade and Industry Alvin Tan participated, through videoconference, in the Mercosur Summit 2022 held in Paraguay, where the conclusion of negotiations was announced. Negotiations for the FTA were launched in 2018. In spite of the pandemic situation, a total of 6 negotiating rounds took place, both virtually and after Covid-19 restrictions started being eased, at in-person meetings in the 2 hemispheres, the ambassador tells BT.

Gan said: “The MCSFTA is built upon our mutual interest to connect more and grow together. It signals Singapore’s strong commitment towards deepening trade and investment ties with our Latin American partners. As Singapore’s first trade agreement with the Mercosur member states, the MCFSTA will secure market access and holds promising opportunities for Singapore businesses. We look forward to the expeditious signing of the agreement and its entry into force.”

MTI says that the MCSFTA is a comprehensive agreement with 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 companies to access government procurement projects. Singapore companies in sectors such as oil and gas, agribusiness, digital, manufacturing, hospitality, logistics and infrastructure, can benefit from simplified trade procedures, fair competition, and investor protection.

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The MCSFTA will facilitate greater flows in investment, knowledge and innovation for people and enterprises. Beyond direct economic benefits, the MCSFTA will include cooperation initiatives that facilitate institutional linkages and capacity building efforts, adds MTI.

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. In 2021, Singapore’s total trade in goods with the Mercosur countries amounted to S$7.9 billion, while trade in services amounted to S$3 billion. Singapore’s stock of direct investment abroad in the Mercosur countries was S$1.66 billion as at end-2021.

As the first trade deal between Mercosur and Singapore, the MCSFTA is a stepping stone to broader and deeper engagement between the 2 regions, and presents more opportunities for companies to trade and invest. Singapore and Mercosur member states will now work towards the signing and ratification of the FTA to bring it into force expeditiously.

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Looking ahead, Ambassador Barthelmess says that while her country is already a major supplier of meat to Singapore, exports of Brazilian meat to the Republic can be increased further, as is the case for other Brazilian agriculture goods. Fruits, vegetables, nuts, sesame, beans, honey, coffee, sugar, corn, soybean are just some of the additional products in which Brazil has a practically unlimited export capacity.

‘‘Singapore Food Agency reports that, in 2021, Brazil provided 58 per cent of beef, 48 per cent of poultry and 39 per cent of pork consumed in Singapore. In his last National Day Rally speech, on Aug 21, Prime Minister Lee Hsien Loong referred to Brazil’s contribution to Singapore’s stock of frozen chicken when Malaysia stopped exporting live chickens to the local market. Brazil takes pride in being among the main providers of poultry, beef and pork to Singaporean consumers, thus playing a key role in Singapore’s food security strategy,’’ she adds.

‘‘Throughout the Covid-19 pandemic, Brazil has shown itself to be a reliable partner, both to Singapore and to its customers in more than 100 countries, through a steady supply of food products and a remarkable capability of increasing production.’’

‘‘Moreover, the fact that Singapore is an important trade hub in its region is an incentive to Brazilian exporters to increase cooperation with local operators with a view to going beyond supplying the local market with high-quality agribusiness goods and tapping into other South-east Asian markets through Singapore,’’ the Brazilian envoy tells BT.

Brazil is one of the biggest global agricultural exporters, a true agricultural powerhouse that provides food for more than 700 million people – around 10 per cent of the world population – and is willing to participate even more in world agricultural trade through the sustainable intensification of its crops, she adds.