07 Jul Singapore and the Pacific Alliance’s Cooperation: Remaining Open to Business
Singapore and the Pacific Alliance (PA), a Latin American trade bloc, are preparing to sign a free trade agreement by the end of 2021. Bilateral trade between the two parties has grown by almost 50 per cent since 2010. In 2019, Singapore’s total trade in goods with the PA stood at SG$6.1 billion. This accounted for 33.2 per cent of the country’s total merchandise trade with Latin America. Comprising Chile, Columbia, Mexico and Peru, the PA is the world’s 8th largest economy, accounting for 52 per cent of Latin America and the Caribbean’s total trade. The PA also attracts 45 per cent of investments that flow into the region. Once the FTA is signed, Singapore will become the PA’s first Associate member.
The PA Embassies in Singapore, Singapore’s Ministry of Trade and Industry (MTI), and the Lee Kuan Yew School of Public Policy (LKYSPP) held a virtual seminar on 29 June 2021 to commemorate the Alliance’s 10th anniversary. Titled “Pacific Alliance and Singapore: Partners in Globalisation”, the seminar explored the value of the two parties remaining open to integration despite growing protectionist trends and pandemic pressures.
The Need to Remain Connected
Minister of State for Trade and Industry and Culture, Community and Youth, Mr Alvin Tan, addressed the key benefits of the PA-Singapore relationship. Singapore’s exports can rely on the Alliance as a base to expand into the Latin American market, while businesses from countries within the Alliance can look to Singapore as a reliable node for competing in the wider Southeast Asian region. Additionally, Singaporean investors will be gaining access to a new market – Colombia, as this will be our first FTA with the country.
Speaking at the same event, Associate Professor Simon Tay, Chairman of the SIIA, shared his hopes that the PA-Singapore relationship continues to foster more hub-to-hub connections. This is critical as countries, other than the major powers, need to maintain the global trade system.
However, it is important to remember the context in which these efforts will evolve. Firstly, the discontent with globalisation’s disadvantages. Concerns on the neglect of environmental and labour rights have only grown stronger within the last two decades. The “America-first” mentality, and eventually the pandemic, dealt more blows on the belief that cooperation brings collective security. “It is possible that we will come out of the pandemic not more integrated, not better, but more narrow, more guarded, and poorer for it,” Prof. Tay cautioned. For Singapore and the PA, the integration will need to be coupled with energy spent persuading people on the value of staying open and connected
FTAs Need to Look Beyond Trade
Sino-American trade tensions have threatened the World Trade Organisation’s rules-based order, and the pandemic has restricted human to human connection. ASEAN has been exploring more resilient methods of cooperation. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) are key examples of ASEAN leadership in economic integration during a time of crisis. Additionally, the determinants of economic integration have expanded beyond tariff reductions to include non-tariff measures.
The PA agreements have pioneered a more complex form of economic cooperation, where attention is also spent on non-trade issues such as digital connectivity and socio-economic concerns. There is a need for Singapore to align and adopt such holistic approach and view issues such as climate, gender, and labour concerns as integral to the FTA negotiation process. In this way, fears of socio-economic disadvantages can be addressed, creating opportunities for better and stronger outcomes.