When the US launched a raft of tariffs in April, it roiled financial markets and threw international trade into turmoil. Singapore received a 10% base tariff. But we sprang into action quickly.
The government has been engaging the US to negotiate trade concessions. It has also set up a taskforce to help Singaporean businesses and workers navigate the uncertainties triggered by the tariffs.
For each successive PAP governments, the interests of Singapore and its people have always come first.
This belief was what drove Singapore to buck the trend in its early years. Instead of leaning towards protectionism, we opened our economy, built strong multilateral ties and stayed connected to the world.
Such an approach has helped us grow, prosper, and has uplifted millions of Singaporeans.
That is something we continue to do today, and one of the ways we do so is by pursuing a growing network of Free Trade Agreements (FTA).
Why Free Trade Agreements matter so much to Singapore
In an era of growing protectionism and global turmoil, FTAs have become a lifeline to Singapore’s continued survival and growth.
Through FTAs, Singapore has been able to diversify its trade and supply chains. Local businesses, especially SMEs, also benefit from lower barriers of entry, including reduced or no tariffs when exporting to other countries.
Rather than serving a limited domestic market, our network of FTAs helps our Singaporean SMEs export to a much larger international market of consumers.
It is a virtuous cycle. When new trade partners join our FTA network, the value of our existing FTAs increases as the benefits apply to a larger market, said Minister for Trade and Industry Gan Kim Yong. That enhances Singapore’s attractiveness as a trade and investment hub.
Nearly 8 years since negotiations began, the Pacific Alliance-Singapore Free Trade Agreement (PASFTA) came into force on May 3. It is also Singapore’s 28th FTA.
Speaking at the PASFTA networking reception, Minister of State for Trade and Industry Alvin Tan said that the FTA will help Singaporean businesses access new markets and opportunities.
The Pacific Alliance, comprising Chile, Peru, Colombia and Mexico, is the 9th largest economy in the world.
FTAs help “foster an environment of predictability and fairness”, said Mr Tan. That is crucial for investors and businesses to make decisions, operate with confidence, and thrive.
Just as Singapore SMEs benefit from exporting to other countries, Singaporeans benefit as well. Since 2016, total tariff savings have more than doubled to exceed S$1bn. With the PASFTA in force, Singaporeans will stand to benefit with greater access and cost savings
on Latin American imports such as wine, chocolates, and avocados.
As Minister Ong Ye Kung once said, “We could not have advanced the welfare of Singaporeans to the degree we have without FTAs.”
A world leader in digital trade
As a small nation, trade is the lifeblood of Singapore. That is why we not only strengthen trade relations. We drive innovation in the field to stay competitive.
In 2020, Singapore signed the Digital Economy Partnership Agreement (DEPA) with Chile and New Zealand. Coming at a time when the fourth industrial revolution is well underway, DEPA was a first-of-its-kind agreement.
The digital-only trade agreement does not focus on tariffs or goods. Instead, it sets common standards for the digital economy, helping businesses trade seamlessly in the digital sphere and cooperate on areas such as AI and FinTech.
The goal is to make it faster, safer and cheaper for SMEs to access the digital economy.
Since DEPA, Singapore has signed Digital Economy Agreements with Australia, the UK, Korea and most recently, the European Union (EU).
The EU-Singapore Digital Trade Agreement (EUSDTA) will unlock new opportunities for our businesses and citizens in digital trade, said Minister-in-charge of Trade Relations Grace Fu.
Over the years, Singapore’s digital economy has experienced robust growth. In 2023, the digital economy contributed S$113 billion or 17.7% of the country’s Gross Domestic Product (GDP), growing the pool of tech jobs that are particularly sought after by young people.
Building a forward looking and open Singapore
Singapore became a free trading port in 1819. Since then, goods and ideas have flowed freely, allowing Singapore to prosper and punch above its weight.
Despite being a tiny island state, Singapore is a hub for innovation, finance and logistics. It is also a global leader in digital trade.
This exceptionalism is what the PAP government intends to build upon to lead Singapore forward. We develop global partnerships, encouraging openness and innovation. We grow the pie to benefit Singapore, bringing jobs and prosperity to the country and uplifting all Singaporeans.
Singapore’s openness to the world is our superpower, and the reason behind our success.
