Singapore-Pacific Alliance free trade agreement enters into force for Republic, Chile and Peru
Source: Straits Times
Article Date: 06 May 2025
Author: Ovais Subhani
The pact will give Singapore companies greater access to the Pacific Alliance countries – Chile, Colombia, Mexico and Peru – that are collectively deemed the world’s ninth-largest economy with a total population of 235 million.
A free trade agreement has entered into force for Singapore, Chile and Peru, three of the five partner countries in the Pacific Alliance-Singapore FTA (PASFTA), said Singapore’s Ministry of Trade and Industry (MTI) on May 5.
The pact will give Singapore companies greater access to the Pacific Alliance countries – Chile, Colombia, Mexico and Peru – that are collectively deemed the world’s ninth-largest economy with a total population of 235 million.
The PASFTA was signed on Jan 26, 2022. Singapore ratified the agreement in July 2022, and Peru in February 2023. Chile ratified the pact in March 2025, bringing the PASFTA into force for the three countries first.
The PASFTA will enter into force for Colombia and Mexico upon the completion of their ratification procedures.
The free trade pact will scrap most tariffs on goods traded between partner countries, and improve transparency and efficiency of Customs procedural processing.
Singapore service suppliers and investors will be treated as favourably as those from the Pacific Alliance. Also, Singapore firms will not be required to appoint individuals of any particular nationality to senior management.
The four countries of the Pacific Alliance have a combined gross domestic product (GDP) of more than US$2.7 trillion (S$3.5 trillion) in nominal terms, accounting for about 40 per cent of the total GDP of the Latin America and Caribbean region, according to the World Bank.
Singapore is already FTA partners with Chile and Mexico through the existing Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and with Peru through the CPTPP and the bilateral Peru-Singapore FTA.
MTI said Singapore’s bilateral trade with the Pacific Alliance in 2024 was $12.5 billion. Some top traded products include electric machinery, refined metal products, cocoa products, wine and seafood.
About 100 Singapore companies are already operating across the Pacific Alliance markets, mostly in sectors including technology and the digital economy, food trade, infrastructure, and port management and logistics.
Singapore’s Olam Food Ingredients (OFI) has established itself as a leading coffee exporter in the market. It sources high-quality beans directly from farmers in Colombia, Mexico and Peru for its global customer base.
Mr Manish Dhawan, OFI’s president of the coffee division, said his company sees clear benefits in the PASFTA helping it better serve high-quality sustainable ingredients to roasters and manufacturing customers worldwide.
He said the PASFTA is expected to reduce tariffs and export costs, provide a streamlined regulatory framework, simplify Customs procedures and enhance trade facilitation provisions.
“These changes are timely and will enable OFI to better support customers by navigating increasing tariff risks in the market today. Enhanced trade flows can also empower businesses like ours to scale investments in the region, and foster greater innovation,” said Mr Dhawan.
Experts believe increased access to relatively new markets will be critical for Singapore companies at a time when the world’s largest economy – the US – has turned hostile towards the global trading order it helped establish after World War II.
Amid the turmoil, Singapore has vowed to continue strengthening multilateralism and free trade, and seek new opportunities in less-explored markets for its businesses.
MTI said the PASFTA – Singapore’s 28th FTA – is a comprehensive agreement containing 25 chapters, including trade in goods, services and investment, small and medium-sized enterprises, good regulatory practices for trade and investment, and electronic commerce.
The PASFTA is Singapore’s first FTA with a chapter on international maritime transport services. This chapter aims to enhance physical connectivity between partner countries and facilitate the exchange of best practices and training opportunities.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction.
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