- POSTED: 06 Aug 2014 20:35
- UPDATED: 06 Aug 2014 23:02
Singapore will see import costs reduced by two per cent or more over five years if a global Trade Facilitation Agreement is sealed - that is the conservative estimate by economic research firm IHS. However, the agreement is hanging in the balance due to India's refusal to ratify the pact.
SINGAPORE: Getting over 150 countries to agree on a global trade pact was always going to be a challenge - and in guarding its food subsidy policies, India has rebuffed the World Trade Organisation's attempts to lock down its proposed Trade Facilitation Agreement.
The deal would have reduced red-tape in cross-border trade by simplifying customs and procedures, translating to savings for members of the global trade body, of which Singapore is a member.
There is a glimmer of hope though - India has said that it is open to some form of compromise. There is a possibility that the deal could be sealed before 2014 is over. However, that means there is more bargaining to be done, and not everyone is confident that a consensus can be reached.
If the deadlock is broken, it could mean US$1 trillion and 21 million new jobs added to the global economy - good news for trade-dependent Singapore. It also potentially means cheaper imported goods due to smoother customs, and the deal can also help cushion the impact of inflation and reduce business costs.
Mr Rajiv Biswas, Senior Director and Asia-Pacific Chief Economist at IHS, said: "For businesses such as manufacturing, it helps to reduce the cost of imports for their manufacturers. So it does provide quite a big benefit to the corporate sector in terms of manufacturing and other users of imported raw materials. Also, we should remember that there's probably benefits on the export side as well, because exports also will become more competitive globally."
At the very least, experts said Singapore's pragmatic strategy of pursuing bilateral and regional agreements will keep the free trade momentum going.
Associate Professor Shandre Thangavelu, Regional Director of Southeast Asia at the University of Adelaide's Institute of International Trade, said: "We're opening up pockets and then trying to bring these pockets all together. And which basically means that progressively, we are becoming more open. Progressively, the region is becoming more open. Progressively, the global economy is becoming more open - that is what the bottom-up kind of approach is."
But experts agree that the process will be smoother-sailing if all of the more-than 150 countries can get their act together and agree on one deal.