SINGAPORE: After more than five years of negotiations, a deal on a comprehensive trade agreement that will connect Singapore to 11 other countries has been agreed upon, creating the world's largest free trade region. This was announced by trade ministers at a press conference in Atlanta, in the United States (US) on Monday (Oct 5).
The Trans-Pacific Partnership, or TPP, will give Singapore firms increased access to some of the world's largest economies, including the US and Japan. It will also help open new markets such as Canada and Mexico to Singapore as it does not have bilateral free trade agreements with these countries.
In a statement issued on Monday, the Ministry of Trade and Industry (MTI) said the TPP will put in place new and updated trade rules it described as "robust and balanced" to promote fair competition and good governance, encourage innovation and to grow the digital economy. This will create more opportunities and allow Singapore-based companies to operate in the region with greater ease and confidence, it added.
"The TPP embodies what Singapore sees as the future of the Asia Pacific," said Trade and Industry Minister Lim Hng Kiang. "It will transform the region by reducing tariff and non-tariff barriers substantially for both goods and services, encouraging greater investment, and addressing new trade challenges in the modern economy.
"The TPP has also been deliberately designed to be more inclusive, so that small and medium-sized enterprises can take full advantage of its benefits," he added.
The 12 countries that make up the TPP together account for 40 percent of the global economy. These countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.
INVESTORS CAN EXPECT MORE OPEN PLAYING FIELD: PM LEE
In a Facebook post on Tuesday morning, Prime Minister Lee Hsien Loong said he was "very pleased" that a deal on the TPP has been reached after more than five years of negotiations.
"This is a historic moment," he said.
"It covers twelve major economies in the Asia Pacific, including the US, Japan, Malaysia, Vietnam, Australia, Mexico and Peru. Our exporters will have better market access to these countries, and investors can expect a more open and level playing field," said PM Lee.
He added that the agreement would open up more opportunities for small and medium-sized enterprises in TPP countries, and make it easier for them to conduct business.
"My thanks to the US for their leadership, and to all our TPP partners for their hard work to bring these negotiations to a close. Hoping for a swift ratification of the agreement," PM Lee said.
TPP WILL BE "CATALYST FOR GROWTH"
The TPP countries represent a large market for Singapore businesses, with a population of 800 million and a combined GDP of around US$30 trillion, amounting to 40 per cent of global GDP.
In 2013, the TPP countries accounted for 30 per cent of Singapore’s total goods trade, worth S$300 billion, and 30 per cent of foreign direct investment in Singapore, amounting to S$240 billion, MTI said.
Speaking to Channel NewsAsia earlier on Monday, CEO of the Singapore Business Federation (SBF) Ho Meng Kit said agreement on the TPP will help boost economic growth.
"Growth has not recovered, it’s still below pre-financial crisis levels, so why is that? I think part of it is there are more barriers to trade and investment internationally. There are less conditions for trade, so structural reform needs to be done by many economies, so I think the TPP being a high standard trade agreement would be a catalyst for growth."
According to a joint statement issued by the Office of the United States Trade Representative, the parties involved will work on tying up remaining details and produce the final text for public review. Each country will also begin domestic approval processes to bring the TPP into force as soon as possible.