Singapore forms new Free Trade Agreement with Pacific Alliance with aim to achieve high-quality business partnerships

This agreement establishes a modern, high-quality and mutually beneficial economic partnership that seeks to cater to today’s business needs and contemporary realities.

The Pacific Alliance - Singapore Free Trade Agreement (PASFTA) has entered into the force effective 3 May 2025, for Singapore, Chile, and Peru. As shared by Ministry of Trade and Industry, this is Singapore’s 28th FTA.

This new agreement establishes a modern, high-quality and mutually beneficial economic partnership that aims to cater to today’s business needs and contemporary realities.

The Pacific Alliance (PA), which comprises Chile, Colombia, Mexico, and Peru, was established in 2012, compromising trade blocs from Chile, Colombia, Mexico, and Peru representing the nineth largest economy in the world with a population totaling to 235mn.

Approximately 100 Singapore companies are operating across the PA markets and are currently FTA partners with Chile and Mexico through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Additionally, the country is also a partner with Peru through the CPTPP and the bilateral Peru-Singapore FTA.

The key benefits of PASFTA include:

1. Trade in goods

• Tariff elimination on the majority of the tariff lines.
• Improved transparency and smoother customs processing procedures.
• Materials from another party can contribute towards the originating status of a good produced to qualify for preferential tariffs more easily.
• Transparent and non-discriminatory rules for developing technical regulations and sufficient time given to businesses to meet new technical regulation.

2. Trade in services and investments

• Singapore service suppliers and investors are treated as favourably as those in PA.
• Singapore companies operating in the PA need not appoint individuals of any particular nationality to senior management.
• Singapore service providers need not establish or maintain a local representative office in the PA for sectors which have been committed.

3. Trade in services

• Singapore service suppliers have preferential market access in legal services, construction services and tax advisory services/
• Government procurement opportunities
• Singapore companies can bid for PA’s government procurement projects.

4. E-commerce

• No customs duties on electronic transmissions.
• Companies selling products with embedded software are not obliged to release their source code.

5. International maritime transport services

• Cooperation in maritime activities with the removal of barriers to the supply of maritime transport services.

In 2024, Singapore’s bilateral trade with PA was S$12.5bn with top traded products including electric machinery, refined metal products, cocoa products, wine and seafood.

READ MORE: NTUC’s e2i launches 'SMARTER' initiative aiming to boost career support for senior PMETs