Rio de Janeiro, Dec 7 (EFE) – The Southern Cone Common Market (Mercosur) signed a free trade agreement with the Republic of Singapore on Thursday during its 63rd presidential summit in Rio de Janeiro, the first in its history with an Asia-Pacific country.
It is also the first extraterritorial agreement successfully concluded by the South American bloc, formed by Argentina, Brazil, Paraguay and Uruguay, since it signed a similar one with Palestine on Dec. 20, 2011.
The signing took place at the Museu do Amanhã in Rio, in the presence of the four presidents of the Mercosur countries: Luiz Inácio Lula da Silva (Brazil), Alberto Fernández (Argentina), Luis Lacalle Pou (Uruguay) and Santiago Peña (Paraguay).
The meeting was also attended by the President of Bolivia, Luis Arce, whose country became a full member on Wednesday.
Key points of agreement with Singapore
1. Five years of negotiations
Negotiations between Singapore and Mercosur began in 2018 and culminated in a text of 19 chapters in just five years.
An accelerated agreement compared to the more than two decades of dialogue still ongoing between Mercosur and the European Union.
The topics covered in the trade agreement include mobility of people, digital trade, intellectual property rights and transparency, among others.
The document, which still has to go through all internal legal procedures to come into force, commits to promoting trade for the benefit of “sustainable development in its economic, social and environmental dimensions.”
During Brazil’s six-month presidency, which ends Thursday, the Lula government requested and succeeded in modifying some sections sensitive to Mercosur, such as government purchases.
Singapore is one of the main destinations for Mercosur exports, with a trade flow between the two that amounted to about $10 billion in 2022, according to official data.
2. Import tariffs close to zero
Singapore, with a population of nearly six million, has committed to eliminating tariffs on “all exports from Mercosur.”
In return, the South Americans will eliminate 95.8% of the import duties currently borne by Singaporean products.
3. Investment incentives
The South American side estimates that the agreement can stimulate the attraction of investments from Singapore.
According to the United Nations Conference on Trade and Development, the island state was the third destination for foreign investment in 2022 and ranked eleventh in the world in terms of investors.
4. Cutting red tape
The parties also committed to simplify customs procedures to increase efficiency and reduce operational costs, which is crucial for the exchange of perishable goods.