Ministry analyses benefits of 6 Asian FTAs
The Ministry of Development Strategies & International Trade, criticised by professional organisations over the recent Sri Lanka-Singapore Free Trade Agreement (FTA) and others planned with India and China, has prepared an analysis of 6 Asian FTAs, showing in each, the benefits to the recipient countries.
The Ministry, in a media release, has provided an overview of the performance of the ASEAN- China Free Trade Area of July 2005; the ASEAN- India FTA of January 1, 2010; China-Singapore FTA ( CSFTA) of January 1,2009; Japan-Singapore Economic Partnership Agreement ( JSEPA) of November 30, 2002; US- Singapore FTA of January 1, 2004; and the Vietnam-South Korea FTA of December 20, 2015.
In the case of the ASEANChina FT Area, the Ministry said that, over the past decade, trade and investment between ASEAN member States and China have expanded significantly.
Under the agreement, the 6 original ASEAN members and China decided to eliminate tariffs on 90% of their products, by 2010, while Cambodia, Lao PDR, Myanmar and Vietnam- commonly known as CLMV countries- had until 2015 to do so.
Since the signing of the agreement, China has consistently maintained its position as ASEAN’s largest trading partner, the Ministry release said.
The ASEAN-India Trade in Goods Agreement paved the way for the creation of one of the world’s largest FT Area market, creating opportunities for over 1.9 billion people in ASEAN and India, with a combined GDP of US$ 4.8 trillion.
“AIFTA creates a more liberal, facilitative market access, and investment regime among the member countries. The agreement set tariff liberalization of over 90% of products traded between the two dynamic regions,” the Ministry noted.
The CSFTA eliminated tariffs for about 95% of Singapore’s exports to China, and also ensured tariff-free import for most products.
The release said, more than 85% of Singapore’s exports to China have enjoyed zero-tariff rates and an additional 10% have been duty- free since January 1, 2010.
“China is Singapore's third largest export market and the largest source of imports. Singapore’s FTAs have been instrumental in helping Singapore- based businesses to strengthen cross-border trade by eliminating or reducing import tariff rates, providing preferential access to services sectors, easing investment rules, improving intellectual property regulations, and opening government procurement opportunities,” the release said.
In the case of the Japan-Singapore Economic Partnership Agreement, the Ministry said the Japanese market has always been a tough case for foreign exporters and firms, with its numerous barriers; tariff and non- tariff trade barriers, as well as institutional, cultural barriers, etc.
“As such, the liberalization measures brought about by this bilateral FTA are expected to have a significant positive impact on both export and import flows between the two countries,” it said.
"Since Singapore is a country with relatively few trade barriers in place, and Japan is taking on more of the trade barrier reductions in this FTA agreement, Singapore’s exports to Japan are expected to be more affected by the implementation of this FTA," the Ministry said, adding that “for Singapore’s exports to Japan, this agreement is predicted to have a reinforcing effect on the price elasticity of demand, based on the assumption that the trade liberalization measures will increase the responsiveness of export demand to variations in prices”.
The U.S .- Singapore FT A resulted in immediate zero tariff son all U.S. products, with the U.S. trade surplus with Singapore tripling during the first year of FTA implementation. .
The Ministry release said that, in the case of the Vietnam- South Korea FTA, bilateral trade between the two countries soared 87-fold, from $ 500 million in 1992, to $ 43.4 billion last year.
Last year, South Korea was the third largest trade partner ( after Hong Kong and mainland China) and the fourth largest export market for Vietnam. There are 6,130 FDI projects from South Korea in Vietnam, with total registered capital of $ 54 billion, according to the Ministry.
This FTA has created new export opportunities for more than 500 Vietnamese products, especially agro-forestry and aquatic products such as shrimp, crab and fish, the Ministry release added.