SINGAPORE, Nov 30: The Japan-Singapore free trade agreement (FTA), which opens up trade and investment between the two countries, but excludes the sensitive issue of agriculture, came into effect on Saturday, the foreign ministry here said.
Under the economic partnership, 99 per cent of bilateral trade, or 94 per cent of Singapore’s exports to Japan will be duty free.
Exporters to Japan, including Japanese companies here, will enjoy tariff benefits on a wide range of products including chemicals and petroleum, electrical and electronics items, plastics, pharmaceuticals, transport equipment and fabricated metal products.
Estimated annual savings on tariffs based on 2001 trade figures could reach US$34 million.
The FTA, signed by Japanese Prime Minister Junichiro Koizumi and Singapore leader Goh Chok Tong in January, avoids the issue of agriculture, and analysts have said the absence of a farming industry in Singapore helped facilitate the accord.
Agriculture is a sensitive topic with Japan with its large farm sector heavily protected.
Singapore Foreign Minister S. Jayakumar has described the agreement as an “economic partnership that will create larger and new markets,
and enhance the attractiveness and vibrancy of both the Singapore and Japanese markets.”
It is the first FTA for Japan, the world’s second biggest economy which had previously favored multilateral pacts in bodies such as the World Trade Organization.
However, export-reliant Singapore is a leading advocate of free trade pacts and has already signed deals with New Zealand, the European Free Trade Area and Australia.
It is close to completing an agreement with the United States and is negotiating others with Canada, Mexico and South Korea.
Japan is Singapore’s third largest trading partner and second largest foreign investor. Of the 6,000 foreign companies operating in Singapore, more than 1,600 are Japanese.
The new FTA covers trade and investment as well as finance, information technology and human resource development and is designed to stimulate movement of goods, people, services, capital and information between the two countries. —AFP