In May 2025, Singapore achieved two significant milestones in its international trade strategy with the activation of the Pacific Alliance–Singapore Free Trade Agreement (PASFTA) and the signing of the European Union–Singapore Digital Trade Agreement (EUSDTA). These agreements are part of Singapore’s broader effort to deepen economic ties and maintain its status as a leading global trade hub, leveraging a network of over two dozen free trade and digital economy agreements.
The PASFTA, which took effect for Singapore, Chile, and Peru on May 3, 2025, marks Singapore’s first free trade agreement with the Pacific Alliance—a Latin American bloc comprising Chile, Colombia, Mexico, and Peru, collectively representing the world’s ninth-largest economy. The agreement eliminates tariffs on most goods, streamlines customs procedures, and allows materials from any member country to count toward preferential tariff treatment. It also covers investment, e-commerce, government procurement, services, and SME development, giving Singaporean businesses expanded access and the ability to compete for government contracts in the region. Once Colombia and Mexico ratify the agreement, its benefits will extend to the entire Pacific Alliance.
Meanwhile, the EUSDTA represents the EU’s first bilateral digital economy agreement with an ASEAN country. This landmark deal aims to enhance digital connectivity between Singapore and the EU by removing data localization requirements, enabling secure and trusted cross-border data flows, and establishing clear rules for digital contracts and consumer protection. The agreement also supports paperless trade, e-payments, and e-invoicing, building on the existing EU-Singapore Free Trade Agreement to foster innovation and unlock new business opportunities, especially for SMEs and digital service providers.
These agreements signify Singapore’s commitment to maintaining an open, rules-based international trading environment and adapting to the evolving landscape of global commerce. By securing preferential access to both traditional and digital markets, Singapore positions itself as a gateway for businesses looking to expand into Southeast Asia, Latin America, and Europe.
Amid global trade uncertainties and shifting economic conditions, such as those caused by tariff tensions and supply chain disruptions, these new agreements are expected to bolster Singapore’s trade resilience, support growth in key sectors, and create fresh opportunities for Singaporean companies on the world stage.
(Source: ChannelNews Asia, Shared Services Link)
