This is the first post in a series about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and what this means for Singapore companies looking to do business with Mexico. Click here for the next post: 5 reasons why the CPTPP is important for your business.
What is an FTA?
A Free Trade Agreement reduces barriers to trade goods between participating countries. Examples of trade barriers include tariffs or quotas for imports.
The CPTPP is a Free Trade Agreement (FTA) signed among the 11 states of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
This partnership will ease trade barriers between these 11 countries, allocating special concessions and preferential tariffs and quotas to their member states.
Singapore and Mexico
Singapore (along with Mexico and Canada) were among the first 3 countries to sign the CPTPP, signaling our commitment to facilitate trade among all the member countries. After negotiations that spanned almost two years, the CPTPP came into effect in December 2018.
This is a significant step for Singapore and Mexico that cements our history of strong relations. Bilateral trade between our countries more than doubled in the last decade to S$4.5 billion in 2017, making Mexico our 2nd largest trading partner in Latin America. And the CPTPP aims to continue increasing trade flow between our two nations.
Example of the CPTPP in play
While Singapore already has existing FTAs with 8 of the 10 CPTPP countries, this is our first FTA with Mexico. Given its growing middle class, reputation as one of the largest manufacturing bases in the world, and links to the rest of the region, Singapore businesses should make full use of this opportunity to do business with Mexico.
For instance, companies can now export Singapore manufactured beer to Mexico and save up to 20% in preferential tariffs. The CPTPP also covers items such as seafood, flowers, tea, textiles, and automotive vehicles.
It’s a win-win situation for exporters and importers alike.
Opportune time for Singapore companies
With Singapore’s technical know-how, investment capability and expertise in areas such as petrochemicals and technology, and Mexico’s vibrant, growing consumer market, skilled workforce and abundance of natural resources, there are myriad opportunities for collaboration.
Given the fast changing nature of the global economy, having an alternative base aside from the manufacturing hubs of China or India may also put you ahead of the competition as costs rise. Singapore companies can make use of the CPTPP to fast track entry their entry into Mexico and the Latin America region.
As Mr Enrique Escamilla, Charge d’Affaires A.I. for the Mexican Embassy in Singapore mentioned at a recent iAdvisory event at Enterprise Singapore, “it’s not just about running fast, but speeding up.”
Click here to find out 5 reasons why the CPTPP is important for your business.
Want to find out more about FTAs and the CPTPP? Click here to access our Tariff Finder.