{"id":4728,"date":"2020-11-16T14:45:53","date_gmt":"2020-11-16T06:45:53","guid":{"rendered":"https:\/\/dollarsandsense.sg\/business\/?p=4728"},"modified":"2021-03-16T16:41:49","modified_gmt":"2021-03-16T08:41:49","slug":"guide-to-understanding-free-trade-agreements-ftas-and-how-it-helps-companies-and-businesses","status":"publish","type":"post","link":"https:\/\/dollarsandsense.sg\/business\/guide-to-understanding-free-trade-agreements-ftas-and-how-it-helps-companies-and-businesses\/","title":{"rendered":"Guide To Understanding Free Trade Agreements (FTAs) – And How It Helps Companies And Businesses"},"content":{"rendered":"\n

This article was first published on 22 July 2020<\/strong> and has been updated with additional reporting.<\/em><\/p>\n\n\n\n

The world\u2019s largest Free Trade Agreement, the Regional Comprehensive Economic Partnership (RCEP), was signed on Sunday after 8 years of negotiations.<\/p>\n\n\n\n

Comprising 30% of the world\u2019s economy and a  population of 2.2 billion, Singapore and 14 other countries, including all members of  ASEAN, Australia, China, Japan, New Zealand and South Korea are part of the RCEP. This is not only a major win for Singapore, but also for multilateralism and open trade during a difficult economic period where economies are increasingly de-globalising.<\/p>\n\n\n\n

Here\u2019s an introduction to FTAs, how they can benefit your business, and how to find out if you can be a beneficiary of an FTA.<\/p>\n\n\n\n

Read Also: <\/strong><\/em>Guide To Government Grants And Resources For Singapore Companies To Expand Their Business To Overseas Markets<\/em><\/strong><\/a><\/p>\n\n\n\n

What Do Free Trade Agreements Cover?<\/h3>\n\n\n\n

In essence, Free Trade Agreements (FTAs) help grow businesses by reducing barriers for companies in signatory countries to do business with one another. Common barriers to international trade include regulatory hurdles, tariffs, and permits for workers.<\/p>\n\n\n\n

In general FTAs cover 3 main areas: Trade in Goods<\/a>, Trade in Services<\/a> and Investment<\/a>.<\/p>\n\n\n\n

Trade in Goods<\/strong>: FTAs might provide preferential tariffs (customs duties) for imported finished products or raw materials. This means that tariffs could be at reduced rates or completely eliminated. Note that this only covers import duties, and other taxes could still apply, such as Sales Tax\/Value-Added Tax and Excise Tax.<\/p>\n\n\n\n

Trade in Services<\/strong>: FTAs help maintain a favourable trading environment for companies by locking in certain levels of market access for companies providing services, as well as setting out avenues for recourse for breaching FTA commitments. This provides certainty for companies to commit resources and staff towards an overseas venture.<\/p>\n\n\n\n

Investment:<\/strong> FTAs encourage and incentivise investments in signatory countries by providing a more stable operating environment, removing nationality requirements for senior positions in invested firms, as well as establishing protections and avenues of recourse for investors.<\/p>\n\n\n\n

Read Also: <\/strong><\/em>What Are Virtual Trade Fairs And Conventions \u2013 And What Are The Benefits Of Attending One?<\/em><\/strong><\/a><\/p>\n\n\n\n

Bilateral And Regional Free Trade Agreements Signed By Singapore<\/h3>\n\n\n\n

There are two main kinds of FTAs: bilateral (signed between Singapore and a single trading partner) and regional (signed between Singapore and a group of trading partners). As of time of writing, Singapore has established 14 bilateral FTAs and 11 regional FTAs.<\/p>\n\n\n\n

The Regional Comprehensive Economic Partnership (RCEP) will come into effect once it has been ratified by constituent countries.<\/p>\n\n\n\n

Singapore\u2019s Bilateral FTAs:<\/p>\n\n\n\n