Singapore's Dependence on Trade Agreements
Singapore is a country that is dependent on exports and imports for basic commodities such as food, industrial raw materials, and energy. The country therefore, prioritizes on keeping multilateral and bilateral trade agreements and is a member of the World Trade Organization. The state also believes that the body can help in providing stable framework to facilitate development of multilateral rules that work to ensure that goods and services flow freely with minimum challenges. Singapore aims at guarding its trading interests by promoting free and open international trading environment with its partners. Free trade agreements refer to the treaties formed between two or more nations with the aim of reducing or removing trade barriers and bringing closer economic integration (Lin 4). Some of its trade agreements include the US-Singapore Free Trade Agreement (FTA), which was signed in 2004 (Parinduri and Thangavelu 927). It also has other bilateral and region agreements with Australia, Costa Rica, India, Japan, South Korea, Jordan, and Turkey among others (Lin 6). Singapore benefits a lot from its many free trade agreements as the FTA encourage and promote its businesses on regional and international level without prejudice thereby ensuring enough goods and services in the country as well as promoting economic growth. With increased connection to the other nations the country is assured of enough basic commodities, services, as well as support.
Promoting Easier Access to the Export Market
Singapore benefits by promoting easier access into the export market improving the economy. By signing various free trade agreements with different countries, Singapore allows free flow of goods by providing economies involved in its agreement-preferred access to markets. For instance, FTAs allow for increased export quotas, a treatment that allows a greater advantage to exporters from member states reducing competition from non-member countries. Such plans are valuable for the country, since it is able to ensure easier exchange of commodities and help traders to remain competitive in the global market. Singapore has benefited a lot from its bilateral Free Trade Agreements as well as regional ones. Export trade achieves significant rates due to the low duties on Singaporean goods and services. The investors reap from legal protection provided by the FTAs and some sectors such as intellectual property rights in have improved to world-class levels due the US-Singapore FTA (Lin 4). Consequently, the nation has grown to be a major regional business hub for foreign traders from different countries. In several instances, there is hard bargaining between negotiators in which trade and investment concessions are exchanged. Singapore promotes its economic integration with its FTA associates since the agreements affect several parts of the Singaporean economy. The government and private sector is always educating and engaging the society to make sure that it understands the benefits that arise from the FTAs as well as the commitments, which Singapore undertakes to achieve such benefits. The country has already implemented some rules for governing the treatment of investors and their investments. Some of the provisions include minimum standard of treatment for investors, the right to compensation types of goods or services, and protection against discrimination (Othman, Acar and Jafari 925). The country has also updated its dispute mechanism with some countries such as Australia to include ensuring greater safeguard on each nation's right of regulation for the public interest. Therefore, the country benefits a lot from FTAs by promoting easier access to markets, which in turn help in economic developments.
Stability of Exports and Imports
Trade agreements also enable the country to ensure stability of exports and imports by dealing with countries that have signed deals. Import duties mostly depend on individual state's trade policies that have the right to raise or lower them when necessary. The decisions have long-term impact on exports into the markets but the FTA preferential rates are legally binding and signatory countries, which are required to abide by the concessions offered. Therefore, stability for exporters in the long-run is sustained avoiding losses as well as preserving important markets. Singapore also deals with service exports and imports especially with countries such as Australia. In the recent times, significant impact on Singapore has been achieved in the education sector (Othman, Acar and Jafari 925). The country provides education opportunities in Australia, which is its third largest export. Education is popular among Singaporean students in which more students head to Australia for their education, which in turn promotes international trade. FTAs also provide greater assurance for professional services in the legal sector where Singaporeans can practice law in other countries such as Australia, which puts them on equal ground with other foreign competitors. Australians also practice law in Singapore with great ease, a factor that has stabilized export of services. The two nations have established mutual recognition for professional qualifications with the aim of promoting accounting and engineering sectors. Such services financial companies can provide in Singapore include portfolio management, investment information, and brokerage services for insurance among others (Othman, Acar and Jafari 925). The country has established rules that governing foreign investments, e-commerce, and exchange of services, harmonization of technical standards, and the streamlining of customs procedures. Japan and Singapore have taken negotiations over this kind of FTA, which has promoted potential benefits through implementation of uniform standards for e-commerce in the two nations (Hertel, Walmsley and Itakura 446). The effects of liberalization of procedures that govern direct trade in services are evident especially in the automation of customs procedures in Singapore to make them compatible with the computer-based standards established by other countries such as Japan (Hertel, Walmsley and Itakura 447). Singapore has, therefore, attained stability of businesses due to formation of agreements that promoted export and import throughout the year.
Weathering External Shocks
Singapore also benefits due to its outward-oriented strategies towards FTAs, which enables the economy to weather external shocks that may lead to depression or economic underperformance. Some of the recent crises include the Asian financial crisis to the SARS as well as the recent unfavorable conditions in the Middle East (Thangavelu and Toh 5). Singapore's efforts to liberalize its services sector leads to economic benefits to consumers and global trade. However, some areas need to be addressed such as the commitment to multilateral agreements, since the number of bilateral free trade agreements signed by Singapore has increased. The country has formed many trade agreements thus need to ensure that the citizens enjoy the benefit of trade even during the times of economic turbulences. Whenever there are financial crises in some regions, Singaporeans have the advantage of trading with other partners in other regions. The United States-Singapore Free Trade Agreement (FTA) is very important for the economy especially during economic hardship in the Asian countries. Findings from a study involving the two nations indicate that trade liberalization and FTAs maximize the value of firms in the trading partners (Thangavelu and Toh 5). Singapore is an open economy, the growth of which depends on global trade and therefore maintains low import and export barriers. The country commits itself to major trading partners by dropping its own tariffs to ease trade, which ensures that traders have constant market with FTA countries that have also dropped their tariffs. The FTAs enhances Singapore's export competitiveness regardless of economic crises in some nations.
The Benefits of Free Trade Agreements
Free Trade Agreements are formed to help in reducing the barriers to trade that may exist between two or more countries. The idea is to help protect local markets as well as industries. Trade barriers can be in the form of tariffs and quotas that may make it difficult for countries to exchange goods or services. Agreements, can be bilateral or multilateral and lead to creation of new markets in Singapore for businesses organizations, facilitate exchange of high-quality goods and enhance economic growth. Singapore benefits greatly from the FTAs it has signed through increased export and imports, easier access to markets, and stability during times of economic problems in some countries. Free trade tends to eliminate discrimination on imports and exports thus buyers and sellers belonging to different economies can voluntarily exchange commodities without the need for the government to apply tariffs, quotas, subsidies or prohibitions on goods and services. The main principle of multilateral trade system is lowering trade barriers on most favored goods for a nation to every WTO member. Singapore's trade agreements have been proved to have many benefits for traders, economy, and the citizens.
Works Cited
Hertel, Thomas W., Terrie Walmsley, and Ken Itakura. "Dynamic effects of the" new age" free trade agreement between Japan and Singapore." Journal of economic Integration (2001): 446-484.
Lin, Chang Li. Economic Diplomacy: Essays and Reflections by Singapore's Negotiators. World Scientific, 2010.
Othman, Jamal, Mustafa Acar, and Yaghoob Jafari. "Towards OIC Economic Cooperation: Impact of Developing 8 (D-8) Preferential Trade Agreement." The Singapore Economic Review 58.02 (2013): 1350009.
Parinduri, Rasyad A., and Shandre M. Thangavelu. "Trade liberalization, free trade agreements, and the value of firms: Stock market evidence from Singapore." The Journal of International Trade " Economic Development 22.6 (2013): 924-941.
Thangavelu, S. M., and Mun-Heng Toh. "Bilateral ‘‘WTO-Plus." Free Trade Agreements: The WTO Trade Policy Review of Singapore 2005 (2004).
