Singapore reached a significant milestone in its trade relations with the Pacific Alliance-Singapore Free Trade Agreement (PASFTA), entering into force on 3 May 2025. This marks Singapore’s 28th free trade agreement and establishes new economic ties with one of Latin America’s most dynamic trading blocs.
What is the Pacific Alliance?
The Pacific Alliance represents a progressive Latin American trade bloc established in 2012, comprising Chile, Colombia, Mexico, and Peru.
Together, these four nations form the world’s 9th largest economy, with a combined GDP exceeding US$2.7 trillion and a population of 235 million people. The alliance accounts for approximately 40% of the Latin America and the Caribbean region’s total economic output.
Singapore already maintains trade agreements with Chile and Mexico under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and with Peru through the CPTPP and the bilateral Peru-Singapore FTA.
What is PASFTA?
The Pacific Alliance-Singapore Free Trade Agreement (PASFTA) establishes a modern, high-quality economic partnership that caters to today’s business needs and contemporary realities.
The agreement builds on existing agreements Singapore has with Pacific Alliance member states and facilitates greater economic integration between the markets.
Negotiations took four years to complete, with the PASFTA concluded and signed on 26 January 2022 by the Economic Ministers of the four Pacific Alliance member states and Singapore at the 16th Pacific Alliance Summit in Colombia.
Singapore, Chile, and Peru have ratified the agreement, bringing it into force for these three parties first. Colombia and Mexico will join upon completing their respective ratification procedures.
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Features of PASFTA
The PASFTA is a comprehensive free trade agreement containing 25 chapters that cover trade in goods, services, and investment, small and medium enterprises, good regulatory practices for trade and investment, and electronic commerce.
The agreement includes Singapore’s first chapter on international maritime transport services. This chapter aims to enhance physical connectivity between the Pacific Alliance and Singapore and facilitate the exchange of best practices and training opportunities.
Key Economic Benefits
The PASFTA delivers substantial advantages across multiple areas:
1. Trade in Goods
No tariffs will apply to the majority of tariff lines. Colombia will reduce or eliminate tariffs on 85.7% of tariff lines once it ratifies the agreement.
2. Rules of Origin
Businesses can use materials originating in any PASFTA member to contribute towards a good’s originating status, making it easier for exports to qualify for preferential tariff treatment.
3. Customs Procedures and Trade Facilitation
Improved transparency in customs procedures and integrity in customs administrations through simplified processes, including enhanced trade provisions for express consignments and perishable goods.
4. Technical Barriers to Trade
Transparent and non-discriminatory rules for developing technical regulations, including rules that facilitate the acceptance of conformity assessment results from any PASFTA member.
5. Investment
Basic investment protection in other investment-related agreements, including national treatment and most-favoured-nation treatment. Investments receive fair and equitable treatment with protection and security under customary international law.
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6. Trade in Services and Investment
Includes core obligations found in the WTO and other trade agreements, such as national treatment, most-favoured nation treatment, and market access. Singapore service providers can
enjoy lower operating costs as they need not establish or maintain a local representative office in Pacific Alliance countries for sectors which have been liberalised.
Service providers can also be assured of efficient transfers and payments for cross-border supply of services.
7. International Maritime Transport Services
Strengthens cooperation in maritime transport services between Singapore and the Pacific Alliance through exchange of best practices, knowledge, and training opportunities.
8. Temporary Entry
Singapore business visitors can enter Chile and Colombia for up to 90 days, Mexico for up to 180 days, and Peru for up to 183 days. Singapore investors can enter Peru for up to 90 days, Chile and Mexico for up to 1 year, and Colombia for up to 3 years.
9. Telecommunications Services
Businesses benefit from a pro-competition and market-based regulatory environment with disciplines that prevent anti-competitive behaviours.
10. Electronic Commerce
Comprehensive commitments on cross-border data flows and location of computing facilities. Companies selling products with embedded software are not required to release source code except for legal reasons.
11. Government Procurement
Singapore and Pacific Alliance countries have agreed to core principles of national treatment and non-discrimination, with timely publication of relevant information for suppliers so that they have sufficient time to obtain the tender documentation and submit a bid.
Suppliers can be assured that their tenders will be treated fairly, impartially, and with confidentiality.
12. Competition
Singapore and Pacific Alliance countries maintain legal regimes that prohibit anti-competitive business conduct, ensuring fair competition and protecting consumers from fraudulent activities.
13. Economic and Trade Cooperation
PASFTA parties will undertake and strengthen economic and trade cooperation activities in the following sectors:
- Innovation Science
- Technology, including Information and Communications Technology
- Trade Infrastructure, Transport, and Urban Mobility Infrastructure
14. Small and Medium Enterprises (SMEs)
Singapore and the Pacific Alliance will explore ways to promote an environment that supports SME development, growth, and competitiveness.
15. Good Regulatory Practices
Businesses benefit from an open, fair, and predictable regulatory environment as Singapore and the Pacific Alliance encourage transparency and coordination across governments.
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Looking Ahead with PASFTA
PASFTA represents Singapore’s first trade agreement to include international maritime transport services, enhancing connectivity and knowledge exchange between partner countries. This agreement allows Singapore to diversify its trade relationships and strengthen multilateralism amid global trade tensions.
The partnership reinforces Singapore’s reputation as one of the world’s most open economies and strengthens its role as an international business hub.
Companies operating from Singapore gain competitive advantages through lower tariffs, easier foreign market investment, and better overseas protections, making Singapore an effective gateway into ASEAN and regional markets.
PASFTA Opportunities
On 10 April 2025, CW En Español hosted a webinar for Latin American companies where Helen Campos, founding director of HC Consultancy, outlined the advantages for Latin American businesses establishing regional headquarters in Singapore.
Companies considering operations in Singapore to benefit from PASFTA or exploring expansion in Pacific Alliance markets can work with HC Consultancy for guidance on their business plans.
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Frequently Asked Questions
1. When did PASFTA enter into force and which countries are included?
PASFTA entered into force on 3 May 2025 for Singapore, Chile, and Peru. Colombia and Mexico will join once they complete their ratification procedures. The Pacific Alliance comprises four Latin American countries: Chile, Colombia, Mexico, and Peru.
2. What are the main benefits for Singapore businesses under PASFTA?
Singapore businesses gain access to reduced or eliminated tariffs on most trade lines, simplified customs procedures, and the ability to use materials from any PASFTA member country to qualify for preferential treatment. Service providers can operate without establishing local offices in liberalized sectors, while investors and business visitors receive extended entry periods across member countries
3. How does PASFTA differ from Singapore’s existing trade agreements with these countries?
PASFTA builds on existing agreements Singapore has with Chile, Mexico, and Peru through the CPTPP and bilateral arrangements. The key difference is that PASFTA creates Singapore’s first comprehensive trade agreement that includes Colombia, and it features Singapore’s first-ever chapter on international maritime transport services.
