Since the establishment of diplomatic ties 18 years ago, Singapore and China have developed one of the strongest and most dynamic trading relationships in the world. The signing of the Singapore-China Free Trade Agreement (SCFTA) on October 23rd, 2008 not only marked a significant milestone in the evolution of trade relations between these flourishing economic heavyweights, but also created a plethora of opportunities for countries that trade with Singapore or China or both.

Teaming Up With Singaporean Firms

The SCFTA has effectively institutionalized Singapore’s access to the Chinese marketplace. It also has enabled Singaporean companies that have not previously dealt in China to explore a variety of new Chinese economic opportunities with other trading partners. In short, the agreement has paved the way for American companies and others to team up with Singapore firms for the purpose of increasing the flow of goods and services in and out of China.

Over the years, Singapore and China have made significant gains. In fact, Singapore’s trade with China rose to a record high of S$91.6 billion in 2007. China is currently Singapore’s third largest trading partner, and Singapore is China’s eighth largest trading partner.

Duty-Free Access

Under the SCFTA, as of January 1, 2009, more than 85 percent of Singapore’s exports to China will enjoy duty-free access. By 2010, this figure will rise to 95 percent. This will include exports of petrochemicals, processed foods, electronics and electrical products. All Chinese exports to Singapore were granted tariff-free access on January 1, 2009.

A Gateway to China

Singapore has widely been seen as the gateway to China. The signing of the SCFTA only serves to reinforce this perception. American companies can capitalize on Singapore’s pro-business environment and excellent business infrastructure to enhance their own export and import businesses. American firms also can tap into Singapore’s growing network of free trade agreements that provide preferential access to almost every major market in the world.

Over 7,000 multinational companies have already availed themselves of the benefits of doing business in Singapore. The signing of the SCFTA promises to grow this number exponentially. To date, more than 1,600 Chinese companies have established a presence in Singapore and over 90 Chinese companies are listed on the Singapore Stock Exchange.

U.S.-China-Singapore Connection

China is the fastest growing market in the world and will further strengthen its position in the years to come. Chinese-American trade has seen explosive growth in the last decade and this trend is likely to continue. Singapore is widely regarded as one the closest economic and political allies of the United States in the Asia-Pacific region. Tied together, new opportunities emerge.

The SCFTA not only represents a significant step forward in relations between China and Singapore, but also a very important step in trade for the United States with both China and Singapore.

There could be no better time for American companies to explore new opportunities in Singapore and China.

About The Author Mitchell Weinberg and Alex Foo

Mitchell Weinberg and Alex Foo are with Mondial Trade Compliance Services and Solutions. With a network of trade consultants and offices strategically located in New York, Shanghai, Singapore and around the world, Mondial Trade Compliance is uniquely positioned to help companies with all of their trade needs.