Asia’s Free Trade Agreements

Asia’s Free Trade Agreements

How is Business Responding?

ADBI series on Asian Economic Integration and Cooperation

Edited by Masahiro Kawai and Ganeshan Wignaraja

The spread of Asia’s free trade agreements (FTAs) has sparked an important debate on the impact of such agreements on business activity. This pioneering study uses new evidence from surveys of East Asian exporters – including Japan, the People’s Republic of China, the Republic of Korea and three ASEAN economies of the Philippines, Singapore and Thailand – to shed light on the FTA debate.

Chapter 6: Singapore

Chia Siow Yue

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics


Chia Siow Yue INTRODUCTION The number of free trade agreements (FTAs) has been growing rapidly in Asia since 2000 and these agreements are used by governments as a major instrument of trade policy and foreign policy. Singapore has signed and is negotiating numerous plurilateral and bilateral FTAs to secure economic benefits by gaining access to the markets of FTA partners, consolidating itself as a services hub, attracting more foreign investors and protecting its growing investments abroad. Singapore offers free trade in goods (except for import tariffs on a few alcoholic beverages), so its attraction for its FTA partners lies in its restricted services market as well as its value as an investment location, investment partner and regional gateway to the rest of Asia. There is a growing literature on measuring the effects of FTAs through computable general equilibrium (CGE) modelling. However, there are few empirical studies on the behaviour and perceptions of firms toward FTAs in Asia. The main contribution of this chapter is the results of a survey of firms in Singapore that attempts to cover this knowledge gap. The survey covers firms in three export industries: electronics, pharmaceuticals and chemicals, and textiles and garments. Although the automotive industry had initially been chosen as one of the three industries of focus in the survey, its coverage had to be abandoned when the nine firms surveyed were found to be engaged in trading rather than automotive parts manufacturing.1 The automotive industry was replaced with the pharmaceuticals and chemicals industry, which...

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