countries choose to cooperate with other countries → by pursuing policies that promote free trade
- form of econ cooperation can be achieved → by signing free trade agreements (FTAs) → treaties between 2 or more economies → to make trade and investment between them easier
- FTAs typically agree to reduce / remove tariffs between countries → allow foreign imports + exports to be traded more freely and at lower costs
Bilateral FTAs
Example
Singapore-Australia FTA (SAFTA).
- tariffs on all imported goods removed
- number of australian universities whose law degrees are recognised in singapore increased from 4-8
- period of stay granted to business visitors between SG and Au increased from 1m-3m
Multilateral FTAs
Example
European Union (EU)-Singapore Free Trade agreement (EUSFTA)
- Euu remove tariffs on 84% of all SG products entering Eu within 1st year and remaining 16% over period of 3-5Y
- market access for Asian food products made in SG → enhanced
despite impact of covid19 on global trade → Eu imports from SG → saw 12% increase (amting to 15.8bil) → in first 6 months since EUSFTA came into effect