The Agreement between Japan and the Republic of Singapore for a New-Age Economic Partnership Agreement (JSEPA)
The JSEPA was the first ever FTA concluded by Japan.
What are the factors?
1. Singapore’s trade structure, which comprises few sectors that need
protection at home, allowing 99.9 per cent of its imports to be tariff-free
2. Singapore’s interest in bilateral FTAs eventually emerged as a fallback tool, since FTAs were
believed to be more effective in promoting trade liberalisation. Singapore hoped such a trading
arrangement could be useful in securing larger markets on a preferential basis, by attracting more
Foreign Direct Investment (FDI), strengthening its position as a transportation hub, and circumventing
future protectionist and discriminatory tendencies
3. Japan's change in perception: Japan should consider a trade policy that involved bilateral and regional arrangements despite these
arrangements being discriminatory and even though this was an approach that Japan itself had long
1. Since the 1980s, Japan has consistently been one of Singapore’s top three trading
partners. In 1999, when the idea of a JSEPA was still muted, Japan was Singapore’s third largest trading
partner, contributing to 12 per cent of Singapore’s total merchandise trade. On average, it constituted
about 20 per cent of Singapore’s total imports (MOFA 2000b).
2. Singapore was the sixth largest
export market for Japanese goods and Japan’s thirteenth largest import source in
1999 (IMF, 2000)
Econometric Impact: Endogeneity and Simultaneity. Countries choose their FTA partners. Prior linkages between Japan and Singapore perhaps spurred creation of the FTA