THE economic trade pact signed between Asean and Japan will benefit Singapore significantly, said Trade and Industry Minister Lim Hng Kiang on Tuesday.

Mr Lim, who signed the Asean-Japan Comprehensive Economic Partnership (Ajcep) Agreement for Singapore on Monday said it covers 96 per cent of Singapore's trade volume with Japan, including key chemicals, electronics, and leather products.

Tariffs for 173 out of Singapore's 200 items traded with Japan will go down to zero when the agreement enters into force.

He added that beyond the tangible gains are strategic benefits, as the Ajcep agreement is a building block from the Japan-Singapore Economic Partnership Agreement (Jsepa), signed in 2002.

"Deepened Asean-Japan relations through the Ajcep agreement also means another essential link between Asean and a key economic partner in the wider regional architecture,' said the minister.

Under the pact, which was finalised in November after 11 rounds of negotiations spanning four years, about 90 per cent of trade between Asia's largest economy and the 10-member Asean bloc will be tariff-free within 10 years.

It will be the first multinational free trade agreement (FTA) for Japan, which also has been seeking to conclude a flurry of bilateral pacts amid a breakdown in global trade negotiations

Besides market access through lower tariff concessions, the pact also offers traders in Singapore the advantage of cumulation to more easily meet rules of origin (ROO). This means that traders can enjoy a larger sourcing base, as they will be able to use raw and intermediate materials from any of the Ajcep parties and enjoy preferential tariffs.

In addition to chapters on Trade-in-Goods, ROO, and SPS, other key elements of the Agreement are chapters in Technical Barriers to Trade (TBT), Economic Cooperation, and Dispute Settlement Mechanism (DSM), as well as the commitment to start negotiations on services and investments within one year after entry into force of the agreement.

The agreement will come into force on completion of domestic procedures of Japan and at least one Asean member state. This is expected in the next few months.

Japan is Asean's second largest trading partner and Singapore's fifth largest trading partner.

Moving forward, the 10-member groupng and Japan will start talks on services and investment.

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