Although the idea of establishing an FTA between Singapore and the United States was thought of earlier, it was only on 16 November 2000, during the APEC meeting in Brunei, that the then U.S. President Bill Clinton and Singapore's Prime Minister Goh Chok Tong officially announced the launch of the U.S.– Singapore FTA (USSFTA). After more than six rounds of negotiations spanning two years, U.S. Trade Representative Robert Zoellick and Singapore's Minister for Trade and Industry BG George Yeo, jointly announced the substantive conclusion of the USSFTA in Singapore on 19 November 2002. The agreement was signed by the current U.S. President George W. Bush and Singapore's Prime Minister Goh Chok Tong in Washington, D.C. on 6 May 2003. With the passing of the USSFTA by the House of Representatives on 25 July 2003 and by the Senate on 1 August 2003, the agreement came into force from 1 January 2004.

The economic rationale behind the USSFTA is reflected in the de facto close trade and investment linkages between the United States and Singapore. The USSFTA strengthens the already strong economic ties between the two countries. The United States, being the world's largest economic and military superpower, is Singapore's second largest trading partner and is also the largest foreign investor. Nearly 1,300 U.S. companies and 15,000 U.S. citizens are based in Singapore, with many U.S. MNCs using Singapore as an export base to the rest of the world. Singapore has also been an important economic and strategic partner for the United States in Southeast Asia. It is the twelfth largest trading partner of the United States and the second largest Asian investor in the country, after Japan. The United States, which has a market of nearly 288 million people with a GDP per capita of US$36,273, offers great opportunities for Singapore and other ASEAN countries to expand their market access through FTAs.

The USSFTA is not only seen as a means of gaining greater market access, but also as a way of avoiding the imposition of possible protectionist measures by the United States in future, as well as managing future trade tensions.