International Trade Policy of Thailand

1

International Trade International Trade Policy of ThailandPolicy of Thailand

2

OutlineOutline

1. International trade policy

2. Trade agreements

–WTO

–Regional and bilateral

3. Some comments on regional trade agreements

3

Reference:Reference:

นโยบายการค้าระหว่ างประเทศของไทยในช่ ว่งป� 2543ถึ�งป�จจ�บ�น โดย รศ.ดร . ช่ย�นต์" ต์�นต์#ว่�สดาการ

4

Overall pictureOverall picture

• Member of WTO since 1982

• AFTA (ASEAN Free Trade Agreement) and other bilateral FTAs

• Relatively free investment policy, with special treatment for US. Investors (Amity Treaty since 1966)

5

Import MeasuresImport Measures• Tariff as main tool, rates declining over

time• Average rate of 14.7% (2003) from 5,505

items

•Average rate for agriculture = 25.4%

•Average rate for manufacture = 12.9%

• WTO bound rates average = 28.4% , accounting for 72% of tariff items

6

Import MeasuresImport Measures• Concession rates e.g. Common

Effective Preferential Tariff (CEPT) under ASEAN Free Trade Agreement (AFTA)

• Tariff-free items account for 4.0 % of all items

• Items with tariff quota account for 1.0% of all items

7

• Import license and other non-tariff border measures: to protect infant industries, for national security, public health and environment

• High-tariff items include vegetables, finished food, transport equipment, shoes and weapons

Import MeasuresImport Measures

8

• Tariff escalation (increasing rates with processing degree): on food, leather, wood, paper, petroleum products, iron and steel


9

• Measures to protect local products from “unfair” imports:

– safeguards by import surcharge (BOI and MOC)

– anti-dumping (e.g. on iron products, glass)


10

• Some announced export tax rates are high, but not often applied

• Export license for some

– wild animals (for protect endangered species)

– rice, coal, oil (for national security)

• Import tax rebates for materials used in production of export

Export MeasuresExport Measures

11

• Local content and export requirement: used in the past, but already phased out

• Intellectual property right law: improved and better enforcement

• Competition law: exists but not actively enforce

Other MeasuresOther Measures

12

Trade AgreementsTrade Agreements

13

World Trade Organization (WTO)World Trade Organization (WTO)

Thailand’s stand in WTO negotiations:

• Comply with MFN principle

• Emphasis on free trade in agriculture, reducing export subsidies and domestic supports; also a member of the Cairns Group

14



• Against trade restriction based on environment standards

• Against trade restriction based on non-scientific evidence e.g. GMO prroposed by EU

15


Thailand’s stand in WTO negotiations:Pay attention to:• TRIPs and health, i.e. phamarceutical

products• Extend “geographical indicators”

from wine (e.g. Champagne) to other agricultural products (e.g. jasmine rice)

16



Pay attention to:

• Issues related to investment and competition, to be linked to trade

17

Regional Trade Agreements (RTA)Regional Trade Agreements (RTA)

RTA can help and hurt member countries

• Trade creation: switch to import from lower-cost source within RTA

• Trade diversion: switch to import from higher-cost source within RTA

• Increase efficiency through more competition

18

Benefits for members of RTAsBenefits for members of RTAs

• Cheaper imports, and larger export markets

• Economies of scale

• Reduce monopoly power by national firms

• Attract more FDI

• Increase bargaining power in WTO

• A training ground before open to world-scale competition

19

Costs for members of RTAsCosts for members of RTAs

• Lose tax revenue• Trade and investment diversion • Complicated customs system (rule of

origin)• Lose policy independence• Depend too much on member markets• Too many RTAs lead to confusion

(spaghetti bowl effect)

20

SingaporePhilippinesIndonesia

BruneiMalaysiaVietnamThailand

MyanmarCambodia

Laos

CanadaChile

MexicoPapua New

GuineaPeruUSA

New ZealandAustralia

APEC

ASEAN

EU

ASEM

YunanGMS

CERBIMST

-ECBangladesh India

Sri Lanka

China+1

JapanKorea

+3

AFTA-CER

Source: adapt from TRDI

Bahrain

Pakistan

21

Regional Trade Agreements:

• ASEAN free trade (AFTA)

• ASEAN-China free trade

• Asia Pacific Economic Cooperation (APEC)

• Asia-Europe Meeting (ASEM)

• Greater Mekong Subregion (GMS)

• BIMST-EC

• ASEAN+3 (China, Japan, Korea)

Free Trade Agreements of ThailandFree Trade Agreements of Thailand

22

Bilateral Trade Agreements:

• Australia

• New Zealand

• Japan

• China (Early harvest)

• India (Early harvest)

• Others still under negotiations: USA, Bahrain, Peru, Mexico, Pakistan

Free Trade Agreements of ThailandFree Trade Agreements of Thailand

23

ASEAN Free Trade Agreement (AFTA)ASEAN Free Trade Agreement (AFTA)

• Members reduce tariff to 5% (or less) for almost all products from other members by 2002-3 [Common Effective Preferential Tariff (CEPT)]

–Eligible products: at least 40% ASEAN content

– Selected “fast-track” items, e.g. cement, textiles, jewelery, furniture, rubber, ceramics, glass

24


• Few products are excluded (sensitive list) e.g. 7 items for Thailand (copra, fresh flowers, potato)

• AFTA expands intra-ASEAN trade, and attracts FDI

25


• ASEAN also seeks trade links with outsiders

– ASEAN-China FTA: tariffs reduced by 2010, with “early harvest” for fruits and vegetables started in 2004

– ASEAN + 3 (China, Japan, Korea): agreed in 2002 to study feasibility of “East Asia Free Trade Area”

– ASEAN with Australia, NZ, India under study

26

Asia Pacific Economic Cooperation Asia Pacific Economic Cooperation (APEC)(APEC)

• 21 members agree to open trade and investment within 2010 for developed countries and 2020 for developing countries

• Voluntary, comprehensive, and open regionalism

• Loose integration

27

Asia-Europe Meeting (ASEM)Asia-Europe Meeting (ASEM)

• ASEAN and EU: informal cooperation in political, social, economic areas

• Trade facilitation action plan: reduce NTB, promote mutual trade, paperless customs procedure

• Asia-Europe Business Forum

• ASEM Trust Fund for solving poverty problem

28

Bilateral Trade Agreements: Bilateral Trade Agreements:

Thailand’s strategy

• Market Strengthening in existing major markets:

–Japan, USA

• Market Broadening & Deepening in new markets:

–Potential markets: China, India, Australia, NZ

–Gateway: Bahrain, Peru

–Regional: BIMST-EC

29

Country Trade value Share(%) Growth(%)

Japan (17) 1,517,246.37 18.04 13.11

USA (1) 943,561.09 11.22 12.34

China (19) 739,443.94 8.79 31.70

Australia (6) 239,569.80 2.85 43.23

India (29) 100,486.24 1.19 31.66

NZ (22) 28,197.57 0.34 40.34

Bahrain (n/a) 6,907.23 0.08 30.56

Peru (n/a) 3,131.84 0.04 9.11

หมายเหตุ�: ตุ�วเลขท้ ายชื่��อประเท้ศ เป�นอ�นดั�บความสามารถในการแข!งข�น, หน!วยของม#ลค!า (ล านบาท้), ไท้ย อ�นดั�บ 32

30


Thailand-China

• “Early harvest” covering fruits and vegetables from October 2003

• Will be part of ASEAN-China FTA eventually

• Major exports from Thailand include rubber, tapioca

• Large two-way trade volume in computer parts and electronics

31


Thailand-India

• Relatively small trade

• “Early harvest” covering 82 items from January 2004

• Zero tariffs for other items planned in 2010

32


Thailand-Australia FTA

• Began in January 2005, covering trade, services and investment

• Zero tariffs for most items in 2010

• Sensitive items liberalized in 20 years for Thailand, 10 years for Australia

• Thailand’s sensitive items include dairy products, beef

33


Thailand-NZ FTA

• Began in July 2005

• Zero tariffs immediately for more than half of trade items, and for the remaining in 2010

• Sensitive items liberalized in 10-15 years for Thailand, 10 years for Australia

• Thailand’s sensitive items include dairy products, beef

• NZ’s sensitive items include textiles, garments, and shoes

34


Japan-Thailand Economic Partnership Agreement: JTEPA

• Began in 2007, covering trade, services, investment, and other areas of cooperation

• Sentitive items for Thailand are iron & steel, vehicle parts, and small-engine cars

• Sensitive items for Japan is rice (no free trade), but lower tariffs for several agricultural products, e.g. fruits, chicken, seafood

35


Japan-Thailand Economic Partnership Agreement: JTEPA

• Services: Japan allows import of Thai cooks, teachers, dancers, and tour operators

• Cooperation in health standards, human resource, S&T, SMEs, tourism

36


Thailand-US FTA• Negotiations started in 2004, but not yet

concluded (suspended after the 2006 coup)

• Several issues to be negotiated: trade, intellectual property right, textiles, standards, services, investment

37


Thailand-US FTA• Agriculture:

– US offers zero tariff within 5 years for 65% of US import from Thailand

– Thailand offers free trade for items already imported from US, e.g. cotton

– Thailand’s sensitive items: beef, dairy products, corn, potato, onion; tariffs to be reduced in 10-20 years

38


Thailand-US FTA• Manufactured:

– US offers zero tariff for 74% of US import from Thailand

– Thailand’s potential benefit: electrical appliances, electronics, wood and rubber products, ceramics, plastic products, jewellery, textiles and garments

39


Thailand-US FTA• Manufactured:

– Thailand offers zero tariff for 71% of its import from US

– Thailand’s sensitive items: glass, iron & steel, paint; tariffs to be reduced in 10 years

40


Thailand-US FTA• Intellectual property right :

– US wants more protection than existing level, particularly those related to phamarceutical products

– Thailand’s sensitive issue on drugs for AIDS; still disagreement with talks suspended

41

Criticisms on Trade Agreements Criticisms on Trade Agreements

• Lack study on costs and benefits, and skills in negotiations

• Inadequate public participation

• No consultation/approval with/from parliament (now a requirement in the new constitution)

• No measures to cushion adverse impacts

• Too much emphasis on “bilateral” FTA; better off from agreements in WTO forum

Documents

International Trade Policy of Thailand