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International Trade Policy of Thailand

International Trade Policy of Thailand. Outline. 1. International trade policy 2. Trade agreements WTO Regional and bilateral 3. Some comments on regional trade agreements. Reference:. นโยบายการค้าระหว่างประเทศของไทยในช่วงปี 2543 ถึงปัจจุบัน โดย รศ.ดร. ชยันต์ ตันติวัสดาการ.

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International Trade Policy of Thailand

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  1. International Trade Policy of Thailand

  2. Outline 1. International trade policy 2. Trade agreements • WTO • Regional and bilateral 3. Some comments on regional trade agreements

  3. Reference: นโยบายการค้าระหว่างประเทศของไทยในช่วงปี 2543ถึงปัจจุบัน โดย รศ.ดร. ชยันต์ ตันติวัสดาการ

  4. Overall 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 Measures • Tariff as main tool, rates declining over time • Average rate of 14.7% (2003) from 5,505items • 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 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 Measures • 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

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

  9. Import Measures • Measures to protect local products from “unfair” imports: • safeguards by import surcharge (BOI and MOC) • anti-dumping (e.g. on iron products, glass)

  10. Export Measures • 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

  11. Other Measures • 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

  12. Trade Agreements

  13. World Trade Organization (WTO) Thailand’s stand in WTO negotiations: • Comply withMFN principle • Emphasis on free trade in agriculture, reducing export subsidies anddomestic supports; also a member of the Cairns Group

  14. World Trade Organization (WTO) Thailand’s stand in WTO negotiations: Against trade restriction based on environment standards Against trade restriction based on non-scientific evidence e.g. GMO prroposed by EU 14

  15. World Trade Organization (WTO) 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) 15

  16. World Trade Organization (WTO) Thailand’s stand in WTO negotiations: Pay attention to: Issues related to investment and competition, to be linked to trade 16

  17. 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 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 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) 19

  20. APEC ASEM Canada Chile Mexico Papua New Guinea Peru USA New Zealand Australia + 1 China EU + 3 Japan Korea CER BIMST-EC Bangladesh India Sri Lanka AFTA-CER Pakistan Bahrain Yunan GMS ASEAN Singapore Philippines Indonesia Brunei Malaysia Vietnam Thailand Myanmar Cambodia Laos Source: adapt from TRDI

  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 Thailand 21

  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 Thailand 22

  23. 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. ASEAN Free Trade Agreement (AFTA) • 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 Free Trade Agreement (AFTA) • 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 (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) • 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: 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. หมายเหตุ: ตัวเลขท้ายชื่อประเทศ เป็นอันดับความสามารถในการแข่งขัน, หน่วยของมูลค่า (ล้านบาท), ไทย อันดับ 32

  30. Bilateral Trade Agreements: 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. Bilateral Trade Agreements: Thailand-India • Relatively small trade • “Early harvest” covering 82 items from January 2004 • Zero tariffs for other items planned in 2010

  32. Bilateral Trade Agreements: 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. Bilateral Trade Agreements: 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. Bilateral Trade Agreements: 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. Bilateral Trade Agreements: 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 35

  36. Bilateral Trade Agreements: 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 36

  37. Bilateral Trade Agreements: 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 37

  38. Bilateral Trade Agreements: 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 38

  39. Bilateral Trade Agreements: 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 39

  40. Bilateral Trade Agreements: 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 40

  41. 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 41

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