An overview of TAFTA & Thailand’s Other FTAs

PIMCHANOK VONKHORPORNExecutive Director

Bureau of Multilateral Trade NegotiationsDepartment of Trade Negotiations

Ministry of Commerce

OVERVIEWTAFTA

Thailand-Australia Free Trade Agreement TAFTA

• Bilateral Agreement• Signed on 5 July 2004• Came into effect on 1 January 2005

AANZFTA (ASEAN Australia New Zealand FTA)• Signed on 27 Feb 2009• Came into effect on 12 March 2010 except CLMV

SCOPE of TAFTA (1/2)Trade in goods further details on the following slidesTariff reduction and other trade measures such as NTBs

Safeguard Measures (SG)Special Safeguard Measures and Bilateral Safeguard Measures

Customs Procedures Cooperation in customs procedures development

Rules of Origins

Sanitary and Phyto-Sanitary Regulations (SPS)Equivalence of SPS and an establishment of SPS committee

SCOPE of TAFTA 2/2Technical Barriers to Trade (TBT) (Mutual Recognition Arrangements, exchange etc.)

E-commerce

Competition Policy

Intellectual Property

Free Trade in Services and Investmentfurther details on the following slides

Cooperation in Trade

Liberalization of Trade in Goods

Goods Free of Tariff (%)

Thailand Australia

1 JAN 2005 = 49.48%1 JAN 2010 = 93.28%

1 JAN 2025 = 100%

1 JAN 2005 = 83.21%1 JAN 2010 = 96.07%

1 JAN 2025 = 100%

Free Trade in Services and InvestmentThailand Australia

Enabling Australia to make large-scale investments in Thailand, holding up to 60% interest in projects where area, size, and minimum investment amounts are conditions of approval

Allowing Australia to set up educational science institutes in Thailand (with commercial presence unbound with respect to national treatment measures)

Allowing Australian businessmen with positions of Executive, Manager, and Expert to work in Thailand.

Open for 100% investment from Thailand in all categories except newspaper, broadcasting radio, and air transportation) (Investment over 10 million USD are subjected to approval)

Allowing Thailand to set up educational institutes with limited privileges

Allowing Thai businessmen with positions of Executive, Manager, and Expert to work in Thailand for a period up to 10 years

Trade after TAFTA in Force

EXPORT

IMPORT

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Investment after TAFTA in Force

TAFTA has entered into force since 1 Jan 2005.

FDI from Australia

Million USD

2001 2002 2003 2004 2005 2006 2007 2008

THE REVIEW of TAFTAThailand has committed to review TAFTA with Australia

on the following issues;

• Liberalization of trade in services : To open up in sectors that Thailand has potentials

• Review of Special Safeguard Measures • Competition Policy : To encourage free and fair

competition in line with enhance academic cooperation

• Government Procurement : To encourage exchange of information regarding government procurement

• Other issues• The first round is due to start in March 2011

OVERVIEWTHAILAND’S FTAs

WHY FTAsEXPORT-DRIVEN : MARKET ACCESS

REDUCE TRADE & INVESTMENT BARRIERS

EXPAND INVESTMENT : INFLOWS & OUTFLOWS

COST REDUCTION / RESOURCE-SEEKING

INTERNATIONAL ALLIANCE & CAPACITY-BUILDING

Traditional Markets

USA JAPAN

EU

PotentialMarkets & Resources

CHINA INDIA

AUSTRALIA NEW ZEALAND

KOREA

Linkage toOther

Regions

BIMSTECPERUEFTA

SELECTION

THAILAND’S FTAs

USA

ASEAN-EU

EFTA

Pending

Chile

NewInitiatives

ASEAN-GCC

ASEAN-MERCOSUR

BIMSTEC

ongoingNegotiations

FTAsin Force

ASEAN-IndiaThai-India

ASEAN-JapanJTEPA

ASEAN-China

ASEAN-Korea

ASEAN-CERThai-Australia

Thai-New Zealand

Peru

Thai-EU

ASEAN AEC

Some bilateralagreements havealready entered into force

SINGLE UNDERTAKINGTHAILAND-JAPAN (JTEPA)

THAILAND-AUSTRALIA

THAILAND-NEW ZEALAND

THAILAND-PERU

THAILAND-EFTAONGOING NEGOTIATIONS

ONGOING NEGOTIATIONS

IN FORCE 1 JULY 2005

IN FORCE 1 JANUARY 2005

IN FORCE 1 NOVEMBER 2007

SEPARATE AGREEMENTS

BIMSTEC

THAILAND-INDIA

ONGOING NEGOTIATIONS

on goods (82 Items)In Force 1 SEP 2004

on services & investmentONGOING NEGOTIATIONS

Thailandparticipated in numerous ASEAN FTAnegotiations

ASEAN-JAPAN

ASEAN-AUS-NZ

ASEAN-EUIN FORCE 12 MARCH 2010

PENDING

IN FORCE 1 JUNE 2009

SEPARATE AGREEMENTSAgreements on: Goods Services InvestmentASEAN-KOREA

ASEAN-CHINA

ASEAN-INDIA

In Force 1 JAN 10  In Force 1 JAN 10  In Force 13 OCT 09 

In Force 20 JUL 05  In Force 1 JUL 07  In Force 15 FEB 10

ongoingIn Force 1 JAN 10  ongoing

ASEANCOMMUNITY

AC : 2015

ASEANSocial-CulturalCommunity

(ASCC)

ASEAN Security

Community(ASC)

ASEANEconomic

Community(AEC)

AEC Declaratio

n

AEC BlueprintStrategic Schedule

AEC GOALS

•Free flow of goods•Free flow of services•Free flow of investment

•Freer flow of capital•Freer flow of skilled labor

•Priority integration sectors

• Competition Policy

• Consumer Protection

• IPR

• Infrastructure Development

• Taxation• E-Commerce

• SME Development

• Initiative for ASEAN Integration (IAI)

• Coherent Approach towards External Economic Relations

• Enhanced participation in global supply network

• FTAs with non-ASEAN

AASingle Market and Production Base

BBCompetitive

Economic Region

CCEquitable Economic

Development

DDIntegration into the Global Economy

13 Priority Sectors : E –ASEAN, Electronics, Textiles & clothing, Agro-business, Rubber, Automotive, Healthcare, Fisheries, Wood-based, Tourism, Air transport, Logistics

AEC Blueprint : Free Flows of Goods

REAFFIRM THE COMMITMENTS UNDER CEPT*-AFTATARIFF ELIMINATION

PRODUCT IN INCLUSION LIST

ELIMINATION of NTBs*

AEC Blueprint : Free Flows of Goods

INCREASE FOREIGN EQUITY PARTICIPATION

AEC Blueprint : Free Flows of Goods

Free Flows of Investment & Other Cooperations

Freer Flows of Capital : Implement measures endorsed by ASEAN Finance Ministers

Free Flows of Investment : Extend non-discriminatory treatment, including National Treatment and Most-Favored Nations to investors in ASEAN & Revise the AIA and draft the new ASEAN Comprehensive Investment Agreement (ACIA)

Other Cooperation : Food, Agriculture, Forestry, Intellectual Property Rights (IPR), E-Commerce, SEM Development, Infrastructure Development, etc.

AEC Blueprint : Free Flows of Goods

NEXT STEPS

The first round of these negotiations is set for March 2011

Under Feasibility Study

Under Feasibility StudyWaiting for cabinet approval;Then parliamentary approval

InvestmentOpportunities

AEC as aSingle Market

and Production

Base(economies of scale,

large markets, etc)

RegionalPlatform and

Building blocs

BIMSTECASEAN+3ASEAN+6FTAAP ?

Connecting Asia and the

World

China & IndiaUS & EU

BUSINESS OPPORTUNITIES

Emergence of the Global Factory

Source: Emerging Asian Regionalism (ADB 2008)

Openness and export-led

model created supply chains,

forming a regional hub

of global production networks.

These boosted productivity

and cut costs; enticing

investment and technology

transfer.

CHALLENGES FOR FUTURE FTAs

26

• Increased utilization of FTA•Trade adjustment

assistance•Regulatory reforms•Political factors•Regional / Global changes •Global economic recovery

Negotiations

Systemic Issues

•Tariff consolidation•Rules of origin •Services and investment

liberalization•New issues : env’t &

climate change, labor, security

UTILIZATION OF EXISTING FTAs

UTILIZATION OF EXISTING FTAs

Impediments to Using FTA Preferences% of responding firms

Note: . . . Indicates topic was not covered in the survey questionnaire for that country.

Reasons for Reasons for ImpedimentsImpediments JapanJapan SingaporeSingapore KoreaKorea PRCPRC ThailandThailand PhilippinesPhilippines

Lack of information 33.3 25.0 34.2 45.1 … 70.1

Delays and admin costs 53.3 60.0 10.8 10.6 22.2 30.6

Small margin of preference 33.3 60.0 35.8 14.2 16.7 13.4

Use of EPZ schemes/ITA … … 25.8 8.8 … 26.9

Confidentiality of information 26.7 30.0 … 10.6 … 12.7

NTMs in FTA partners … … 4.2 6.2 36.1 9.0

Too many exclusions … … … 4.4 25.0 14.9

Rent-seeking … … … 5.3 … 23.1

Number of respondents 15 20 120 226 36 134

Source : ADB (Kawai and Wignaraja)

Tackling the Noodle Bowl

31.0

37.5

15.4

6.3

26.227.7

0

10

20

30

40

50

Source: Kawai and Wignaraja (2009)

• Spread of FTAs triggered concerns about crisscrossing FTAs – (Bhagwati’s “spaghetti bowl of trade deals”, 1995, 2008).

Discriminatory trade liberalization with multiple FTAs means different tariffs and ROOs for same commodity.With FTA growth, international trading system chaotic and raises transaction costs for SMEs

Firm-level evidence shows that ROOsimpose limited burden on firms.

% of responding firms that reported multiple ROOs add to costs

ADJUSTMENT FUNDS (1/2)กองทนุปรับโครงสรางการผลิตภาคเกษตรเพือ่เพิ่มขีด

ความสามารถการแขงขันของประเทศ

(กระทรวงเกษตรและสหกรณ)FTA FUND

Ministry of Agriculture and Cooperatives

TOTAL FUND

540Million Baht2006-2009

FUND AVAILABLE

272Million Baht

2010

ADJ. FUNDS (2/2)

โครงการเงินชวยเหลือเพือ่การปรับตัวของภาค

การผลิตและภาคบริการที่ไดรับผลกระทบจาก

การเปดเสรีทางการคา (กระทรวงพาณิชย)FTA FUND : Ministry of Commerce

TOTAL FUND

280Million Baht2007-2010

FUND AVAILABLE

50Million Baht

2010

TARIFFREDUCTIONSCHEDULE

TARIFF REDUCTION SCHEDULE : THAILAND

TARIFF REDUCTION SCHEDULE : THAILAND

TARIFF REDUCTION SCHEDULE : OTHER PARTIES

TARIFF REDUCTION SCHEDULE : OTHER PARTIES

For More Information

Please contactDepartment of Trade Negotiations (DTN)

กรมเจรจาการคาระหวางประเทศ

www.dtn.go.th www.thaifta.com

Call Center 02-507-7444 , 02-507-7555