Thailand : EU FTA

The Thailand-EU FTA in historical perspective

EABC – The EuroCham in Thailand

Thailand – EU partnership

Growing the Thai economy

Conclusions

Q&A

Supported by the European Union 2

The Thailand-EU FTA negotiation is the latest example of the EU growing closer to ASEAN ◦ Dec. 2009 - EU approves FTA negotiations with ASEAN

member states

◦ 2010 – EU begins FTA negotiations with Singapore and Malaysia

◦ 2012 – EU begins FTA negotiations with Vietnam

◦ Dec. 2012 – Singapore-EU FTA negotiations completed

◦ Mar. 2013 – Thailand-EU FTA negotiations begin


The European-ASEAN Business Centre (EABC) represents the interests of the European business community in Thailand

With our consortium partners we have a combined membership of about 2,000 companies in Thailand

There are nine advocacy working groups


EABC members are active and positive contributors to the Thai economy and society

Many have been in Thailand for decades and consider it home

We need Thailand to be economically strong and prosperous


The EABC strongly supports the Thailand-EU FTA

The Thailand-EU FTA will: ◦ Provide immediate benefits to the overall Thai

economy

◦ Boost EU investment in Thailand

◦ Help take Thailand’s service sector to the next level

By entering this Partnership for Growth Thailand will create a virtuous cycle of economic growth and development


Thailand will not enter the FTA as a ‘junior partner’ ◦ The EU is Thailand’s 3rd largest trading partner

◦ The EU is the largest investor in ASEAN


EU Imports and Exports with Thailand

Source: European Commission, May 2013

Million EUR


Source: Bank of Thailand

Millions US$

EU FDI

US FDI

The Thailand-EU FTA will promote trade and investment and increase Thai access to the EU market


EU imports of Thai goods expected to grow 6.7% (950 million EUR) in the first year of the FTA

An additional 0.56% Thai GDP growth related to the FTA

“Thailand's Trade Options. Managing Trade Relations with the EU", Study prepared for Board of Trade November 2012.


Inward FDI Stocks South Africa R1,000

million

Source: South African Reserve Bank

South Africa-EU FTA

US$ Millions

Source: ASEAN Secretariat

FDI Inflows Selected ASEAN Members

The FTA will allow significantly greater investment in Thailand’s service sector and bring much needed knowledge and technology transfers

Services are critical for moving to the next level of economic development but Thailand’s service sector has lost its competitive edge


The service sector is a critical part of the Thai economy but it is losing its competitive edge


Services as % of GDP Thailand’s Service Exports

Source: World Bank Development Indicators 2013

13

Services as a share of GDP Comparison of services sector contribution to GDP in selected

economies, 1970 and 2010

-

10

20

30

40

50

60

70

80

19

70

19

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19

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19

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00

20

01

20

02

20

03

20

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20

05

20

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20

07

20

08

20

09

20

10

Pe

rce

nt

Services (% of GDP)

China

Korea, Rep.

Malaysia

Taiwan, China

Thailand


45 44 42 42 41 39 39 40 39 40 40 41 39 42

14 15 15 15 16 16 16 15 16 15 14 14 21 14

41 41 42 42 43 45 46 45 45 46 46 45 41 44

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Agriculture Manufacturing Service

The service sector employs 44% of the labour force compared to

14% for manufacturing

10 10 10 10 10 10 9 9 9 9 9 8 9

38 39 38 39 40 41 41 41 42 42 41 43 41

52 51 51 51 49 50 50 50 49 49 50 49 50

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Agriculture Manufacturing Service

50% of GDP comes from the service sector compared to 41%

from manufacturing

Source: NESDB


Source: IMD World Competitiveness Yearbook 2012

($ per person per annum)

16

Most of the developed economies are innovation-driven economies

Factor driven

Bangladesh, Cambodia, Nigeria, Pakistan, Vietnam, Zimbabwe

Transition from 1->2

Brunei, Philippines

Efficiency driven

China, Colombia, Indonesia, Malaysia,

Thailand, South Africa

Transition from 2->3

Argentina, Brazil, Chile, Mexico, Russia

Innovation driven

Australia, Canada, Singapore, Hong Kong, Korea, Japan, EU, US, Taiwan


In ASEAN the EU has just finalized an FTA with Singapore and is currently in negotiations with: Malaysia, Thailand and Vietnam

Total Trade: 775,153 Total FDI: 63,997




Data: millions US$ Source: ASEAN Secretariat

Making the adjustments that go with the FTA will yield multiple benefits for Thailand

The launch of the FTA will put in motion a process that leads to increasing prosperity for Thailand



More attractive

investment

destination

Increased FDI

Increased

skills/

technology

transfer

More

competitive

economy

Thailand-EU FTA

Thailand is faced with unique opportunities to grow its economy, but if the FTA is delayed it may loose this chance and its neighbors move ahead

Thailand should lock in its FTA benefits before the AEC comes into effect in 2015

Today’s opportunities outweigh its challenges and Thailand is moving forward with vision and confidence


The global economy is becoming ever more integrated and Thailand is part of this trend

The Thailand-EU FTA creates a true Partnership For Growth with numerous important benefits for Thailand’s economy

In particular this agreement will increase investment and facilitate technology and skills transfer to Thailand’s service industry



As long-standing participants in Thailand’s society and economy

the EABC and its member companies express our strong

support for the Thailand-EU FTA

Thailand : EU FTA

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