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Prospects high for fruitful end to Thailand-EU FTA talks

The Nation, Bangkok

Prospects high for fruitful end to Thailand-EU FTA talks

By Nophakhun Limsamarnphun

July 20, 2013

Italian envoy cites long ties with Kingdom

Michelangelo Pipan, Italy’s ambassador to Thailand, is bullish on the prospects of a successful free trade agreement between Thailand and the European Union.

"On the FTA negotiations, of which Italy is a key EU member, I think there are fundamental factors supporting the work. First, Thailand is graduating from the GSP system of preferential tariff treatment for goods exported to the EU, so we need a new basis on bilateral trade.

"The first round took place in Brussels recently, while the second round will take place in September, possibly in Chiang Mai. The FTA is a more comprehensive mechanism than the GSP [Generalised System of Preferences], making things easier for both sides, covering trade in goods and services as well as investment.

"The GSP is more like a unilateral thing, but an FTA is more equal. The EU already has an FTA with Singapore while negotiating with Thailand and Vietnam, and next is Malaysia. These are building blocks and in the end, we hope to have an FTA with the 10-country ASEAN grouping.

"The EU has 28 member countries, as Croatia has joined. ASEAN has 10 countries plus China, Japan, Korea etc."

According to the envoy, Thailand’s diplomatic relations with Italy date back centuries, marked by King Chulalongkorn’s visit to that country in 1907.

"Thailand is ranked the 25th-most-important trading partner for Italy. Among ASEAN countries, Thailand is No 1, with Italy exporting machine tools, auto parts, consumers goods, and rubber products to Thailand.

"On the other hand, Thailand exports jewellery, air-conditioners, electronic parts, auto parts etc to Italy. Bilateral trade topped US$4 billion [Bt120 billion] in 2011, but it went down a little bit last year [because of the euro-zone economic crisis]. This will be soon overcome. The Italian economy is not in an easy situation. More or less, European economies are in a situation in which we are confronting increased competition from emerging economies in Asia, so we have to restructure our economies and boost productivity.

"Italy is strong in small and medium-sized enterprises, so we need to boost our SME sector. We focus on clusters of SMEs in footwear, electronics, furniture, chemicals, etc with emphasis on incubators, innovation and other measures to make their business easier and more competitive.

"Linkages with universities and research institutes are also key to boost their competitiveness, with the European Union also providing financial aid in terms of R&D [research and development] funding.

"High wages in Europe are an issue when competing against emerging markets where wages are less, but think of textiles as an example in which European producers can compete in the upper-end market segments instead of mass markets.

"An MoU [memorandum of understanding] was also signed in 2005 with Thailand to work together in SME development. "We also welcomed the recent investment by Thailand’s Central Department Store group in which it acquired Italy’s La Rinascente department-store chain, the No 1 and oldest chain in Italy.

"The deal reflects the quality of this department-store chain and its importance for the tourist and local customer businesses. In the future, it can also be the vehicle for Central to enter the third-party overseas market.

"We’re a top tourist destination in Europe, with visitors estimated to be no [fewer] than 40 million a year.

"Italian investment in Thailand has also expanded in recent years. Recently, Ducati set up a motorcycle factory in Thailand with an expansion plan under way for both domestic and export sales. Italian investors are also involved in steel, gas-cylinder, cement, and frozen-fish sectors.

"In services, we’re less active, but Italian restaurants or pizzas are our food ambassador."