Somkid sees gains from Japan FTA
Business Day, Thailand
Somkid sees gains from Japan FTA
Dow Jones
10 August 2005
Commerce Minister Somkid Jatusripitak said yesterday Thailand will definitely gain more than it will lose from a planned free-trade agreement with Japan because of probable greater investments and higher exports in the long term.
Thailand and Japan agreed in principle earlier this month on a long-awaited free-trade agreement and expect to sign the deal around April unless disagreements arise over the details.
“We will be able to export more and gain more investments from Japan. That will more than offset the losses from import tariffs. We will lose only when we don’t improve ourselves to compete with them,” Somkid said at a news conference.
Thailand, he said, is expected to become a production hub for automobile, electronics and petrochemical industries once the agreement is effective as Japanese firms will invest more here.
Many critics have said Thailand will lose from slashing import tariffs on Japanese products, while exporters, particularly of agricultural products, may not be able to ship much more in goods to Japan due to the controversial rules of origins.
Revenues from import tariffs on Japanese goods were 43.5 billion baht last year.
Rules of origin are intended to ensure that the benefits of a trade agreement go only to products produced by the two countries that have signed the pact. Typically, the products must be grown, harvested, produced or “substantially transformed” within an area to qualify.
Somkid described the rules of origins as the Thai government’s key area of contention on the FTA.
“Whatever we should have, we must have it. If the issue can’t be solved and our products can’t access to Japanese market, we will not sign the deal,” Somkid said.
The deal is expected to take effect in October next year as the deal needs approval from Japan’s parliament, he said.
According to the foreign ministry, 42 billion baht worth of farm products face market-access restrictions in Japan, accounting for nearly half of 93 billion baht in agricultural products exported to that country every year.
Pisan Manavapat, chief negotiator and deputy permanent secretary of the foreign ministry, said that if the rules of origin issue can be resolved, Thailand will gain more from exporting agricultural products, offsetting losses on import tariffs.
Japan is Thailand’s biggest single trade partner, with bilateral trade at $35.79 billion last year. Of this, Thai exports were worth $13.50 billion, while imports were $22.29 billion, according to the the Ministry of Commerce’s website.
In the first six months of this year, trade value between the two countries was $20.56 billion. Of this, Thai exports were $7.44 billion while imports were $13.12 billion.
