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TDRI pushes for fewer FTA restrictions and more pacts

Bangkok Post

TDRI pushes for fewer FTA restrictions and more pacts

6 August 2011

Business leaders and academics recommend the new government ease rules and extend the coverage of current free-trade agreements as well as step up the Trans-Pacific Partnership (TPP) talks.

Easing rules of origin and extending product lists of existing FTAs will help lift exports from Thailand to Asean, Japan and China, the top three overseas markets of Thai products, said the Thailand Development Research Institute (TDRI).

TDRI researchers found that Asean sourced more parts in strategic sectors, such as automotive and electronic industries, from China due party to cheaper manufacturing costs.

"While Thailand has reaped substantial benefits from existing FTAs with key partners, we found rules of origin and procedures under the current trade pacts have remained an obstacle to higher growth," said TDRI vice-president Somkiat Tangkitvanich.Thai manufacturers often face long and unclear procedures in FTAs, or their products fall on sensitive lists.

Last year 3.3 trillion baht worth of Thai goods and services were exported to FTA partners including Asean, China, Australia, Japan, Korea, and India, resulting in tax savings of 101 billion baht, with automotive, food and plastics manufacturers the main beneficiaries.

Only half the products exported to FTA partners receive tax incentives.

Thailand imported 2.15 trillion baht worth of goods from FTA partners with tariff reductions of nearly 60 billion baht. Around 40% of imported goods benefited from the FTAs.

"Eliminating tariffs for all goods will raise the trading value under the FTAs drastically, especially for new Asean members where tariffs remains high," Dr Somkiat said.

Sectors poised to benefit if rules of origin are eased are food, chemicals, textiles and machinery. Sugar and rice remain on the sensitive list while the FTA with Japan has quotas on molasses, iron and steel.

Pongsak Assakul, vice-chairman of the Thai Chamber of Commerce, said Thailand had been hesitant in taking part in the TPP negotiations, a US-backed process that involves Singapore, Vietnam, and Malaysia.

Singapore and Vietnam are also pursuing FTAs with the European Union (EU). While Thailand stalls, the EU has turned to the Philippines as its next target, said Mr Pongsak, who is also president of the Thai Textile Manufacturing Association of Thailand.