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Thailand presses SA for free trade deal

Business Day, South Africa

Thailand presses SA for free trade deal

By Mathabo Le Roux, Trade and Industry Editor

12 May 2009

Thailand is eager to engage SA on a fully fledged free trade agreement (FTA) with the Southern African Customs Union (Sacu).

Thai Deputy Minister of Commerce Alongkorn Ponlaboot, who was in SA for the presidential inauguration of Jacob Zuma at the weekend, said Thailand had asked the South African government for a meeting to initiate bilateral trade negotiations.

Thailand is part of the very successful Association of Southeast Asian Nations (Asean) trade bloc, which also includes Indonesia, Malaysia, the Philippines and Singapore, and has a combined consumer market of 500-million people.

SA and Thailand have total bilateral trade between the two countries valued at $2,4bn last year - Thai exports to SA were valued at $1,6bn and SA’s exports to Thailand at $800m. Thailand also saw SA as a strategic gateway to the rest of the African continent, Ponlaboot said.

Whether Thailand’s bilateral overtures will be met will depend on the appetite of the new South African government, but the Thai foreign affairs minister has apparently requested an official meeting to initiate talks.

The deputy minister believed that bilateral ties could be strengthened through more formal trade co-operation between the Asean bloc and SA, and an FTA between Sacu, and even possibly with the Southern African Development Community (SADC), while Thailand would also proactively pursue closer ties between the two countries’ chambers of commerce.

Thailand will ask SA to hold the third joint trade commission meeting this year to initiate talks. The Thai ambassador-designate to SA, Tharit Charungvat, said the meeting could provide a platform where trade issues of mutual interest could be discussed - including the dismantling of trade barriers - and where FTA discussions could be initiated.

Thailand is anxious to formalise trade relations through an agreement, in part to arrest informal “cash and carry” trade of South African diamonds and Thai clothing and textiles, but also to liberalise trade.

“In dealing with the financial crisis, protectionism isn’t the way to go. We want to sit down with SA and identify protectionist measures and trade barriers and dismantle them,” Charungvat said.

But Ponlaboot also hinted that Thailand was eager to negotiate services liberalisation as part of an FTA. SA has in the past resisted requests from both the US and the European Union to enter into negotiations on

so-called new-generation issues, which include government procurement, financial services and telecommunications, saying the region is not ready to liberalise services. It is unlikely that SA will change that stance in negotiations with Thailand.

The Thai economy is 70% export-based and Thailand has seen a marked decline in export figures due to the global economic crisis. The country has injected about $500m of trade finance and export liquidity into its own market to prop up exporters and small enterprises. But Ponlaboot said intra-regional trade between Asean countries had cushioned the region from the fallout of the global crisis to an extent, offsetting the slump in demand from Europe, Japan and the US, which are Thailand’s biggest export markets.

Intraregional trade now accounts for 20% of Thailand’s total exports, and the Asean model has been punted by trade specialists as a model for regionalism that groupings such as SADC should emulate.