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Time to make the most of trade with Japan

Bangkok Post

Time to make the most of trade with Japan

Special review agency could ensure that Thai businesses overcome obstacles and take full advantage of trade pact.

By Thanida Tansubhapol

19 April 2010

The government should set up an agency to follow up the implementation of the Japan-Thailand Economic Partnership Agreement (JTEPA) in order to make it more effective, says the Thailand Development Research Institute (TDRI).

Thai fruit exports have big potential in Japan but some Thai processors are not aware of the procedures they need to follow to achieve success, says the TDRI.

Somkiat Tangkitvanich, a TDRI vice-president, said such an agency would help Thai businesses to identify any obstacles encountered in the bilateral trade agreement with Japan, which took effect in November 2007.

"The new agency, which may be under either the Foreign or Commerce Ministries, will be able to prepare information for the Thai negotiating teams to review the JTEPA, expected next year," said Mr Somkiat.

He said Thai businesses in general have yet to fully tap the advantages from free trade pacts in recent years.

A TDRI study found Thailand could achieve billions of baht in tariff savings from exports under several FTAs: 3.8 billion baht per year from the Asean Free Trade Area (Afta); 6 billion from the JTEPA; 3.8 billion from the Thailand-Australia FTA; 3.5 billion from the Asean-China FTA; and 260 million from the Thailand-India agreement.

For imports, Thai businesses could enjoy 16 billion baht in tariff savings from Afta, and 4.2 billion from the JTEPA.

Mr Somkiat said only 56% of the Thai exporters currently benefit from tariff savings under the JTEPA. The top three beneficiary sectors are processed foods, textiles and garments, and jewellery and ornaments.

According to a survey by the Japan External Trade Organisation (Jetro), Japanese companies were more interested in the JTEPA than in any other FTAs that Japan had concluded.

Thai exporters, meanwhile, still report some problems related to JTEPA implementation, said Mr Somkiat.

For example, some small exporters complain that the procedure for applying for certificates of origin (C/O) is still too complicated. Others say that the preferential tariff margins are too low and rules of origin for some products are too restrictive to be useful.

Japanese companies also complain about the high fees for issuing C/Os for the just-in-time production system that is widely used in the automotive sector.

"The Thai government should launch campaigns to help people understand the rights of utilisation from the tariff reductions," said Mr Somkiat.

He proposed the government negotiate tariff reductions and relaxation of rules of origin for certain products such as animal feed, carpets, curtains and bed covers during the next review with Japan next year.

Meanwhile, the Customs Department and the Department of Foreign Trade should raise the awareness and increase understanding of JTEPA utilisation among Thai companies.

Mr Somkiat gave the example of the pineapple industry, saying that some players were unaware of the opportunity to export small pineapples weighing no more than 900 grammes, such as the Phu Lae variety, to Japan.

"This information is important. It would be a pity if we did not benefit from it. The new agency’s duty should be to collect information to be ready for a review negotiation with Japan."