Thailand needs clear strategy on trade pacts

Thailand needs clear strategy on trade pacts
PHOTO: The Straits Times

During the ongoing difficult period for global trading, many countries have turned their attention increasingly to trade liberalisation.

In ASEAN, member countries have not only looked to the ASEAN Economic Community, the important regional integration, but also beyond to other, bigger regional groupings - and to bilateral trade pacts - to ensure their competitiveness and market access globally.

Besides its well-established ASEAN free-trade agreement (Afta), ASEAN has regional trade pacts with China, Japan, South Korea, India, Australia and New Zealand - ASEAN+6 - that are already effective, while also negotiating another two regional agreements.

Meanwhile, all ASEAN member have also proceeded with their own individual free-trade pacts and negotiations to ensure they get the maximum benefit in terms of market access and closer co-operation with other countries, in particular with economic giants such as the United States and the European Union, but also with other emerging economies, as detailed in the accompanying graphic.

Thailand currently has 10 FTAs in place, including the Thai-Chilean pact, the most recent of the agreements to come into effect.

The FTAs together generated US$261 billion (Bt9.44 trillion) in trade value, or 57.4 per cent of the Kingdom's total trade, last year.

Thailand is also speeding up free-trade talks with Pakistan and Turkey, while bilateral talks with the European Union and the European Free-Trade Association have currently been suspended.

Singapore has the highest number of free-trade deals among ASEAN member countries, since it has a highly developed system and is a fully open country for free trade.

Thailand, meanwhile, when compared with other ASEAN countries, has delayed joining a number of potential regional groupings, most notably the US-initiated Trans-Pacific Partnership (TPP).

The government, therefore, needs to establish a clear strategy in regard to joining wider groupings, and how to effectively negotiate such deals.

If the focus is only on participating in a host of bilateral FTAs, the country risks sinking into a big bowl of spaghetti - with little overall benefit.

Nopporn Thepsithar, chairman of the Thai National Shippers' Council, said that with so many countries now focused on free-trade deals, Thailand could not ignore the opportunity to participate in large free-trade agreements, including the TPP, the Regional Comprehensive Economic Partnership and a pact with the European Union.

However, the most important thing is not how many free-trade pacts Thailand should have, but how it can reap the maximum benefits from each agreement, he stressed.

According to the Trade Negotiations Department, Thai enterprises have to date only reaped around 50 per cent of the potential benefits from the country's existing trade pacts.

"The government should adjust rules and laws to facilitate and encourage enterprises to get benefits from the FTAs. Enterprises should also learn how to maximise FTA benefits; this may entail some process changes or higher costs in the beginning, but they will have lower costs in the long run," he explained.

Moreover, he called on the authorities to upgrade the country's trade standards, laws and regulations, as well as develop each industry to using high technology and innovation in preparation for high-standard free-trade pacts that come in the form of a partnership, like the TPP.

Sirinart Jaimun, director-general of the Trade Negotiations Department, said that starting from next year, the government would follow a clear strategy when it came to moving forward on ASEAN integration, as well as on other free-trade negotiation plans.

"The government has a strategy to create economic linkage among ASEAN members, and through third countries worldwide, as realising those free-trade deals will encourage higher development and business adjustment," she said.

Promoting competitiveness

Meanwhile, the department will focus on increasing the competitiveness of small and medium-sized enterprises, and develop human resources and infrastructure.

It will co-operate with other government agencies to draw up short- and long-term plans to prepare the country for regional integration and seamless trade, she added.

The agency chief said the plan to move Thailand forward to seamless trading and closer economic co-operation comprised:

Promotion of service-business growth, as such businesses would benefit from growth of the production sector;

Promotion of infrastructure development to ensure Thailand is at the centre of ASEAN trading and investment;

The development of information technology and logistics systems for the facilitation of more trade;

The amendment of domestic rules and regulations that may hinder the growth of trading;

Services and investment;

Support research and development;

Promotion of human-resource development in all sectors.

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