Trade Agreements Of Thailand

Launched in January 2004, the ASEAN-China Agreement (ACFTA) has since created the world`s largest free trade area, with 1.7 billion consumers, with gross domestic product (GDP) totalling approximately $2 trillion and a total trade volume (imports and exports) of about $1.2 trillion. This agreement has had a very positive impact on the Thai economy. Thailand has a limited free trade agreement with Laos (1991) and another with China (agriculture only, 2003), a framework agreement with Bahrain (as a springboard to a free trade agreement with the GCC, 2002), Peru (2003) and India (2003) and a fairly comprehensive free trade agreement with Australia (2003), New Zealand (2005) and Japan (2007). In addition to these rules, exporters must be able to accurately specify their product billings and understand their trade flows. This was a difficult undertaking for Thai companies, as experienced when they were modified the new version (2012) of Thailand`s HS code. Thai Customs asked the exporter (and importer) to indicate the classification of the goods under the new version, which was sometimes different from the previous version. During this period and according to the rules, country of origin (C/O) forms still required the old version of the HS code (2007), which had different references in the customs declaration. The obligation for Thai companies was to meet the requirements of a 2012 tariff change with outdated documentation of 5 years. As the process was difficult, some exporters did not wait for the C/O to be issued on time and skipped the process.

Thai exports account for a very large share of the country`s GDP (about 70% over the last three decades, according to the World Bank, which is relatively high compared to Japan (about 15%, 20% in Australia or 45% in Germany). By focusing on changes to accelerate exports, the country will realize its full potential by increasing export earnings in key and high-potential markets. These efforts will also encourage Thailand`s border and regional trade, with free trade agreements, as a key factor in the plan to strengthen economic ties with its major trading and regional partners. In addition to these examples, there is a specific FTA term called the “Ratchet Mechanism”[1] or “Unilateral liberalisation of new services automatically engages within the framework of this specific agreement.” This mechanism, if included in the free trade clause, is only one way to prevent, particularly for trade in services and investment parties, from modifying or improving national legislation, directives or regulations and not being replaced by more restrictive amendments than previous conditions. The aim of this mechanism is to ensure that measures are progressively beneficial under national legislation [1] Some trade and investment agreements include this mechanism, under which not all liberalisation measures taken by a Member State can be replaced by new, more restrictive measures. In the International Trade and Investment Rankings, Thailand ranks 49th (out of 189 economies) in the World Bank`s Ease of Doing Business Chart 2016. According to the ranking, and compared to the previous year, almost all difficulties have increased, including Thailand`s trade on cross-border groups (55 last year and 56 this year).