Thailand: The Thai-Australian Free Trade Agreement


Cavan Hogue

Negotiations for the TAFTA have been completed and the formal signing of the agreement is to take place when Prime Minister Thaksin visits Australia some time in June or July.

Both sides see advantages in the agreement although some Thais have expressed concern about potential Australian competition. Also, as the Australian Trade Minister has rightly pointed out, because Thailand is negotiating trade agreements with some of Australia s competitors, the benefits will be greatest to those Australian firms who get in before these other agreements extend some of the same concessions to other countries.

TAFTA will reduce more than half of Thai tariffs on Australian goods on the day it comes into force and most others will be phased out from 2005 to 2010. There will be real benefits to Australian exporters in services, agricultural products and manufactures.

DFAT has produced details of benefits for Australian exporters. Some highlights are:

" from the date the FTA enters into force, Thailand will eliminate tariffs on items representing 78% (49.4% of tariff lines) of current Thai imports from Australia; " over 2005-2010, items covering 17% (41%of lines) of imports will go; " Thailand currently has tariffs up to 60% on agricultural products of interest to Australia and up to 80% on general industrial products both will be reduced to 20% and then phased out over the next five years; " products of special interest to Australia include processed foods, automotive products, chemicals and metals.

While its primary focus is on bilateral trade, there are some political angles. The completion of a FTA with Thailand is seen by the Australian Government as evidence that it can operate effectively in Asia and that its critics are wrong in arguing that John Howard has destroyed Australia s relationships in Asia. On the Thai side, this is the first such agreement Thailand has completed with a developed country so, as a Thai Confederation of Industries representative pointed out at the recent NTSC Thai Update, a major Thai interest was to negotiate something with Australia which might serve as a model for negotiations with other developed countries whose markets had more to offer.

Full details on particular products are available from or by telephone on (02) 6261 2373.

WATCHPOINT: Entry into force of the Agreement and progress of other Thai negotiations, which might lessen Australia s advantages, will be of particular interest to Australian businesses.


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