Jun 16, 2013

Thailand - German envoy hopeful of Thai-EU FTA by 2015

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Rolf Schulze, the German ambassador to Thailand, is upbeat about the prospects of the Thailand-European Union Free Trade Agreement (FTA), whose first round of negotiations started late last month in Brussels.

“Last year Thailand and Germany celebrated the 150th anniversary of diplomatic relations. Within the European Union, Germany is by far Thailand’s most important trading partner,” Schulze said.

“In 2012 bilateral trade amounted to $10 billion or about Bt325 billion—an aggregate of the UK’s and France’s together, representing an annual growth rate of 5 percent to 6 percent.

“Thailand had a slight surplus exporting automotive parts, [information technology] parts, agricultural and aquatic products, garments and footwear to Germany. Likewise, we exported automobiles, chemicals, machinery, IT products, electronics, kitchen and other equipment.

“In terms of investment, German firms are here and invest in factories for luxury cars such as Mercedes-Benz and BMW, chemicals such as BASF and Bayer and a whole range of SMEs [small and medium-sized enterprises]. Altogether, 600 German firms are in Thailand and foreign direct investment amounted to around €1 billion in 2012.

“In the service sector such as tourism, last year, 700,000 Germans visited Thailand, a very attractive holiday destination, and after having been here for two years I understand why it’s so. In addition, 30,000 Germans are permanent residents who have migrated to Thailand.

“Besides tourism, German firm DHL is a major player in the logistic sector, employing 16,000 in Thailand, making it one of the country’s biggest employers. We are also strong in law firms, insurance and banks and other professional services such as Allianz, Deustche Bank and Commerzbank.

“Last July Prime Minister Yingluck Shinawatra paid a state visit to Germany and extended an invitation for German Chancellor Angela Merkel to visit Thailand. In September this year, we will have a general election in Germany and my impression is that there is a window of opportunity to visit Thailand after the election.

“On the Thai-European Union FTA negotiations, the first round of talks took place in Brussels late last month. Germany has been a driving force behind the negotiations. We have convinced our European and Thai friends of the benefits of this FTA.

“We hope the negotiations will be carried out on an equal footing and a win-win situation for with added values for both parties. We want a comprehensive agreement covering the whole varieties of bilateral trade relations.

“Let’s be ambitious that the FTA talks will be concluded in 2015 when the Asean Economic Community [AEC] will be effective. If both parties work hard, we can achieve [an agreement], and we see Thailand as an attractive market with a robust economy. German firms want to be part of this success as well as in the greater framework of the AEC in 2015.

“The FTA will lower or abolish the import tariffs so products [moving] into Thailand or out of Thailand will be cheaper. Thailand already has FTAs with many countries, such as Japan, Korea and India. European companies have found it difficult to compete with these countries in an equal scenario, so an FTA with Thailand is important.”

Against the backdrop of slow movement in the World Trade Organization in liberalising global trade, “we must be realistic that FTAs must be in our toolbox in boosting our competitiveness.”

“Meanwhile, Thailand is no longer a developing country but a higher-medium-income country about to join the ranks of developed nations. Concerning the EU, we give preferential tariffs to developing countries including Thailand; this will probably end in 2015 due to the country’s changing status as reported by the World Bank.

“So it’s also in Thailand’s interest to negotiate the FTA with the EU to maintain its competitiveness in exporting to the EU. When bilateral trade is boosted by the FTA, more investment will follow, especially in view of Thailand’s good infrastructure and highly developed landscape for foreign direct investment. “The FTA will further boost European capital into Thailand.

“On the euro-zone economic crisis, I can reassure Thai business leaders that there is no need to worry and you can count on the euro. There is no euro-zone crisis [as such] but a sovereign debt crisis of a few countries of the 17-country euro zone.

“The sovereign debt crisis is that these few countries have financial problems as they could no longer manage their deficits. It’s not the single currency crisis. The euro remains a strong currency, while the 27-country European Union as a whole is not in a crisis either.”

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