Reduction of tariffs between Thai and European markets can be beneficial
but only if the concerns of all groups and sectors are heeded and acted upon
A free-trade agreement between
Thailand and the European Union seems to be on the cards, offering the prospect
of an end to tariff barriers for exports to the EU market. But the devil is in
the details. Both sides should weigh the potential benefits to ensure that the
proposed agreement is acceptable to all stakeholders.
The scope of the talks and the
details should be sufficient to facilitate more open business opportunities on
both sides, but the agreement should not require Thailand to enter into a
commitment that could adversely affect some sectors. Concerns over the
prospective intellectual property protection requirements under the FTA should
be incorporated into the formulating of the agreement.
The Thai parliament is set to
endorse the scope of the FTA talks in the near future, and will outline the
substance of the bilateral trade pact. The parliamentary debate, as required by
Section 190 of the Constitution, should allow all parties concerned to air
their opinions and offer either approval or dissent on the details of the
agreement.
The prospective Thai-EU FTA
should help facilitate the flow of goods between the Kingdom and the main
European markets after Thailand graduates to tariff privileges under the
Generalised System of Preferences by 2014. It is estimated that more than 700 products
will be affected after that date.
In theory the Thai agricultural
sector should benefit from the establishment of an FTA because Thai farmers
have traditionally exported a high volume of produce to the EU markets. The FTA
should lower the tariffs for our farm exports and give a price-competitive edge
for Thai goods.
In fact, the advent of the FTA is
almost inevitable because other countries in the region are trying to come to
similar agreements with the EU. Singapore is likely to be the first Asean member-country
to strike an agreement there, followed by Malaysia. Vietnam recently announced
that it would start FTA talks with the EU. Indonesia and the Philippines are
set to start negotiations soon.
The prospective EU FTAs with
individual countries have come after the suspension of negotiations between the
EU and Asean as a whole. The two sides began discussing an FTA in 2007 but
negotiations stalled due to Asean's insistence on including Myanmar. In
addition, the diverse levels of economic development in Asean member-nations
make some members wary about entering any agreement as a group.
Since the EU's FTA negotiations
are a comprehensive package covering the liberalisation of trade in goods,
investment and services, some sectors have voiced concern that any agreement
may affect the livelihood of certain groups of people. Activists have already
voiced concern, for example, that stricter intellectual-property protection
under an EU FTA could affect the public's access to affordable pharmaceutical
products.
Others are concerned that, even
though in theory an agreement should require the EU to lower tariffs for Thai
farm produce, in reality this may not be the case. Critics say this is because
some EU governments could cite barriers to maintain protection of their own
local produce. They might also raise issues such as standards for environmental
protection or sanitation. Current economic conditions among EU countries
meanwhile could make it difficult for European regional politicians to convince
constituents about the benefits of FTAs with individual Asian countries. Under
the present circumstances, some Europeans might not be receptive to an inflow
of foreign goods and services.
Nonetheless, the prospective
agreement will be important for bilateral trade. The EU has been one of
Thailand's traditional markets over the years, and the Western bloc is the
second-biggest investor in Thailand after Japan. An agreement could promote
further trade and investment between the two sides. The challenge is for governments
on both sides to explain to their people the benefits that can be derived from
an agreement, and to incorporate and address the concerns of citizens that
might arise during FTA talks.
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