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13 October 2015
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Thai exports in dire straits unless govt joins TPP, trade experts warn

 Thai exports in dire straits unless govt joins TPP, trade experts warn




EVEN THOUGH the recently agreed Trans-Pacific Partnership will not come into force until it is ratified by its member states, Thailand will immediately lose export orders and see its competitiveness decline next year, a seminar heard, and foreign direct investment will be the next casualty.

To reduce the impacts from a delay in joining the pact, the country needs to declare clearly its intention to join it eventually in order to preserve the confidence of traders and investors, while spending the 12 TPP members’ ratification period to study the pact, participants said.

At a Thailand Development Research Institute (TDRI) seminar on the deal, Nopporn Thepsithar, chairman of the Thai National Shippers Council, said private enterprises were deeply worried that the Thai export sector would lose out before the TPP’s implementation, as foreign buyers shift to TPP members, especially Vietnam and Malaysia.

In the long term, key foreign interests, mainly American and Japanese, will invest in other TPP countries. Thai industries that will certainly lose out are garments and electronics, he claimed. Raw-material export will also be affected.

Nopporn said that amid global liberalisation, inevitably Thailand could not refuse to join the world’s largest free-trade bloc.

“The country should not hesitate to join the pact over worries about losses, as nobody always wins with trade liberalisation. Thailand needs to accept both the benefits and challenges, then prepare and find remedies for each sector,” he said.

Sluggish for three years

Duanden Nikomborirak, research director at the TDRI, claimed the TPP would cause Thai exports, which have already been sluggish for three years, to slow even further. Exports by trade competitors, mainly Malaysia and Vietnam, to fellow TPP members will enjoy strong growth, while Thailand’s grow only slightly.

A TDRI study found that the 12 TPP members accounted for 40 per cent of Thailand’s trading value, and 10 per cent of this was with three countries – the United States, Canada and Mexico – with which Thailand has no free-trade agreement. As well, the TPP states account for 45 per cent of the value of foreign direct investment into the Kingdom.

Export products that will be hurt by high tariffs levied by the US are garments and clothes, tuna, electrical appliances, vegetables and fruits, textiles, food preparations, footwear, and rubber gloves.

Vietnam will gain significantly in the export sector, as it has similar products to Thailand. These are agricultural goods, textiles and garments, footwear, and automotive parts.

Duanden said investment in the service sector would also be affected as the TPP includes an investment protection agreement favouring its members. To lessen the impact from putting off joining the TPP, Duanden suggested that Thailand accelerate negotiations for the Regional Comprehensive Economic Partnership (RCEP) and resume bilateral talks with the European Union.

Some industries may need to relocate to other TPP countries and benefit from other FTAs. She said the government should also closely study the impact on important sectors, mainly from prolonged drug patents and rigid copyright enforcement.

Kannikar Kijtiwatchakul, FTA Watch coordinator, said that since Thailand was still led by an interim military regime, it could not yet join the TPP, but needed to spend this time to study the pact’s impact in all dimensions as well as find remedies for some concerned sectors.


First published in The Nation on Tuesday, October 13, 2015


Deunden Nikomborirak, Ph.D.
Research Director, Economic Governance