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Trade watch: Thai exports in EU


webfact

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Trade watch: Thai exports in EU

Praphorn Praphornkul

 

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BANGKOK (NNT) - Thailand’s export sector has been hit hard by the COVID-19 pandemic, as exporters could do little but wait for the situation to improve.

 

The issue is challenging due to fiercer competition, higher standards and the conditions that apply to Free Trade agreements (FTAs). At present, the European Union (EU) market may be considering importing products from Vietnam instead of Thailand because of the European Union-Vietnam Free Trade Agreement (EVFTA).

 

Pasta, rice, prepared fish, canned squid, motorcycle tires, vegetables and fruit, including durian, are some of the products that the EU may want to import from Vietnam rather than Thailand. Vietnam’s product prices are lower, as the EU is progressively removing its duties on imports from Vietnam.

 

The EVFTA came into force on August 1, 2020. Under the pact, both sides are required to eliminate 99 percent of tariffs on goods traded between them.

 

Vietnam is eliminating 99 percent of its import duties over 10 years and the EU is doing the same over seven, with two thirds of all products, such as textiles and food, being duty-free immediately. Thailand also exports these products, including rice, seafood and car parts, to the EU.

 

The FTA enables Vietnam to export products at lower prices than Thailand. When the product quality is similar, buyers are likely buy products made in Vietnam.

 

To address this issue, the Director-General of the Department of Trade Negotiations, Auramon Supthaweethum, said today that if Thailand cannot compete on prices, it has to focus on product differentiation through the enhancement of product quality and standards. Thailand has to use other trade channels and benefit from its own FTAs to compensate for the tariff difference.

 

Mrs. Auramon urged Thai entrepreneurs to be ready to compete in international markets, particularly the EU. There are good markets for many Thai products which have the potential to succeed.

 

Import tariffs on many Thai products have been waived, after Thailand signed FTAs with its trading partners, such as China and Japan. In addition, Thailand has not fully utilized the privileges offered by the Regional Comprehensive Economic Partnership (RCEP), which will come into full effect soon, due to the large market share.

 

The EU is Thailand’s fourth-largest trading partner, accounting for eight percent of the country’s trade in the global market. Last year, the total export value of Thai goods was 17.6 billion dollars US, or about 520 billion baht.

 

The Thai government is also working to resume FTA negotiations with the EU. The negotiation framework is being prepared to improve the competitiveness of Thai goods.

 

Thailand has so far signed 13 FTAs with 18 countries, accounting for 63 percent of the country’s trade on the global market. With more than 30 percent remaining, Thailand has to enter more trade agreements.

 

Thai entrepreneurs have to be ready to compete, especially during the COVID-19 pandemic. They have to adapt to consumer behavior in the digital era, as more people are looking for ways to improve their health. Levels of particulate matter of 25 microns or less in diameter (PM2.5), have also become a major environmental concern.

 

Entrepreneurs have to take these issues into consideration when developing products, to comply with market requirements and meet consumer demand.

 

 

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40 minutes ago, webfact said:

 

Thai entrepreneurs have to be ready to compete, especially during the COVID-19 pandemic. They have to adapt to consumer behavior in the digital era, as more people are looking for ways to improve their health. Levels of particulate matter of 25 microns or less in diameter (PM2.5), have also become a major environmental concern

 

First entrepreneur to come up with a big butterfly net to run 'round capturing the pesky PM 2.5's is on a winner .. 

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The Vietnamese are an industrious and hardworking people, they have a single party system resulting in a stability of policy lacking in Thailand, and, they do not have great concentration of any sector of an industry under any one company.

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Thailand has been its worse trade barrier.

I suggest:

Value of baht consistantly too high for exports (but apparently great for the SET).

Unable to negotiate new GSP terms with the USA when it expired - insist previous terms remain or nothing and got nothing (default to less advantaged WTO terms?).

Difficulty abiding with FTA's and resorting to illegal retributions (ie., cigarettes from The Philippines) and/or Thai courts to bypass compliance with FTA binding arbitration.

Refuse to recognize its WTO/ASEAN trade violations.

Insufficient global trade expertise to be competitive (too reliant on domestic Thai price controls, government subsidies, state-owned enterprise monopolies & Thai corporate/government "cooperation")

 

 

 

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5 hours ago, webfact said:

The issue is challenging due to fiercer competition, higher standards and the conditions that apply to Free Trade agreements (FTAs).

 

5 hours ago, webfact said:

Vietnam’s product prices are lower, as the EU is progressively removing its duties on imports from Vietnam.

Nothing to do with Covid 19.. just plain old market forces.

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A trade deal between the EU and Thailand would be great for us expats. Cheap wine, cheese, cars, motorcycles etc. from EU member states would be fine and dandy.

 

If the EU starts negotiating now, and assuming Thailand doesn't mind being subject to the ECJ, handing over it's fishing grounds to EU shipping fleets, following all the EU's ever increasing regulations, there could easily be a deal done by 2035 😆.

 

Of course, Thailand being Thailand they'd probably keep all the huge taxes on the imports and expect to export tariff free anyway.

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2 hours ago, Srikcir said:

but apparently great for the SET

 

I haven't seen that evidenced in my LTF/RMF investments !

Pretty uninspiring growth for the last 5 years and a very slow recovery (compared to most indices) from the decline last March. 

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2 hours ago, Srikcir said:

Thailand has been its worse trade barrier.

I suggest:

Value of baht consistantly too high for exports (but apparently great for the SET).

Unable to negotiate new GSP terms with the USA when it expired - insist previous terms remain or nothing and got nothing (default to less advantaged WTO terms?).

Difficulty abiding with FTA's and resorting to illegal retributions (ie., cigarettes from The Philippines) and/or Thai courts to bypass compliance with FTA binding arbitration.

Refuse to recognize its WTO/ASEAN trade violations.

Insufficient global trade expertise to be competitive (too reliant on domestic Thai price controls, government subsidies, state-owned enterprise monopolies & Thai corporate/government "cooperation")

 

 

 

 

Yes, mostly valid points. 

Many of these are relating to the 'rule of law' which those pesky international counterparties are quite keen on.

The local oligarchs less so, as this creates innovative concepts such as competition, responsibility and accountability. These kind of issues are not a consideration in their domestic monopolistic business operations.

 

It's a shame really, Thailand has the potential to grow so much economically, with the chance to raise opportunities and living standards on a more widespread basis. 

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5 hours ago, malathione said:

The Vietnamese are an industrious and hardworking people, they have a single party system resulting in a stability of policy lacking in Thailand, and, they do not have great concentration of any sector of an industry under any one company.

The Vietnamese also have a better Educated Workforce, and are therefore able to offer higher end skills to the EU, and any other Trading Partner, whether under a FTA or not.

Labour costs are also less in Vietnam, making the Goods Exported cheaper, and with a higher value added figure to them.

Thailand has been missing the Ferry now for several Years, and the latter half of 2019 was showing a severe decline in Thai Exports before any impact from Covid 

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2 hours ago, JonnyF said:

A trade deal between the EU and Thailand would be great for us expats. Cheap wine, cheese, cars, motorcycles etc. from EU member states would be fine and dandy.

 

If the EU starts negotiating now, and assuming Thailand doesn't mind being subject to the ECJ, handing over it's fishing grounds to EU shipping fleets, following all the EU's ever increasing regulations, there could easily be a deal done by 2035 😆.

 

Of course, Thailand being Thailand they'd probably keep all the huge taxes on the imports and expect to export tariff free anyway.

Exactly the problem as always.   The Thai mentality is export with low or no Tariff's whilst importing with massive Tariff's and until that mindset is altered there should be no deals available with the EU or Britain.

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To me the difference is the Vietnamese govt will structure trade to be better for all of Vietnam, whereas Thailand structures everything to be better for a select few. This won't change and Thailand won't change

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12 hours ago, webfact said:

Auramon Supthaweethum, said today that if Thailand cannot compete on prices, it has to focus on product differentiation through the enhancement of product quality and standards

Oh, well, that seems doomed to failure from the outset

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22 hours ago, Srikcir said:

Thailand has been its worse trade barrier.

I suggest:

Value of baht consistantly too high for exports (but apparently great for the SET).

Unable to negotiate new GSP terms with the USA when it expired - insist previous terms remain or nothing and got nothing (default to less advantaged WTO terms?).

Difficulty abiding with FTA's and resorting to illegal retributions (ie., cigarettes from The Philippines) and/or Thai courts to bypass compliance with FTA binding arbitration.

Refuse to recognize its WTO/ASEAN trade violations.

Insufficient global trade expertise to be competitive (too reliant on domestic Thai price controls, government subsidies, state-owned enterprise monopolies & Thai corporate/government "cooperation")

 

 

 

That's what happens when you have generals running the country, or should I say, trying too.

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What are new Harley-Davidson motorcycle prices like in Europe / UK now compared to when they came from US pre 2019?

These bikes are all coming from the assembly plant in Thailand.  Only CVO models come from US now (to both Thailand and Europe).  I believe Europe / Thailand agreed to a 6% import tax on the bikes.

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Thailand has caused the loss of markets as the strong Baht continues and Human Rights violations increase. USA and EU may very well impose additional restrictions on trade with Thailand.

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