Thailand is set to host the second round of free trade agreement (FTA) discussions with the European Union (EU) in January, aiming to finalize an agreement within the next two years.
- The talks will focus on liberalizing trade, investment, and services, with the goal of completing negotiations by 2025.
- The European Parliament’s approval is crucial for the Thai-EU FTA, highlighting the EU’s interest in Thailand as an economic partner.
- Thailand’s exports to the EU reached $18.2 billion, while imports totaled $16.7 billion in the first ten months of this year.
The talks will focus on liberalizing trade, investment, and services, with the aim of finalizing an agreement within the next two years. The plan is to conduct three meetings annually and complete negotiations by 2025.
The EU is Thailand’s fourth-largest trading partner, and the recent interactions highlight the EU’s interest in Thailand as an economic partner. The European Parliament’s approval is crucial for the FTA.
Thailand’s exports to the EU reached $18.2 billion, while imports totaled $16.7 billion in the first ten months of this year.
Thailand to host second round of FTA discussions with the EU
Thailand and the European Union (EU) have recently announced the relaunch of negotiations for a free trade agreement (FTA) that aims to boost trade and investment between the two partners.
The FTA talks were put on hold in 2014 following the military coup in Thailand, but resumed in March 2023 after the EU took steps towards broadening its engagement with Thailand, following the Council Conclusions of 2019 and the 2021 EU Indo-Pacific Strategy.
The FTA negotiations will cover a wide range of issues, such as market access for goods, services, investment and government procurement; sanitary and phyto-sanitary procedures; intellectual property rights protection, including geographical indications; digital trade; trade in energy and raw materials; and trade and sustainable development.
Key features of the Thailand-EU FTA
Here are some of the key features of the Thailand-EU FTA:
- Elimination of tariffs: The agreement eliminates tariffs on most goods traded between Thailand and the EU. This will make it cheaper for businesses in both regions to export their products to the other market.
- Reduction of non-tariff barriers: The agreement also reduces non-tariff barriers to trade, such as quotas and licensing requirements. This will make it easier for businesses in both regions to export their products to the other market.
- Increased investment: The agreement is expected to increase investment between Thailand and the EU. This will create jobs and boost economic growth in both regions.
- Enhanced cooperation: The agreement also includes provisions on cooperation in a variety of areas, such as trade facilitation, customs cooperation, and intellectual property rights. This cooperation will help to ensure that the agreement is implemented effectively and that both parties benefit from it.
The FTA will also support the digital and green transitions of both parties, with robust and enforceable disciplines on labour rights, environmental protection and climate action.
The first round of negotiations took place from 18 to 22 September 2023 in Brussels, and the next round is scheduled for January 2024 in Bangkok. The goal is to conclude the FTA by 2025, according to Thailand’s Commerce Minister Phumtham Wechayachai.
- In 2020, total bilateral trade between the EU and Thailand amounted to €29 billion.
- The EU is Thailand’s fourth largest trade partner (after China, Japan and the US), accounting for 7.5% of the country’s total trade. Thailand is the EU’s 26th largest trading partner worldwide.
- Thailand exported goods worth €15.1 billion to the EU in 2020. Key exports from Thailand are machinery and electronics and transport equipment, miscellaneous manufactured articles, as well as food products.
- The EU exported goods worth €11.3 billion to Thailand in 2020. Key EU exports to Thailand are machinery and transport equipment, chemicals and related products, and manufactured goods.
- Thailand is one of the most important destinations of European investments within ASEAN with €19.8 billion of outward stocks. The EU is the second-largest investor in Thailand after Japan.
The FTA is expected to bring significant benefits for both sides, as the EU is Thailand’s fourth largest trade partner and the second-largest investor in Thailand, while Thailand is the EU’s 26th largest trading partner worldwide.
In 2020, the total bilateral trade between the EU and Thailand amounted to €29 billion, with key exports from Thailand being machinery, electronics, transport equipment, manufactured articles and food products, and key exports from the EU being machinery, transport equipment, chemicals and manufactured goods. The FTA could further increase trade flows by reducing tariffs and non-tariff barriers, enhancing regulatory cooperation, facilitating customs procedures and promoting e-commerce.
The FTA will also strengthen the strategic partnership between the EU and Thailand, as well as between the EU and ASEAN, the Association of South East Asian Nations.
Thailand is one of the 10 members of ASEAN, the second largest economy in the region in terms of GDP (17%) and the EU’s fourth largest trading partner in ASEAN. The EU is already negotiating FTAs with other ASEAN countries, such as Indonesia, Malaysia and the Philippines, and has concluded FTAs with Singapore and Vietnam. The EU’s ultimate objective is to establish a region-to-region FTA with ASEAN, which would create one of the largest free trade areas in the world.
The FTA talks with Thailand are an important opportunity for both sides to deepen their economic ties and cooperation on key global challenges. The FTA will also contribute to the recovery from the COVID-19 pandemic by supporting trade and investment as engines of growth and resilience. The FTA will be based on shared values and principles of democracy, human rights, rule of law and multilateralism.