The cabinet today approved a proposed free trade agreement FTA between Thailand and the European Union EU amid concerns of its impact on drug patents and alcohol importation.
The Thai-EU FTA framework, already scrutinised by the Council of State, will be forwarded to Parliament for deliberation.
Tossaporn Serirak, spokesman of the Prime Minister’s Office, said the proposed bill must pass public opinion due to reservations from some quarters on drug patents and alcohol import. Thailand is a major importer of alcoholic beverages from Europe and the FTA enforcement will have an impact on the business.

He said the FTA initiative was aimed at minimising impact on Thai exports due to the expiry of the generalised system of preferences GSP in 2015. Thailand’s GSP privileges last year amounted to Bt297 billion from exports of automotive, electronics and seafood products.The European Union is currently negotiating free trade agreements with Vietnam, Singapore and Malaysia in 17 trading categories. MCOT online news
via Cabinet approves framework of Thai-EU free trade agreement | MCOT.net.
Trade between the EU and Thailand is considerable, amounting to approximately €27 billion (1.15 trillion Baht) in 2010. The EU is Thailand’s second largest export market, after the ASEAN. In 2010, exports from Thailand to the EU totalled some €17 billion (approx. 725 billion Baht).
The strength of Thai exports has led to substantial trade surpluses with the EU. During the period 2007-2009 Thailand’s annual trade surplus with the EU stood on average at around €5.5 billion per annum (approx. 220 billion Baht).
Notably, more than half of Thai exports entering the EU receive preferential treatment either via Most Favoured Nation (MFN) or partial or full tariff elimination granted under the EU’s Generalized Scheme of Preferences (GSP). Thailand is also the second largest GSP beneficiary among EU’s trade partners behind India.
Bilateral trade between Thailand and EU
The EU is the world largest trading partner, accounting for 20% of world trade (19% of world trade in goods and 24% of world trade in services). It absorbs one fifth of all developing countries’ exports.
- In 2011, the EU’s trade with Thailand was approximately €29.4 billion (ranked no. 24 among all EU’s trading partners).
- The EU, being the third largest export market for Thailand, contributes in an important way to Thailand’s economic growth. The average growth of bilateral trade between the EU and Thailand in 2006-2010 was 5.3% Thai Exports to the EU grew by more than 27% in 2010, showing a fast recovery following the decline of 15.6% in 2009.
- Globally, Thailand is the second largest beneficiary of the EU General System of Preferences (after India) which offers unilateral tariff reductions.
- Roughly 70% of Thailand’s exported goods enter the EU Single Market either with MFN zero duty or under a preferential reduced duty.
The strength of Thai exports has led to substantial trade surpluses with the EU
Each year, the value of Thai exports to the EU has been roughly double that of Thai imports from the Community. This has significantly helped strengthen Thailand’s external account and contributed to the GDP which depends heavily on external incomes (approx. 70%).
- In 2011, the EU ranked as the third largest export market of Thailand (after ASEAN), accounting for approx. 17.5 billion Euros (ranked no. 20 among all EU’s importing partners).
- At the same time, the EU is the fourth largest source of imports to Thailand after Japan, ASEAN, and China. In 2011, Thailand’s total imports from the EU were approx. 10.5 billion Euros.
- Top three imports from Thailand to the EU in 2011 were: (i) Electronical and electronics equipment and HDD (36.9% of total EU’s imports from Thailand) (ii) Plastics and rubber (11.6%) and (iii) Processed food (11.4%).
- Top three exports from the EU to Thailand in 2011 were; (i) Electronical and electronics equipment and HDD (30.8% of total EU’s exports to Thailand), (ii) Chemicals (14.4 %) and (iii) Vehicles, aircraft, transport equipment etc. (11.8%).
About the author
Bangkok Correspondent for Siam News Network. Editor at Thailand Business News