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Thailand to join RCEP in a bid to form world’s biggest trading bloc

For Thailand, the RCEP agreement may not significantly change Thailand’s trade structure because Thailand already has trade agreements with ASEAN and the other six countries

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During the ASEAN summit earlier this year in Bangkok, the Thai government, as the ASEAN chair, pushed RCEP members to agree to conclude RCEP talks by the end of this year.

RCEP is a proposed free trade agreement between the 10 ASEAN members and the six Asia-Pacific countries with which ASEAN has free trade agreements, namely Australia, China, India, Japan, South Korea and New Zealand.

Once agreed, RCEP will create a massive economic bloc representing 32.3% of the world’s gross domestic product (GDP). The combined population of RCEP member countries totals 3.589 billion or 48% of the global population and the combined trade within the bloc has reached USD11.4 trillion or 31% of global trade.

No significant changes for Thailand

For Thailand, the RCEP agreement may not significantly change Thailand’s trade structure because Thailand already has trade agreements with ASEAN and the other six countries, which helped double Thai exports to these countries from 2010 to USD148.5 billion last year.

More than half of Thailand’s exports went to RCEP countries. They included car and parts, chemicals and plastics, refined petroleum, electronics and parts. At present, foreign direct investment (FDI) from the RCEP members in Thailand accounted for over 70% of total FDI.

Moreover, as the RCEP market is set to expand with a growing middle class, Thailand will have a better chance to capitalize on the thriving market in the region.

Slow progress

However, the talks have progressed slowly. The dialogue partners have completed negotiations on only seven of the 20 RCEP chapters.

Members are still unable to reach agreement on contentious issues like rules of origin and details of how members will open their markets to goods, services and investment under the RCEP framework.

In particular, India has demanded strict criteria to determine the rules of origin, fearing an influx of Chinese goods after the RCEP agreement. India already suffers a trade deficit with China to the tune of USD53 billion. The Indian business sector is not convinced that RCEP will create a win-win situation.

RCEP regained significance after the Trade-Pacific Partnership trade talks, another free trade project in the Pacific, lost steam after the US withdrew.

Challenge awaits local industries

However, RCEP may also pose a challenge for Thailand if local industries fail to compete on a level-playing field with other RCEP members, especially Vietnam which is emerging as a strong contender to draw foreign direct investment in electronics production.

Additionally, members of Thailand’s civil society have voiced concerns that the benefits from RCEP may only go to big business, while some RCEP chapters may adversely affect those at the grassroots level. For example, the prospective RCEP intellectual property protection chapter may restrain Thai farmers’ ability to utilize plant varieties, endangering efforts to promote bio-diversity.

Moreover, local communities are concerned that the RCEP agreement may provide protection to foreign investors at their expense, in issues such as land ownership. Uncontrolled investment can also cause harmful effects on the environment, such the dumping of industrial waste.

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Trade

Trade in Asia-Pacific declines for the first time since 2009

For the first time since the 2009 global economic crisis, the value and volume of trade in the region is declining. But the region is expected to bounce back in 2020 with positive trade growth.

Boris Sullivan

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Bangkok (ESCAP news) – Asia-Pacific economies may see positive trade growth in 2020 but are still facing downside risks from the adverse impacts of the United States – China trade tensions, two new trade briefs by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) released today have revealed.

Trade in the Asia-Pacific region contracted during 2019

For the first time since the 2009 global economic crisis, the value and volume of trade in the region is declining. Total export volume fell by 2.5 per cent, while import volume decreased by 3.5 per cent.

Oil exporting economies such as Islamic Republic of Iran and Indonesia, as well as Japan, Singapore and Hong Kong, China registered some of the largest declines in export volume.

Merchandise trade in the region also faced strong headwinds in 2018-2019 caused by the worldwide economic growth slowdown and heightened trade tensions.

These have had an adverse effect on trade, particularly in the case of economies closely integrated with China through Global Value Chains (GVCs). Integration of smaller traders into the global and regional economy through GVCs is becoming more difficult. New import barriers increase the cost of production and reduce the competitiveness of companies participating in regional production networks.

Tariff war-related toll could reach $117 billion in the Asia-Pacific region

ESCAP earlier estimated the tariff war-related toll on gross domestic product (GDP) could reach as much as $400 billion worldwide and $117 billion in the Asia-Pacific region. These projections are materializing and could increase unless current efforts to reduce trade tensions are successful.

“For the Asia-Pacific region, the challenge is to increase trade and deepen economic integration to support sustainable development. Looking ahead to 2020, the agreement reached between China and the United States is welcome and should reduce policy uncertainty,”

United Nations Under-Secretary-General and Executive Secretary of ESCAP Armida Salsiah Alisjahbana.

She further underscored the importance of the multilateral trading system to underpin future trade growth.

The new guarantees provided by the implementation of the Phase-I deal reached between China and the United States might boost investor and consumer confidence enough for trade in the region to grow by about 1.5 per cent in 2020.

This growth would be felt more in developing economies, which could see a 1.9 per cent and 2.7 per cent growth in exports and imports respectively in 2020. However, country-level forecasts vary widely and uncertainties are high.

In trade in commercial services, the region again outperformed the rest of the world in 2019.

Relatively slower growth is expected in 2020, with transport services, other business services and goods-related services expected to be the most affected sectors.

The mid to long-term prospects for trade in services – in particular ICT and business services – remain bright, supported by technological advances.

Commercial services trade in Asia and the Pacific continue to be dominated by a relatively small number of economies, namely China, Japan, India, Singapore, Republic of Korea and Hong Kong, China – accounting for over 70 per cent of total commercial services trade in the region.

Increasing business opportunities associated with digital technologies may lead to a further concentration of trade opportunities in those economies.

The ESCAP trade briefs serve as a complement to the Asia-Pacific Trade and Investment Report 2019. They provide in-depth analysis of performance and trends in 2018-2019, and the outlook for 2020 at regional and country levels, with a special emphasis on the impact of escalating trade tensions within and outside the region.

Read the Asia-Pacific Trade in Goods Trends and Outlooks: https://www.unescap.org/resources/trade-goods-outlook-asia-and-pacific-20192020

Read the Asia-Pacific Trade in Services Trends and Outlooks: https://www.unescap.org/resources/trade-commercial-services-outlook-asia-and-pacific-20192020

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Thailand, the world’s 6th biggest exporter of fruits

Export value of fruit in the first 10 months of this year reached three billion U.S. dollars, making Thailand the 6th largest fruit exporter in the world.

National News Bureau of Thailand

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BANGKOK(NNT) – Known for its good taste and quality, Thai fruits have gained much popularity in foreign countries.

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Trade

Thai exports down 4.5% in October

Thai Exports dropped by 4.5% year-on-year in October to US$20.8 billion, bringing the contraction in first 10 months of 2019 to 2.35%

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BANGKOK (NNT) – The overall export sector performance in October 2019 has lagged for the third consecutive year, resulting in a negative 4.54 percent growth, mainly due to the consequences of the trade war between the U.S. and China as well as lower oil prices.

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