Automotive Industry in Thailand

In July 5, 2004 Thailand's Prime Minister Thaksin Shinawatra and Australian Prime Minister John Howard met in the Australian capital of Canberra to witness the signing of the landmark Thailand-Australia Free Trade Agreement (TAFTA), scheduled to eliminate tariffs from 95% of goods traded between the two nations by 2010. As of January 1, 2005 Thai manufacturers and producers will enjoy open access to a major market and an expected US$1 billion export boost when the pact officially takes effect.

Both leaders expressed enthusiasm over the agreement, which is Thailand's first free trade agreement (FTA) with a non-Asian nation and Australias second in Asia, after signing an FTA with Singapore last year.

"I see Australia as a strategic part of our neighborhood, said Prime Minister Thaksin during a press conference. Our cooperation has never been more broad based and strategic in nature."

Under TAFTA, 49% of Thai tariffs in various categories, including chemicals and fuels, will be eliminated in 2005, with the rest to be phased out completely by 2025. Australian tariffs on imports such as processed foods and automobiles will be cut 83% in 2005, with the remainder to be eliminated by 2015. The phase-in will allow each government to gauge the effects of gradually lowering tariffs in certain sectors. In Thailand, for instance, tariffs on dairy products, agricultural produce and clothing will be lowered incrementally over a 15 to 20 year period.

Under TAFTA, Australian investors and experts will be able to utilize the governments One Stop Service for Visa and Work Permits to obtain one-year work permits extendable up to 10 years. Meanwhile, Thai executives and experts - even specially- certified chefs - will be allowed to work in Australia for four-year periods, extendable to 10 years.

By reducing tariffs, Thailand is on track to become an even more prominent regional automotive exporter, with a 30% boost in automotive exports to Australia projected in 2005. The Thai government is also hopeful that easing trade restrictions will encourage the development of hotels, restaurants, spas and other aspects of Thailand's renowned tourism and services industries.

Moreover, TAFTA is expected to facilitate knowledge exchange. Rob Bridge, Executive Director of the Australian-Thai Chamber of Commerce explained that Australian skills and technology could be transferred to Thailand with mutual benefit in such sectors as precision engineering, biotechnology, waste management and fresh produce supply chain and logistics.

"This free trade agreement is a good outcome for both countries", said Australian Prime Minister John Howard during a press conference following the signing. "Thailand's economy is strong, and we continue to enjoy growing and improving relations between our two nations."

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