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11 Apr 2022

Econ Digest

China-U.S.-EU push for environmental measures…Are Thai export products ready for such action?


        Climate change is not far off, and many countries have started to implement environmental measures in the trading sector. Therefore, Thai exports must accelerate their adaptation to maintain competitiveness in the future.  

        China, the U.S. and the European Union (EU) are Thailand’s key trading partners and are among the world’s top greenhouse gas emitters, accounting for half (51.7%) of the world’s total CO2 emissions in 2020. At the recent UN Climate Change Conference (COP26), these three economic entities have announced more specific targets for achieving reductions in greenhouse gas emissions and then implementing environmental measures to achieve such goal. China has banned plastic waste imports, restricted plastic consumption and is set to reach net-zero emissions (Carbon Neutrality) by 2030. The U.S. prepares to impose a carbon tax and implement clean energy measures to achieve net-zero emissions by 2050, while the EU has implemented measures to ban the sale of single-use plastic products and other measures pursuant to the European Green Deal to achieve its net zero goal by 2050.

        The implementation of such measures by China, the U.S. and the EU will inevitably affect Thailand’s exports. In 2021, Thai exports to these 3 markets reached THB3.28 trillion, or 38.4% of the total Thai exports. The value of important export products with high greenhouse gas emissions such as plastic pellets and plastic products, automobiles and parts, iron and steel products, cement, aluminum products reached THB490 billion or accounted for 14.9% of the total Thai exports. In the short-term, plastic products are expected to be the most affected because of their relatively high export share while the environmental measures related to plastics will become more stringent, and the production of biodegradable plastics as  a substitute for plastic products is insufficient to meet export demand. Thai business operators should be prepared to cope with environmental measures introduced by trading partner countries and Thai authorities in the future, because businesses that can adapt first will be more competitive.

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