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30 Jun 2005

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July 1, 2005: First Step Tariff Reductions, Thailand-New Zealand FTA

คะแนนเฉลี่ย

On July 1, 2005, the Thailand-New Zealand FTA agreement will come into effect. The two countries signed this bilateral trade deal on April 19, 2005. This means that Thailand and New Zealand will begin reducing tariffs imposed on products covered by the agreement from July 1 onwards. Liberalization of the service sector and investment will be put on the negotiating table in three years (2008).

The Thailand-New Zealand FTA will lead to mutual benefits for both countries, as reviewed in the following:

New Zealand

Farm products from New Zealand will have greater competitive potential in Thailand as a result of Thailand's tariff reductions under the bilateral trade deal. Among the key products are prepared infant foods, whole milk and carrots. Other products from New Zealand that will have a greater opportunity in the Thai market include avocadoes, cherries and kiwi fruit, given that tariff rates of 30-40 percent imposed on them at present will be eliminated as soon as the FTA deal becomes effective.

- Industrial products from New Zealand will have stronger competitiveness in the Thai market. On July 1, 2005, around 71 percent of overall New Zealand industrial products shipped to Thailand will receive tariff exemptions immediately. Among them are electrical appliances, cosmetics, glass and glassware, machinery, carbonated drinks, floor tiles, wall tiles, shampoo, dog and cat food, etc.

Thailand

Farm products ? New Zealand has established high sanitary and phytosanitary (SPS) standards. Under the bilateral FTA deal, Thailand will thus benefit in protocols on SPS through the easier access of Thai vegetables, fruit and food to the New Zealand market. As a result, Thai exports with potential ? and the five priority items of farm produce ? are lychee, longans, mangosteen, durian and fresh ginger that will likely expand in the New Zealand market where consumers have high purchasing power. (Despite having a population of only 4 million, the per capita annual income of New Zealand equals some USD23,000, ten times higher than that of Thailand.

And importantly Thai fruit and vegetables entering the New Zealand market more conveniently will improve the trade balance on agricultural goods where Thailand typically posts a deficit with New Zealand of around Baht5 billion per annum.
  1. Industrial goods - The structure of Thai exports to New Zealand shows that more than 78 percent of the total Thai exports to New Zealand were industrial goods in 2004. The commencement of New Zealand's tariff reductions under Thailand-New Zealand FTA will be an opportunity for Thai exports to grow well in the New Zealand market, including such manufactures as automobiles, equipment and parts, iron & steel and products, plastic pellets, furniture, shampoo and air-conditioners.
  2. Employment opportunities for Thai chefs - New Zealand will permit qualified and experienced Thai chefs to work temporarily in New Zealand. Normally, New Zealand is rather strict about permitting aliens to work there.
  3. Convenience of Self-Certified Rule of Origin ? Thai manufacturers, exporters or third-country parties authorized as representatives of Thai manufacturers will be able to certify the origin of goods as produced and exported from Thailand on invoices on their own (without requiring a Certificate of Origin from the Department of Foreign Trade of the Ministry of Commerce, as has usually been the case before).

However, New Zealand is one of the top-ranking exporting countries of meat and dairy cows. Entering into an FTA with New Zealand will affect Thailand's meat and dairy cow industry, which is a sensitive goods category. Therefore, before liberating the meat and dairy cow industry fully, 15-20 years of adjustment will be necessary to increase Thai production capacity and enhance our competitiveness. KRC holds the view that to prepare for the liberalization of the meat and dairy cow industry, the structure of this industry will have to be adjusted to a fully integrated circle, and this must be carried out seriously and urgently with the cooperation of the state sector, farmers and their cooperatives. Also, as the state sector has already established a strategy for meat and dairy cows which includes both proactive and supportive strategies, implementation of these plans should be expedited for material results.

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