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14 Mar 2007

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NTBs: Obstruction to FTAs and Blow to Thai Exports in 2007 (Current Issue No.1958)

คะแนนเฉลี่ย
Thai exports in 2007 remains subject to many negative factors. Apart from economic deceleration in key trade partner countries and the stronger Baht, there are also Non-Tariff Barriers (NTBs), which are a challenging problem for Thai exports in 2007 that are targeted to grow 12.5 percent, as well as being an obstacle to Thailand's FTAs. At present, Thailand is facing NTB export barriers of such developed countries as the European Union (EU), which is our third most important export market after ASEAN and the US. The EU has imposed AD (Anti-Dumping) penalties on canned sweet corn from Thailand, which is now subject to an AD tariff of 13.2 percent. This year the EU has a plan to impose new stricter criteria on both agricultural goods, e.g., food produce, as well as on industrial goods such as chemical products and goods with chemical additives or constituents.
Concerning other new important export markets for Thailand, i.e., Australia and India, although the Thai export value is not that high at present, they are markets where Thai exports are growing and are Thailand's FTA partners where we sought advantage for Thai goods in reductions of import tariffs. However, Thai export goods still face other trade impediments from the NTBs of Australia and India, i.e., the SPS (Sanitary and Phytosanitary Measures) and the strict environmental safeguard measures that have resulted in Thai agricultural exports in jeopardy toward entry to Australia and India and has made them subject to higher cost.
KASIKORN RESEARCH CENTER (KResearch) is of the opinion that Thai authorities should urgently amend rules and regulations on our product standards to preempt strict trade barriers on product quality. This approach would not only reduce the impact of NTBs by trade partners, they can also prevent a rapid influx of cheap but low quality imported goods that are pouring into Thailand and benefiting from FTA tariff reductions, for example, onions, shallots, garlic, temperate fruit (such as apples and pears) that are increasingly evident in Thailand after the trade liberalization brought about by the ASEAN-China FTA, hurting Thai farmers who grow the same types of vegetables and fruit.
Moreover, the government sector should stringently enforce domestic laws for efficiency, transparency and fairness to foster accountability on Thai goods in the global market, for instance, strictly checks on the use of rules of origin where goods made in other countries are transshipped from Thailand to third countries as Thai merchandise, which could cause Thai goods to be levied AD penalties by importing countries.
The private sector should expedite steps to raise product quality, place emphasis on R&D, apply modern technology and follow up on ever-changing regulations of trade partners, and monitor the movements of rival countries in the global market for timely adjustments to the situation and implementation of support strategies. Moreover, private sector industries that use mainly domestic raw materials in their export production should search for opportunities to invest in other countries where the cost of raw materials and wages are still low, particularly in the Indochinese countries neighboring us where they still have fertile soil and natural resources. This investment approach could help reduce the impact of a strong Baht that is trending toward further appreciation this year. Alternatively, entrepreneurs may adjust their strategies by turning to imported raw materials to benefit from cheaper imported raw materials resulting from the stronger Baht.
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Disclaimer: This research paper is arranged for public information, which has been obtained from sources believed to be reliable. KResearch does not warrant its completeness, reliability or accuracy for commerce or fitness for a particular purpose. The information contained herein may be subject to change at any time without notice. Reliance upon any information contained herein shall be undertaken at a user's own risk KResearch shall not be liable to any user, or anyone else for any damage occurring from the use of any content herein. Nothing in this research paper shall be counted as containing any advice, recommendation or opinion for decision making in business.

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