Thailand has signed the Japan-Thailand Economic Partnership Agreement (JTEPA) on April 3, 2007, which will become effective in October. It will provide a good opportunity for Thai garments to expand our export value to the Japanese market, which was worth more than USD20 billion per year. Before that agreement was reached, Thailand had lost some of our market share in garments there to rivals with low production costs, e.g., China and Vietnam. But with this latest agreement, Japan has to decrease import tariffs on Thai garments to duty-free status, against the previous rate of 5.3-12.8 percent. The prices of Thai products will become cheaper for Japanese garment importers.
Meanwhile, the JTEPA will support import tariff reductions on textile machinery and primary materials for the garments industry, such as thread, fiber and textiles of good quality from Japan. Manufacturers can then add these materials to their production, creating added value for Thai exports. One other important issue is that Thai entrepreneurs will have the chance to enter into joint-ventures with foreign investors who are interested in investing in Thailand via the special prerogatives of the agreement. Moreover, investors will transfer technology and modern production methods to Thailand. These factors will benefit the country and enhance our competitiveness in Japan and global markets. After the agreement becomes effective, it is expected that Thai garment exports to Japan will rise by 20-30 percent.
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