Japan and Thailand on Monday reached a basic free trade under which Thailand will open its auto and steel sectors in return for lower tariffs on some of its agricultural products, the chief Thai negotiator told Reuters.
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The agreement, reached in minister-level negotiations, was expected to be signed next April and take effect by September 2006, Pisan Manawapat told the news agency.
“As far as we are concerned, the FTA talks have been concluded on the broad policy level. What is left is only details which will be worked out by officials,” Pisan reportedly said.
The talks resulted in Thailand yielding partly to Tokyo demands for special tariff treatment for Japanese luxury cars and steel, the last major hurdles in 17 months of talks, Reuters noted.
Thailand would start cutting import tariffs on luxury Japanese cars with engines over 3,000 cc from 2006, aiming to reduce them to 60% by 2009 from 80% now, Pisan said.
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By GlobalDataReuters said European car makers has complained the tariff cut on which Japanese negotiators insisted would put them at a disadvantage in a sector they have long dominated. They demand equal treatment.
According to the report, Thailand also yielded to a Japanese request to open its steel sector, allowing in some high-quality Japanese steel products at zero tariffs, especially those for which Thai manufacturers cannot meet domestic demand.
Thailand, however, would give its hot-rolled steel producers another 8-10 years of tariff protection against Japanese and foreign competition, Reuters said.
“Although it may be tricky to quantify the exact economic benefits for Thailand, it seems we may get less than what Japan obtains from our relatively generous offers,” Thanavath Phonvichai of the University of Thai Chamber of Commerce, told Reuters.
The tariff relaxation for luxury Japanese cars may not hurt the Thai auto industry, which focuses on smaller vehicles and trucks, but more imports of big vehicles would contradict a policy of persuading Thais to drive smaller cars, he reportedly added.
Thailand hoped the FTA would attract more Japanese investment, especially in an auto industry for which it has high ambitions, Professor Somjai Phagaphasvivat of Thammasat University told Reuters.
“Our government objectives are to attract more Japanese investment and oblige Japan’s strategy of making Thailand its industrial production base,” he said.
Reuters noted that Japan, which agreed last month to start similar talks with Indonesia, has signed trade pacts with Malaysia, the Philippines and Singapore in a push to strengthen economic ties with Southeast Asia further.
Last year, Thai exports goods to Japan worth $US13.49 billion while its imports from Japan came to $22.29 billion, leaving a deficit of $8.79 billion, according to Thai customs statistics cited by Reuters.
In the first half of this year, bilateral trade reached $20.56 billion, up about 18% from a year earlier, with the Thai deficit at $5.68 billion, the report added.
