Thailand- Australia FTA Continues to Generate Practical Outcomes

By Pannalak, Australian Trade Commission for Hemaraj Newsletter Issue No. 14

As Thailand- Australia Free Trade Agreement enters its third year, Thailand takes its place as Australia’s eleventh largest merchandise trading partner and the second largest export market in South East Asia. In 2006, two-way trade between Australia-Thailand trade increased by 18 per cent to AUD$ 10.59 billion. Based on future projections for business growth between the two countries, it seems the sky’s the limit in terms of opportunities for both countries.

TAFTA has reduced the cost of doing business in Thailand and increased the margin for Thai businesses sourcing from Australia. It is delivering competitive outcomes to Australian exporters and a better bottom line for Thai importers. Thanks to TAFTA, Australian companies hitherto excluded by trade restrictions such as high tariffs and quotas now face quite the opposite. More than 50 per cent of Thailand’s tariffs, accounting for nearly 80 per cent of Australian exports have been removed and 98 per cent of all tariffs in two-way trade will be phased out by 2010.

Since the TAFTA came into force on 1 January 2005, the Australian Trade Commission (Austrade) has worked with a higher number of Thai and Australian firms, and achieved more business outcomes than ever before. In 2006/2007, Austrade assisted 346 Australian businesses achieve export deals worth AUD$560 million to Thailand. Of these 48 were new exporters.

As tariff rates continue to drop, an increasing number of Australian suppliers are entering the Thai market early and more Thai buyers are targeting Australian goods and services, which in turn translate into more TAFTA-driven wins.

During 2007, businesses will enjoy more obvious benefits through greater reduction in tariffs. Austrade research indicates that the industry sectors with the most FTA tariff-based benefits to offer in the short-to-medium term are food and beverage, wine, advanced manufacturing, building and construction, consumer and lifestyle products and pharmaceuticals. For example, tariffs on most Australian auto parts have reduced from 30- 40 per cent to 12 per cent. Tariffs on engines used in vehicles are reduced to 8 per cent from 12 per cent.

In addition to benefits for trade in goods, TAFTA’s liberalization of regulatory procedures has also stimulated two–way trade in services — in the last financial year alone, total two-way trade in services was worth AUD$1.9 billion. Building on this are increasing opportunities for corporate training, industry-focused training programs and consultancy services targeting Thai businesses and government departments.

With 80 points of contact across Australia and 22 specialist staff in Thailand, the Australian Trade Commission (Austrade) can assist Australian and Thai businesses by providing free and impartial advisory services. Austrade can reduce the time, cost and risk involved in finding the right supplier or partner. For further information on how TAFTA can help your business, contact Khun Pannalak on +66 (2) 344 6334 or email pannalak@austrade.gov.au.