Trade and Investment in Thailand
Free trade with ASEAN
It’s hard to go one better than Australia’s five-year-old free trade agreement (FTA) with Thailand, unless you can get 10 countries on one FTA. On February 26, 2009, Australia and New Zealand did just that, entering into an FTA with 10 countries of the Association of South East Asian Nations (ASEAN)—Burma, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, The Philippines, Singapore, Thailand and Vietnam—the AANZFTA.
The most immediate benefit is a reduction in tariffs, says Rod Morehouse, Austrade’s senior trade commissioner for ASEAN: “In the year 2020 we’re down to about three percent of our exports being caught by tariffs, all the rest are duty free. That is a massive change within the ASEAN economy.”
However, Morehouse is also excited about how it may assist other political manoeuvring. “It creates a formal framework for the governments to meet and discuss behind the border issues like tariff quota, licensing, specification and accreditation issues, all those murky areas where governments have the ability to block sales. That happens fairly widely in ASEAN.”
The AANZFTA equips Australia well for the growth markets in South East Asia. Trade to ASEAN countries has increased about 10 percent per annum and the agreement could not have come at a better time, boosting the confidence of exporters worried about global economic downturn.
Morehouse identifies agribusiness as one of the big winners, such as racehorses to Indonesia, goats to The Philippines and wheat and pulses to Vietnam. Food in general will receive benefits. “It ranges from nuts and seeds, margarine, biscuits, seafood, dairy products, confectionery, ice cream and covers a range of countries,” he lists.”In consumer products the big winner there was fashion, upmarket teenage wear, cocktail dresses in Indonesia, Malaysia and the Philippines. They are already important markets and this allows us to do more,” he adds.
In the services sector, Morehouse has high hopes for business services. “We can now increase our Australian equity; we can run them as we’d run them at home. We got major concessions from Indonesia and Malaysia,” he says.
Australia gained a lot from the FTA, largely because a lot of ASEAN countries were quite protectionist, while Australia already had quite an open economy. This played into the negotiations.
“ASEAN didn’t think we had a lot to offer in tariff concessions because we are a fairly open market. What they fed to us was ‘you’re looking for tariff concessions from us, we need competency assistance from you to help us grow our institutions’,” explains Morehouse. “That’s a nice neighbourly thing to do anyway.”Australia can also take heart from the fact that the FTA was a complex multi-country signing, which will serve us well with the World Trade Organization’s Doha Round negotiations.
For the moment, a trillion-dollar market of more than 550 million people will have to do.
“If you’re already doing business there it’s time to make sure your contacts are solid. If you’re not doing business there already, there’s plenty of scope to grow,” Morehouse advises.
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