FTA Thailand-China:Opportunities and Obstacles of Thailand’s Export to China

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Because of the economic progress of China and Chinas participating as a WTOmember, other countries have been awakened and turn attention to adjust economicstrategy accordingly. Thailand is one of the countries who are interested in economiccollaboration with China in term of regional collaboration. Such collaboration resultsin the signing an economic agreement often called FTA Thailand-China by the mediaand people. Principally, Free Trade AREA of FTA has been a focused point for Thailandinternational economic policy in these passed years. FTA helps promote the sectorsthat we have comparative advantage, while comparative disadvantage sectors will bedeteriorated by abundantly imported products from countries with comparativeadvantage. This research is being made in the purpose of exploring the content of additionalagreement between Thailand and China, as well as fundament agreement of ASEANand China in larger scope. In the meantime, opportunity and obstacles as the resultfrom signing an agreement are analysed. Analysis includes potential cities andproducts for export market in China. There are many agreements that Thailand has been involved either as a solecounterpart or as a member among ASEAN countries. The time status for thisstudying is limited to be March of the year 2009. However, collected data andreleased data mostly are updated uritil 2007, due to time-consuming govemmentprocedures or red tape. Therefore, analysis in some aspects might be negativelyaffected. The study method is divided in 2 main parts. The first part is studying andexamining the main content ofthe agreement that explicitly affects international trade.The second part is an analysis of opportunity and obstacles based on the content andprevious indicating data. For analysing, Porters Diamond model concept will beapplied within several chapters. There are total of 6 chapters in this studying report. The first two chapters areabout the rationale of this study, conceptual framework and the method of study invarious facets such as international economics and international relation. Chapter 3 isthe exploration of the vital content of the additional agreement of Thailand and China,and also the base FTA agreement of ASEAN and China. Topics like Trade in Goods,Early Harvest and Rule of Origin are examined here. Opportunity analysis will beconducted in chapter 4. Analysis covers transportation and distribution, demand,behaviour and previous recorded data issues. Then, analysis is done on both potentialcities in China and Thai potential exported products. Chapter 5 is about legitimacymatters in China that exporters should have knowledge with. Related laws and taxpolicies are described along. Finally, obstacles derived from trading will be illustratedin chapter 6 and followed by suggested resolutions. The studying reveals that an agreement of the two countries is based on the largerconcept of FTA between ASEAN and China. Such agreement focuses on acceleratingthe tariff elimination process wliich is previously mentioned and agreed in FTAASEAN-China. Focused goods are fruits and vegetables. Main content remainsidentical as FTA ASEAN-China, but 8 groups of agricultural products listed in code01-08 will be reduced and exempted by October 2003, being faster than l January2005 as agreed before in former FTA. Thus, an agreement between Thailand and China which is often called FTAThailand-China by the media and people is not a Free Trade Area agreement. It is justthe additional agreement based on previously agreed FTA. In this studying paper hasmentions FTA Thailand-China in some parts. Please be kindly informed that it is justfor a purpose of communication not for its definition. Thai exported products have a good market response especially markets inSouthern China near Hong Kong and Guangzhou. Local consumers tend to havefamiliarity with the products for quite a time. These consumers have high income andpurchasing power making them a good target market. However, other large citiesalong the coastline like Shanghai, Hangzhou, Xiamen, Tianjin and Beijing also considered as potential markets for Thai products. Consumers have high averageincome with behaviour of consuming quality imported products. Nevertheless, theirfamiliarity with Thai products is still relatively low and needed to be introduced moreby authority and related private sector. After the agreement, several products now have tariff of 0% making them havemore cost efficiency in exporting to China. Products like rubber, rice, paper, frozenprawn and crocodile meat which Thailand has comparative advantage in, have a goodexport sign. Even though, agreement has been effective. There are still trade barriersdeteriorating international trade. Trade barriers comprise both tax and non tax.Imported agricultural products now have been levied with value added tax of 13%,whereas none is levied on Thailand side. Because of strict and unclear policy, Thai exported fresh products are oftenconfiscated for too log time upon entry making them perished before reachingconsumers hands. Moreover, exporting is required Import Permit and Certificateissued by government agents putting more work and time on exporters. Resolutions vary according to the situation. All of them require both govemmentand private sectors to closely cooperate in order to be efficiently implemented.
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