Fears for Thai consumers gaining access to European alcoholic drinks in free trade pact

November 11, 2019 at 2:20 pm
by Joseph O' Connor
in Economy, Personal, Thai World, Thailand
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Thailand is pressing ahead with new trade deals and opportunities despite the challenging world economic environment and the see-saw speculation on US Chinese trade negotiations. It will make a decision this month on whether to commence talks with the European Union but already a key has raised its head from nationwide consultations.

Thailand is preparing to make a decision on opening talks towards a Thai EU free trade pact as it also looking at opening up other markets with negotiations with Turkey and the new RCEP trade pact being readied for launch in February next year giving the kingdom stable access to key Asia Pacific markets.

european-union-thailand-free-trade-pact-thai-consumers-alcholic-drinks-talks-cabinet-decision — The Ministry of Commerce through its Trade Negotiations department is preparing a report for the Deputy Prime Minister Somkid Jatusripitak following nationwide consultations on opening free trade talks with the European Union. The biggest concern that has emerged is the desirability of the Thai consumer market having access to European alcohol products at zero tariff rates.

However, one of the concerns raised by consultations held in October and this month is the fear that Thai consumers may overindulge when presented with zero-rated tariffs on a huge range of European alcohol beverages.

Thai officials at the Commerce Ministry in Bangkok are getting ready to wind down a nationwide consultation process following an invitation from the European Union to Thailand to recommence talks which stalled following the 2014 coup, on a free trade agreement between the kingdom and its fourth-largest trading partner.

Invitation to Thailand extended in September

The official invitation was made by the EU ambassador to Thailand Pirkka Tapiola in September 12th last to the Deputy Prime Minister Somkid Jatusripitak.

Final decision by the cabinet at the end of the month

The upshot from consultations between key agencies and a range of bodies across Thailand will now be considered and a report submitted to a special government economic committee chaired by the deputy prime minister who has responsibility for coordinating the management of the Thai economy.

It is expected that a final decision by the cabinet will be made at the end of this month on the matter.

Kingdom may find itself awash with lower-priced European wines, beers and liqueurs

The Director-General of the Department of Trade Negotiations indicated in press reports on Monday that some concerns had evolved from the consultations.

These were primarily centred on fears that an open trading relationship with the European Union might see Thailand awash with a broader and lower-priced range of high-quality alcoholic beverages including wines, spirits and beers.

The creation of a free trade pact would allow a range of luxury food and alcoholic products zero-tariff access to the kingdom which may prove tempting for Thai consumers.

Some groups who made submissions highlighted this as a potential health concern as well as a threat to local industries.

Thailand currently as an account surplus with the EU

Thailand exported $25 billion in goods and services to the European Union and imported $22 billion in 2018 leaving the kingdom with significant current account surplus.

Most submissions however supportive of a Thai EU trade pact despite the concern over alcohol

Overall, however, Ms Auramon indicated that there was broad support for commencing talks with the European Union.

The government has repeatedly this year expressed confidence that the bloc could become a key investor in Thailand’s new eastern Economic Corridor development region and plans to transform its economy.

The kingdom has also suggested that it is ready to improve its domestic standards even extending to higher levels of human rights as Thailand seeks to become a developed economy.

Negotiations with Turkey commence in December

The Commerce Ministry pointed out that talks on a potential free trade agreement with Turkey would begin in December and Thailand was waiting to consult with the European Free Trade Association, a block of Euroepan countries which forms a looser trade agreement with the European Union involving Norway, Liechtenstein, Iceland and Switzerland.

RCEP deal targeted for February 2020 in Hanoi

Thailand is also now looking forward to the completion and signing of the Regional Comprehensive Economic Partnership free trade agreement involving 14 other Asia pacific nations.

It is understood that this new project will be launched in February in Vietnam with the 20 chapters finally negotiated at the ASEAN summit earlier this month under the stewardship of Thai Commerce Minister Jurin Laksanavisit

Big boost for Thailand and its exporters

Thailand stands to gain appreciably from this pact which will open up new markets giving Thai exporters stable access to 14 important markets in close proximity.

These markets include Japan, South Korea, China, Australia, New Zealand and the other ASEAN countries.

Loss of India from the deal is a setback

However, the withdrawal of India will be a loss to the new free trade bloc and most particularly to Thailand which has a long history of successful trade with the subcontinent.

Thailand and India were on the verge of an innovative deal promising a boost to the tech sector

One interesting bit of information that emerged from the ASEAN summit and ongoing talks was a proposal to allow Indian service workers access to Thailand for work involving higher standards of customer service and technical innovation with limited areas reserved for Thai workers

The move would have been a significant boost to Thailand’s 4.0 ambitions as it seeks to educate its own workforce in the technological sector and create a new internet economy.

India’s service sector personnel sought the world over and increasingly work in Europe and the US

Perhaps such a deal could still be resurrected between the kingdom and India on a bilateral basis.

India’s service sector is cleared supplying skilled personnel to the Amerian and European operations of some of the largest internet companies in the world, including many based in Silicon Valley.

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About the Author

Joseph O' Connor

Joseph Anthony is an expat from Ireland who has lived in Thailand for the last decade. He has worked extensively in the media including editorial positions in Ireland and Thailand. He is focused on economic and business stories in Thailand as well as the expat lifestyle.