FTA signing with EU 'should be priority'
Country warned of shrinking GDP on expiry of EU tax breaks
The Thai-EU Business Council warned yesterday that Thailand would see its gross domestic product stunted by 1.2 per cent if it does not sign a free-trade agreement (FTA) by 2015 when the European Union's tax breaks expire.
"The tax cuts for imports from Thailand will be ended in 2015. If the negotiations for GSP [Generalised System of Preferences] and the FTA are delayed, Thailand will lose much opportunity ahead of the AEC [Asean Economic Community]," council chairman Chansak Fuangfu said yesterday.
Talks on extending the GSP and concluding the Thai-EU FTA are proceeding slowly compared with neighbouring countries, he said.
Indonesia has discussed a bilateral agreement with the EU, Singapore has already reached an FTA with the EU, and Vietnam and Malaysia have stated their readiness to work on an FTA. The progress of neighbouring countries may encourage investors to relocate to them ahead of the AEC, Chansak said.
Even though the EU is not a crucial market, taking directly 18 per cent of Thailand's total overseas shipments by volume, Thailand is a destination of tourism, services and investment for the EU.
The FTA will help compensate for the termination of the GSP, as the FTA will provide sustainable tariff reductions or tax exemptions to Thailand.
The council and the Joint Public Private Standing Committee will host a seminar in March to gather public opinions and share the experience of experts on the FTA issue to ensure the negotiations will provide the maximum benefits to all stakeholders.
The council, Federation of Thai Industries, Thai Chamber of Commerce and Thai Bankers Association have urged the government to open Thai-EU FTA negotiations to maintain Thailand's competitiveness and support long-term trade and investment.
The council will complete its in-depth white paper for the government to consider, he added
Kritsada Piampongsan, adviser to the council, said the private sector estimates many products worth a combined Bt80 billion will be hit by the ending of the GSP.
The private sector believes the FTA can offset the damage from the withdrawal of GSP privileges.
Chingchai Hanjenluk, co-chairman of the council, said that even though the export volume to the EU is 18 per cent, the FTA framework will not only cover exports but also investment in Thailand.
Thailand serves as a base for the EU's expansion to Asean countries. Many European companies have used the council as a sounding board for their investment plans in Thailand, including 200 Belgian firms that will visit Thailand in March to study investment opportunities in the country.