Thailand should be able to penetrate not only the Chilean market, but also that country's 60 bilateral trade partners, after signing a free-trade agreement with the South American nation, according to the Trade Negotiations Department.
Prime Minister Yingluck Shinawatra and Chilean President Sebastian Pinera yesterday witnessed the signing of the Thailand-Chile FTA in Bangkok.
It is Thailand’s second bilateral FTA with a Latin American country after Peru and the seventh overall. The pact is projected to be implemented early next year, when tariffs for more than 90 per cent of trade in goods will be cut to zero immediately.
Jintana Chaiyawonnagal, deputy director-general of the Trade Negotiations Department, said the FTA would help promote growth in both countries.
"This FTA is a strategic tool for the Kingdom to penetrate the Latin American region, and Chile’s trading partners. Chile has more than 60 bilateral trade pacts with countries worldwide," she said.
Thailand should gain a better competitive edge after signing this FTA. If it had not signed the pact, it would have lost out to other countries, including Singapore, Vietnam, Malaysia, Japan and China, as Chile already had FTAs with them.
She suggested that Thai businesses and investors urgently explore this market, as Chile is rich in natural resources and is a trading centre in South America.
Investment in Chile is expected to grow significantly, as it will allow Thai enterprises up to 100-per-cent ownership in the service sector. Chile has urged Thai investors to tap opportunities in many different sectors, especially food processing, salmon, fruits and wineries.
Thai goods with high export potential are pickup trucks, cement, electrical appliances, plastic pellets, rubber products, and canned and processed foods. Services and investment with opportunities to grow in Chile are engineering, logistics, energy, mining and retail.
Thai rice should also get a big boost after the FTA’s implementation, as Chile has committed to cut tariffs for that commodity to zero in the fifth year of the pact.
This agreement is better than those with other countries, including Vietnam and Malaysia, for which Chile has committed to opening its rice market within 10 years after their FTAs came into effect.
Chile is Thailand’s third-largest trading partner in Latin America, after Brazil and Argentina, while Thailand is Chile’s largest trading partner among Asean countries. Trade between Thailand and Chile was worth US$978.43 million (Bt30.63 billion) last year, with Thailand enjoying a trade surplus of $278.07 million.
Shipments from Thailand were up by 21.05 per cent to $628.25 million last year, while imports from Chile dropped by 2.1 per cent to $350.18 million.
The FTA negotiations kicked off in April 2011 and were completed in August with the goal of laying down a comprehensive framework to liberalise trade in goods and services and to open up investment.