Second trade pact with a Latin American nation after Peru
The Thailand-Chile Free-Trade Agreement will be signed by October when Chilean President Sebastian Pinera visits Thailand, in an attempt to boost bilateral trade and investment.
After a meeting with Chilean Ambassador to Thailand Javier Becker, Commerce Minister Niwatthumrong Boonsongpaisan said the FTA would be finalised and signed soon as the Chilean president believes the FTA would help promote growth in both countries.
It will be Thailand’s second bilateral FTA with a Latin American country after Peru and the seventh with trading partners. The FTA will be signed by commerce ministers from both countries and witnessed by the two countries’ leaders.
“Chile considers Thailand a gateway and a potential country to serve as a manufacturing and trading centre in Asean. Closer ties with Thailand will help boost trade and investment for Chile in the Asean market,” said Niwatthumrong, who is also a deputy prime minister.
Thailand is currently Chile’s largest trading partner among Asean countries with bilateral trade valued at about US$1 billion (Bt30 billion) a year.
Implementation of this FTA should also substantially promote Thai exports and investments in Chile and other Latin American markets as Chile has many bilateral trade deals with other nations. This FTA should be an efficient springboard for Thailand to penetrate other markets in South America.
Niwatthumrong said Chilean investors had shown high interest in Thailand.
So far, Chile’s Magotteaux company has set up a plant in Thailand to produce steel balls and mining equipment for export to third countries. Soquimich (Sociedad Quimica y Minera de Chile), a fertiliser and chemical-products manufacturer, has also opened an office in Thailand.
Chile has urged Thai investors to tap opportunities in many different sectors, especially food processing, salmon, fruits and wineries.
Somkiat Triratpan, deputy director-general of the Trade Negotiations Department, said this FTA would boost two-way trade in a big way, as both nations are committed to cutting duties on more than 90 per cent of goods. Investment is expected to grow significantly, as Chile has allowed Thailand to invest easily in services with up to 100-per-cent ownership.
Thai goods with high export potential are pickup trucks, cement, electric 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 retailing.
Thai rice should also get a big boost after the FTA 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, as Chile has committed to opening its rice market within 10 years after the FTA comes into effect.
Chile is Thailand’s third-largest trading partner in Latin America, after Brazil and Argentina. Trade between Thailand and Chile was worth $978.43 million 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 last August with the goal of laying down a comprehensive framework to liberalise trade in goods and services and to open up investment.