CALL FOR SWIFT FINALISATION OF RCEP
THAILAND should work towards a swift finalisation of the Regional Comprehensive Economic Partnership (RCEP) to offset the prospect of protectionism in global trade, the University of the Thai Chamber of Commerce (UTCC) says.
With the policies of President Donald Trump’s administration in the United States seen likely to result in rising non-tariff barriers (NTBs) in international trade, the Thai government should also seek to resume stalled talks for a free-trade agreement (FTA) with the US, a report from the university advises.
The suggestions were prompted by a UTCC study that found the value of Thailand’s exports to the US could increase by Bt17.24 billion a year under Trump’s policies, while trade with China could shrink under the impact of higher tariff and non-tariff barriers.
Aat Pisanwanich, director of the UTCC’s Centre for International Trade Studies, said a boost in exports to the US could result from Trump’s stimulatory economic policies.
However, Thailand’s trade would be indirectly affected by higher tariffs on Chinese goods, while traders also faced risks from rising NTBs.
“With the US economy expected to grow by 0.8 per cent under Trump’s economic stimulus package, Thai shipments to the US could increase by an average of Bt17.24 billion a year,” he said.
“But this does not take into account risk factors about the uncertainty in oil prices and exchange rates, which could affect the export value, while rising NTBs could affect long-term trade growth to the US.”
Under the best scenario, if the US economy grew by 1 per cent this year, the value of Thai exports to that market could increase by Bt18.32 billion.
He suggested that Thailand should speed up talks among RCEP countries, which comprise the 10 Asean members as well as China, Japan, South Korea, India, Australia and New Zealand.
Against the backdrop of the stalled talks for a free-trade deal with the US, both countries should try to revive the FTA discussions or work towards a strategic partnership agreement that ensures Thai access to the US market.
Aat also warned that enterprises should prepare for a new form of NTBs that would cover areas such as intellectual property rights, sanitary standards, labour standards and the environment.
The study assessed a Trump statement that he would impose import tariffs of up to 45 per cent against Chinese goods.
This would be harmful to Thailand, as China is a major export market for a range of Thai products.
Under such a policy, Chinese exports to the US would decrease by Bt1.7 trillion, or 11.4 per cent, while China’s economic growth could decline by 1.8 percentage point.
As a result, Thailand’s exports to China could drop by Bt39.35 billion, or 4.9 per cent.
However, Thailand’s shipments to the US could increase by Bt71.3 billion, the study found.
With the Chinese yuan expected to rise in response to US pressure, this could also affect Thai exports.
If the yuan strengthened by 5 per cent, the value of exports to China could fall by Bt7.5 billion.
If the Chinese currency gained 10 per cent, export value could drop by Bt10.45 billion.
A 15-per-cent appreciation could result in a Bt13.77-billion decline in export value, the study found.