To minimise the collateral damage from a global trade war, Thailand should move on market diversification, initiate free-trade talks with the UK, review talks with the US and prepare for non-tariff barriers such as anti-dumping duties, labour and environment standards, and stringent intellectual property protection.
At the forum on Asean’s trade and investment under US President Donald Trump’s “America First” policy, Somkiat Tangkitvanich, president of the Thailand Development Research Institute, said Trump’s policy could lead to a trade war while causing financial fluctuations and a great recession as well as a slowdown in trade in many countries including the American market itself, China, Asean and Thailand.
“Thailand, as a small supplier to the US market, accounting for only 1.3 per cent of total US trade, while gaining only a US$12 billion trade surplus with the US, should not face serious heat from the America First policy.
“But, as part of the global economy and one of the major suppliers to China, Thailand will face an indirect impact from a trade war between the US and China, while it could see both benefits and threats from protectionist measures,” he said.
China is a major supplier to the US, grabbing a market share of almost 20 per cent. Other countries that could suffer from US protectionism in reducing its trade deficit are Japan, Malaysia and Vietnam.
Export-dependent countries like Thailand have to adjust to volatility from frequent policy changes.
Although Thailand is less exposed to US protectionism |than other Asian countries, the side-effects could be worse than expected, as China is also one of |the key export markets for Thailand.
If China faces barriers, it will create both advantages and disadvantages for the Kingdom.
For the advantages, Thai shipments to US can increase to substitute for China’s exports. More Chinese investment will flow to Thailand and Asean.
But, there is a risk in the future for local firms supplying China. They could face barriers to the US if it is considered that companies in Thailand are Chinese firms.
To ensure Thailand’s economy as well as trade keep growing amid the uncertainty around Trump’s policy, its trade policy should be adjusted and its overseas market must be diversified from the United States
Thailand must focus on various FTAs such as with the UK and other promising trading partners, |as well as deepen the Regional Comprehensive Economic Partnership.
Thailand should also prepare for a possible revival of the Trans-Pacific Partnership (TPP) as 11 countries could move ahead with it.
And in four years, if the American leader changes, the US may return to join the TPP.
Also, Thailand can continue its trade reform under the Thailand 4.0 roadmap to move with tougher trade negotiations, he added.
Naris Chaiyasoot, chairman of Board the Thammasat Institute of Asia Studies, said Trump’s policy could help stimulate the US economy in its first year of administration, but it will cause a slowdown in the economy in the following years.
Thus, it is time for Thailand and Asean to strengthen economic cooperation in replacing slumping trade to the US market.
Under Trump’s administration, there may nothing in four years than news headlines.
But Thailand should escape from relying on the US or other individual major markets to avoid the impact from the unclear policies of some countries’ leaders, he said.
Daisuke Hiratsuka, president of Bangkok Research Centre at the Institute of Developing Economies under the Japan External Trade Organisation in Bangkok, pointed out that without the TPP, if one country begins bilateral trade negotiations with the US, it would trigger a domino effect.
This will inevitably lead to an American hub and encourage many exporting countries to do their own FTA with the US.
Published : Aug 11, 2022
Published : February 08, 2017
By : PETCHANET PRATRUANGKRAI THE NATION