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Tim Harcourt
Chief Economist
Australian Trade Commission
Sydney
Email: tim.harcourt@austrade.gov.au
20 October 2003
‘Australia is a good friend of Thailand and a good friend of Asia’. That was the key message Dr Supachai Panitchpakdi, the Deputy Prime Minister of Thailand, at the time of the 1993 APEC Summit in Seattle. Now, 10 years on, Australia is an even better friend of Thailand with the announcement of the Thailand-Australia Free Trade Agreement (TAFTA) by Thai Prime Minister Dr. Thaksin Shinawatra and Australian Prime Minister John Howard in Bangkok at the 2003 APEC Summit. The agreement is Australia’s second FTA with an ASEAN economy following the successful completion of negotiations of the Singapore Australia Free Trade Agreement (SAFTA) and only Australia’s third bilateral agreement overall following the Australia New Zealand Closer Economic Relationship (CER) and SAFTA.
So why Thailand? When visiting Bangkok just over two weeks ago I asked Miles Kupa, Australia’s Ambassador to the Kingdom of Thailand. He emphasised Thailand’s economic strengths:
“Thailand is one of the best performing economies in South East Asia. It is second only to Indonesia in the region in terms of size, and the Thai economy, along with South Korea, bounced back quickly from the 1997-99 financial crisis. Thailand and Australia’s trade patterns will complement each other well,” he said.
Ambassador Kupa is on his third posting in Thailand and is amazed by the changes that have occurred since the late 1970s. “The Thais, of course have a strong and proud culture, but are able to graft on all the advantages of modern global economies. The capacity to blend the two is very impressive. Prime Minister Thaksin’s economic reforms to encourage entrepreneurship whilst simultaneously reducing poverty are well supported by the community,” he said.
So what would Australia gain from the TAFTA? What is the nitty gritty of the deal behind the high-level prime ministerial announcements? Under TAFTA, Australia will gain opportunities in a range of sectors including agribusiness, process food, steel, auto components and pharmaceuticals. For example, Thai tariffs include 60 per cent on whisky, 32 per cent on lamb, 30 per cent on process foods like ice cream, 42 per cent on fruit and vegetables, 80 per cent on automotives, 30 per cent on fisheries, 10 per cent on steel. According to Australia’s lead negotiator on the agreement, Justin Brown, "Elimination of Thailand's high tariffs in these sectors will offer a substantial competitive advantage for Australian companies seeking to export to Thailand," he predicts.
Australia’s Senior Trade Commissioner to Bangkok, Cameron Macmillan, also thinks that Australian service exporters – in areas such as legal services, architecture and engineering services – will have a lot to gain from TAFTA. “We have a strong Australian services presence in Bangkok, with law firms such as Minter Ellison and architectural firms like Wood Bagot. These knowledge based service- exporters use Bangkok’s strategic position as a ‘hub’ to Laos, Cambodia and Vietnam. This enhances Thailand’s position a key trade partner for Australia in services,” Mr Macmillan said.
Another services area set to benefit is engineering. According to Graham Storah, of Port Adelaide’s Australian Submarine Corporation, whose overseas office is located in Bangkok, “there are so many opportunities for Australian companies in this country – our engineering skills and know-how are greatly respected and Aussies are well liked by the Thais.”
From a Thai point of view, TAFTA would help Thai agriculture and manufacturing exports to Australia. Dr Nilsuwan Leelarasamee emphasised the complementary nature of Australian Thai trade. “The types of fruit and vegetables that Thailand grows in a mainly tropical climate cannot be found in Australia. At the same time, Australia has many goods that Thailand cannot produce. It’s a similar story in manufacturing,” Dr Leelarasamee said.
In conclusion, the Australian-Thailand relationship is in a strong position and would be further enhanced by the free trade agreement. With Prime Minister Dr. Thaksin, Australia’s links with Thailand are strong at the highest level. And don’t forget Dr Supachai’s strong support for Australia a decade ago. It came in a timely fashion at a very important juncture for Australia-ASEAN relations. Now in 2003, Dr Supachai is the Director-General of the World Trade Organisation (WTO), a position won with the strong support of Australia. These ties with the Thais are bearing fruit. Lets hope that TAFTA will help widen and deepen the economic relationship between the Commonwealth of Australia and the Kingdom of Thailand.
*Thanks are due to Justin Brown, Mike Moignard, Pat Storz, Jemima Lohse, Karla Davies, Jane Sloane, Miles Kupa, Cameron Macmillan, Ian Davey, Ian Smith, Michael Carney, Kimina Lyall, Patama and colleagues in Austrade Bangkok
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