“The Thailand-Australia Free Trade Agreement (TAFTA) was signed on 5 July 2004 and came into effect on January 1, 2005. The Agreement calls for liberalization of trade in goods, services, and investment, as well as for cooperation in working out obstacles to trade caused by non-tariff measures, such as restrictive sanitary and phytosanitary regulations and anti-dumping measures. The cooperation extends also to facilitation of trade in certain categories, such as customs procedures, electronic commerce, intellectual property, government procurement and competition policy. It is anticipated that this agreement will expand two-way trade in goods and services and increase investment on both sides, as well as strengthen the relationship between the two countries.
Trade in Goods
On the date of entry into force of the Agreement (TAFTA), Australia eliminated tariffs on more than 83% of all goods imported from Thailand, including fresh fruit and vegetables, canned pineapple and pineapple juice, processed foods, small passenger vehicles and pick-up trucks, gems and jewelry. Tariffs on the remaining 17% of imports, comprising plastic products, rubber and rubber products, and textiles and apparel, are to be eliminated between 2010 and 2015.
The Agreement calls for Thailand to eliminate tariffs on nearly 50% of all goods imported from Australia as of January 1 2005, most of which is needed raw materials such as mineral ore, fuel, and chemicals, as well as raw and tanned hides. Tariffs on another 45% of Australian imports will be dropped by 2010, with the remaining 5%, comprising dairy and meat products (beef, pork, milk and cheese), tea, and coffee being gradually removed between 2010 and 2015.
At the same time, Thailand removed tariff quotas committed under WTO obligations on 15 of 23 categories of agricultural goods, and offered specific quotas of 10% more than the volume obligated in 2004 under WTO commitments for 6 of the remaining 8 products, including potatoes, coffee, tea, maize, and sugar. In addition, Thailand has also agreed to increase quotas each year by 5% to 10%.
To ensure that domestic industries will have time to adjust to the impacts of the Agreement, Australia and Thailand have agreed to apply Safeguard Measures (SG) in accordance with WTO regulations. Furthermore, in dealing with sensitive agricultural products such as beef, pork, and animal offals, as well as milk and dairy products, the special safeguard measure may be applied, if the volume of imports of such products exceeds the specified trigger volume level for that year, by increasing the rate of customs duty applicable for that product to the level equal to the current customs duty or to the current ‘Most Favored Nation’ (MFN) rate, whichever is lower. Thailand will be able to apply this special safeguard measure for specific products through 2015 and 2020.”
Rules of Origin
Under this agreement, only goods that meet agreed-upon conditions of the ‘country of origin’ requirements for each product will be able to claim preferential treatment. The conditions comprise: 1) goods that are composed of completely domestic components (wholly obtained) such as mineral ore, agricultural products, and products from domestic live animals; or 2) goods that have undergone substantial transformation through processing, resulting in a change of tariff classification, and that have a significant regional value content of Thai and Australian components (40%-45% of the cost of the product) in their production.
Free Trade in Services and Investment
Australia has completely opened its borders to Thai investment in all areas except for newspapers, broadcast media, air travel, and airports, with investments of more than A$10 million requiring prior approval from the Board of Foreign Investment. Thai national executives, managers, specialists, and their families will be allowed to remain in-country for periods of up to 4 years with extensions of up to 10 years. Thai chefs certified by the Department of Skills Development at the Ministry of Labor who have been employed by an Australian concern may work in-country for up to 4 years, and are no longer required to meet the conditions of the economic needs test, whereby an employer must first, for a period of 4 weeks, seek applications from Australian nationals to fill the position before hiring a foreign national.
Thai commitments in this area will enable Australia to make large-scale investments in Thailand, holding up to 60% interest in projects where area, size, and minimum investment amounts are conditions of approval. Such projects include international exhibition centers, conference halls, public infrastructure construction projects, institutions of higher education focusing on science and technology, large hotels, aquatic parks, marinas, and mines. Australian executives, managers, and specialists will be allowed to stay in-country for periods of up to 1 year, with extensions up to 5 years. Australian businessmen will now be able to use the ‘one-stop service’ for various permits and required documentation, a convenience previously limited to businesses with assets valued at more than Bht. 30 million. Also, businessmen holding APEC Business Travel Cards will be allowed to remain in-country for meetings and other business-related activities for up to 90 days without having to request work permits.
Cooperation in Trade
Thailand and Australia have agreed to work together closely to ensure that trade between the two countries is conducted transparently and efficaciously. An Export Group on Sanitary and Phytosanitary Measures and Food Standards has been established to enhance regular and comprehensive consultation and cooperation on agriculture and related matters to facilitate trade between the Parties. To this end, work programs have been set out, initially to review and assess progress of each Party’s priority market access interest within two years of the signature of the Agreement. Among Thailand’s priority products of interest are mangosteen, longan, lychee, and durian, as well as chicken, shrimp, and decorative fish.
Other matters under consideration are customs procedures, anti-dumping measures, electronic commerce, intellectual property, and competition policy. Efforts being made to resolve these and other issues among the two countries include the exchange of information and the sharing of knowledge through training and seminars.
The Free Trade Agreement Joint Commission (TAFTA Joint Commission: TAFTA JC) has been established to oversee the implementation of TAFTA and to review the economic relationship and partnership between the Parties. TAFTA JC will meet annually or as mutually determined by both sides.
– Read more about AUSTRADE and how they can help Australians wishing to do business in Thailand
– Fun Book About TAFTA n Thai
