China likely to profit most from Asean free-trade deal
Bangkok Post, 10 September 2005
China likely to profit most from Asean free-trade deal
WORANUJ MANEERUNGSEE
Thailand’s trade deficit with China could be as high as $2 billion in 2018, when the Asean-China free trade area (FTA) agreement becomes fully operational, a study by Chulalongkorn University shows. The FTA, the world’s biggest in terms of population, affects countries with 1.8 billion people, and went into partial effect last July 20.
The 10 Asean members and China agreed to cut some tariffs immediately. They will all end protection on non-sensitive products by 2012 and then end all tariffs on even sensitive products in another six years.
Somprawin Manprasert, an economics lecturer at Chulalongkorn University and a member of the research team, said the study was based on the assumption that both sides would remove all tariff barriers in 13 years as promised.
Mr Somprawin forecast two-way trade between Asean and China would increase significantly. In the meantime, however, projections show trade within Asean would slow.
The potential in the huge and rapidly expanding Chinese economy, over the next 10 years, would convince Asean members to shift export destinations from Asean neighbours to China.
For Thailand, Mr Somprawin said that by 2018, imports from China would increase by 97.2% compared with this year. Imports from Asean would decline by 4.3%.
The study concluded that by 2018 Thailand would import machinery and equipment, garments and textiles, electronics and steel products from China worth $1.7 billion more than at present.Over the same 13 years, Thailand should be able to raise its exports of chemicals, rubber, plastics, petroleum products, autos and parts and rice by a further $120 million.
’’The $2-billion trade deficit might not be the case. It would seem the country would import more capital goods. And that is our intention to access cheaper capital goods,’’ he said.
’’Anyway, the result is based on current production capability. If we improve, it may be less.’’
In 2004, Thailand ran a trade deficit of $1 billion to China. Its exports were worth $7.1 billion and imports $8.1 billion.
Aksornsri Panitchsarn, an economics lecturer at Thammasat University, encouraged both sides to pursue talks on non-tariff barriers, a major hindrance to entering the Chinese market. Further negotiations on trade in services also are necessary, an area in which Asean members have a comparative advantage.
