FREE TRADE: Chile next in line for FTA
October 03, 2005
Bangkok, Santiago to conduct feasibility study
Thailand and Chile have agreed to conduct a joint study on a potential free-trade agreement (FTA) in order to establish bilateral access to regional markets.
Prime Minister Thaksin Shinawatra will announce the joint study at the Asia-Pacific Economic Cooperation summit to be held in South Korea next month.
An agreement between the two countries would build on a 2003 agreement on principles. Under the FTA, Chile would act as a gateway for Thai goods in the Latin American market, while Thailand would do the same for Chilean goods based on the Asean Free Trade Area.
The joint study will cover trade, the service sector and investment. Officials will take at least six months to negotiate the deal.
Srivicha Rackchamroon, deputy director-general of the Trade Negotiations Department, said the study would consider both the FTA’s positive and negative impacts. She added that the most important benefit to Thailand would easier access to the South American market.
In 2004, trade between the two countries was valued at US$276.5 million (Bt11.4 billion), or only 0.1 per cent of the Kingdom’s total trade. Thailand had a trade deficit with Chile of $68.1 million.
However, Thai exports increased in the first half of this year. From January to June, bilateral trade value was $145.88 million, with Thailand in surplus by $160,000.
Srivicha said she expected the FTA would increase trade with South America overall because Chile looks to have strong economic growth potential in the region.
Besides increasing trade value and volume, the FTA would focus on cooperation in the technological development of the two countries’ industrial sectors, Srivicha said, adding that Chile has a promising fishery industry.
In June, Thai and Chilean trade commissions agreed that the FTA would concentrate on trade and investment exchange, e-commerce, sanitary concerns regarding fresh food products, and tourism cooperation.
Leading Chilean exports to the Kingdom include minerals, paper, fresh foods, leather and chemicals.
Thailand’s high-potential exports to Chile are automobiles, auto parts, cement and electrical appliances.
Meanwhile, the Kingdom has been negotiating an FTA with another South American country, Peru. Srivicha said that the seventh round of talks with Peru would soon be scheduled in Thailand.
“The talks should take advantage of progress made during the sixth round,” she said.
She added that negotiations were 70 to 80 per cent concluded regarding an early-harvest scheme, whereby tariffs would be dropped on selected farm goods.