Survey on the Use of Free Trade Agreements in Thailand

Piyawan Suksri, Sineenat Sermcheep and Piti Srisangnam

from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: There is a proliferation of free trade agreements (FTAs) in Southeast Asia, and Thailand has joined this trend by engaging in 11 FTAs at the bilateral and regional levels. Trade expansion among FTA partners is expected, but it is not automatic because to gain the benefits of FTAs, firms have to apply for Certificates of Origin (COOs). The average utilisation rate of all FTAs in Thailand was 47 percent in 2012. This suggests some constraints may be hindering the use of FTAs. This study examines the obstacles to utilising FTAs and suggests ways to increase usage of FTAs. A survey collected data from 85 manufacturing firms and 19 services sector firms. An in-depth interview and a focus group discussion were held with representatives from FTA-relevant government agencies and the private sector. The results show the three major reasons why Thai firms do not use FTAs. First, it is not worth utilising FTAs because some firms have small trade volumes. Second, some firms use other schemes that give better benefits. Third, Thai firms of all sizes lack information on FTAs. Suggestions to increase FTA utilisation are as follows. The relevant government agencies should improve their websites to provide information that the private sector needs. Information on FTAs given to firms should be more specific to product or sector types, and a contact list based on inquiry topics should be provided to increase the efficiency of the call centres. An electronic and online system and a national single-window system should also be implemented. For COO application, fees should be harmonised among all FTA partners. The private sector itself should also pay more attention to FTAs. The utilisation rate is also low among services sector firms even though they know about FTAs. Many services firms do not import goods directly to use in their businesses, so they do not directly utilise FTAs and do not use COOs. However, distributors have the potential to utilise FTAs, so the benefits of utilising FTAs and other FTA-related information should be disseminated to all kinds of firms, especially shipping companies.

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