The ASEAN Japan Centre (AJC) co-hosted a seminar titled “The Utilization of Free Trade Agreements (FTAs) for Thai and Japanese MSMEs” with the Department of Trade Negotiations (DTN), Ministry of Commerce of Thailand and Japan External Trade Organization (JETRO) Bangkok Office in Bangkok, Thailand on 5th of March 2024.
Key takeaways
The ASEAN-Japan Centre is committed to promoting trade between ASEAN and Japan including Thailand, by facilitating the use of FTAs, especially for Micro, Small and Medium Enterprises (MSMEs).
The AJC conducts FTA utilization promotion seminar in collaboration with government and support agencies such as Ministry of Commerce of Thailand and JETRO Bangkok this time, based on various information surveys, with the aim of promoting trade for MSMEs. The AJC will also continue to strive to promote the utilization of FTAs through follow-up of the seminar.
There are three FTAs available between Thailand and Japan, and Thailand’s FTA utilization is at an impressive 93.7% for exports to Japan. （DTN, MOC）
Currently, one bilateral and two multilateral FTAs between Thailand and Japan are available: the Japan-Thailand Economic Partnership Agreement (JTEPA), the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) agreement, and the Regional Comprehensive Economic Partnership (RCEP) agreement respectively. The trade relations between Thailand and Japan have been developed firmly for many years. However, the utilization rate of FTAs in Thailand’s imports from Japan is quite low at 54.8% and there is still room for improvement.
Japanese companies in Thailand have high expectations for the Thai government’s policy of expanding FTAs. (JETRO Bangkok)
In Thailand, there are approximately 6,000 Japanese-affiliated companies, and 70% of these companies engage in exports. As tensions between the United States and China escalate, and with the ongoing shift of supply chains to Thailand and Viet Nnam, the utilization of FTAs becomes a crucial factor to consider when establishing or expanding production bases in Southeast Asia.
RCEP is often used for the export of Tunas, Prepared or Preserved due to its relaxed rules of origin. （Mr. Yoshioka, ITI）
When comparing the tariff rates of FTAs between Thailand and Japan, the overall tariff rate is 1.7% for JTEPA, 1.9% for AJCEP while RCEP has the highest tariff rate at 2.7%; however, it is utilized because of its relaxed rules of origin. Similar conditions apply for textile products, made of non-originating materials are exported.
The actual effect of utilizing FTAs arises in the price competitiveness of products in the country where they are imported through FTAs. (Mr. Asano, ex-OCCI)
By utilizing FTAs, producers and exporters can benefit from the reduction and elimination of tariffs, while the cost burden borne by the importers is significantly reduced. The actual effect of utilizing FTAs can be said to arise in the price competitiveness of products in the importing country.
Way Forward
Through the reduction and elimination of tariffs by utilizing FTAs, producers and exporters can improve the price competitiveness of their products and enjoy the benefits of further sales expansion. In this context, the Thai Government has shown a proactive stance in broadening the scope of FTAs. Strategic responses are significant for companies, especially MSMEs confronting international competitiveness. AJC will continue to work on various problem-solving efforts for companies to facilitate FTA use through follow-up of the seminar.
About the event
The Utilization of FTAs for Thai and Japanese MSMEs
Date: Tuesday, 5th of March 2024
Time: 9:00-12:35 (GMT+7)
Organizer: ASEAN-Japan Centre
Co-organizers: Department of Trade Negotiations,
Ministry of Commerce of Thailand and Japan External Trade Organization Bangkok Office
Supporter: Ministry of Economy, Trade and Industry (METI), Japan
Venue: Siam Hall, Eastin Grand Hotel Phayathai, Bangkok
Participants: Over 120 (incl. online 45)
Media Coverage: 6 media sources
Speakers:
Mr. Napintorn Srisunpang, Deputy Minister of Commerce, Ministry of Commerce of Thailand
Mr. Jun Kuroda, President of JETRO Bangkok
Mr. Michio Daito, Deputy Director General for Trade Policy, METI Japan （Video message）
Mr. Takeomi Yoshioka, Lead Researcher, Institute of International Trade and Investment (ITI)
Mr. Ryoji Asano, Former Director, Osaka Chamber of Commerce and Industry (OCCI)
Ms. Hanan Wisitpattharanon, Department of Foreign Trade, Ministry of Commerce of Thailand
Ms. Suwadee Niyomthai, Department of Foreign Trade, Ministry of Commerce of Thailand
Mr. So Kitami, Director, Regional Research, JETRO Bangkok
Mr. Yasushi Ishida, Assistant Director, AJC
| Video recording available for download and viewing. Japanese: AJC_FTA Seminar in Thailand_JPN.mp4 Thai: AJC_FTA Seminar in Thailand_TH.mp4 |
