Japanese Food and textile imports shift from China to Thailand: Food safety driving the move
By Jon Fernquest
Despite
a recession, Japan cannot produce enough
food for
domestic
consumption
and has to import as much as 60% of the total
consumption mainly from China and Thailand.Two factors put Thailand at an advantage vis-à-vis China:
1.
The Thailand-Japan Free
Trade Agreement (FTA).
2. Japan shifting imports away from China for a variety of reasons including food safety and diversifying the sources of imports
2. Japan shifting imports away from China for a variety of reasons including food safety and diversifying the sources of imports
Japanese has shifted orders away from China to Thailand because of growing food-safety concerns in the aftermath of China's 2008 melamine scandal.
In contrast, the Thai government has taken proactive steps to achieve international food safety standards and reduce food safety incidents.
(Read articles on food safety in Thailand: #1, #2, #3, #4).
Thai exports were granted privileges in Japan under the Japan-Thailand Economic Partnership Agreement (JTEPA), the official name for the Thai-Japan Free Trade Agreement (FTA).
(Note: See more Bangkok Post articles on JTEPA especially Pasuk Phongpaichit's critical perspective).
Under JTEPA, the two countries agreed to cut import tariffs for products from each other to facilitate trade. Exports of seafood, fruits and vegetables benefit the most from JTEPA. The remaining non-tariff barriers faced by canned tuna and canned pineapples are expected to ease after the recent visit of Prime Minister Abhisit Vejjajiva to Japan. Exports of chicken and seafood under JTEPA have room to grow in the Japanese market.
(See photo above on right of food processing industry workers with work area to protect food from contamination)
domestic consumption - goods
bought by households within the country
vis-à-vis - with regard to, in relation to (See Wikipedia)
Free Trade Agreement (FTA) - an agreement between two or more countries to reduce tariffs and other "barriers to trade" over time
food safety - a scientific discipline that studies the handling, preparation, and storage of food to prevent food from carying illness (See Wikipedia) ความปลอดภัยในเรื่องการอาหารนับแต่กระบวนการการผลิต ขนส่ง การจัดเก็บและจัดจำหน่าย
diversify - increase variety (See glossary)
in the aftermath of Y - after the disaster or big problem Y
the melamine scandal, the 2008 Chinese milk scandal - a food safety incident in China involving milk and infant formula, and other food materials adulterated with the chemical melamine, with China's wide range of export food products, the scandal has affected countries on all continents, in November China reported an estimated 300,000 victims have been claimed; six infants have died from kidney stones and other kidney damage, 860 babies hospitalized. The chemical appeared to have been added to milk in order to cause it to appear to have a higher protein content. In a separate incident, watered-down milk resulted in 13 infant deaths from malnutrition in China in 2004 (See Wikipedia)
infant formula - special milk for babies to drink sold in stores
adulterated - when food quality is reduced or food made unsafe by adding some chemical or substance to the food
proactive - solving problems before they occur, acting in advance to deal with expected difficulties (See glossary)
standards - acceptable levels of quality มาตราฐาน
international standards - levels of quality accepted by all or most of the countries of the world มาตราฐานสากล
food safety standards - acceptable levels of food cleanliness and safety มาตราฐานความปลอดภัยของอาหาร
an incident - when an unpleasant event happens เหตุการณ์ที่เกิดขึ้น
food safety incidents - when lack of food safety causes damage and harm
a privilege - a right, advantage, or power that few people have (See glossary)
Japan-Thailand Economic Partnership Agreement (JTEPA) - (See )
critical - saying what is wrong or might be wrong about something
perspective - a way of thinking about something
tariff, import tariffs - a tax on goods coming into a country
non-tariff barrier - a barrier or restriction on trade with foreign countries that is not a tariff or tax
facilitate trade - help trade (create the conditions or situation that will make trade between countries happen)
have room to grow - there are market opportunities for companies to gain more market share
market share - the percentage of all purchases of a good in a market that a company has, the percentage of all customers it has
food processing - the methods and techniques used to transform raw ingredients into food for consumption by humans or animals (See Wikipedia)
contamination, bacterial contamination - การปนเปื้อนเชื้อแบคทีเรีย
vis-à-vis - with regard to, in relation to (See Wikipedia)
Free Trade Agreement (FTA) - an agreement between two or more countries to reduce tariffs and other "barriers to trade" over time
food safety - a scientific discipline that studies the handling, preparation, and storage of food to prevent food from carying illness (See Wikipedia) ความปลอดภัยในเรื่องการอาหารนับแต่กระบวนการการผลิต ขนส่ง การจัดเก็บและจัดจำหน่าย
diversify - increase variety (See glossary)
in the aftermath of Y - after the disaster or big problem Y
the melamine scandal, the 2008 Chinese milk scandal - a food safety incident in China involving milk and infant formula, and other food materials adulterated with the chemical melamine, with China's wide range of export food products, the scandal has affected countries on all continents, in November China reported an estimated 300,000 victims have been claimed; six infants have died from kidney stones and other kidney damage, 860 babies hospitalized. The chemical appeared to have been added to milk in order to cause it to appear to have a higher protein content. In a separate incident, watered-down milk resulted in 13 infant deaths from malnutrition in China in 2004 (See Wikipedia)
infant formula - special milk for babies to drink sold in stores
adulterated - when food quality is reduced or food made unsafe by adding some chemical or substance to the food
proactive - solving problems before they occur, acting in advance to deal with expected difficulties (See glossary)
standards - acceptable levels of quality มาตราฐาน
international standards - levels of quality accepted by all or most of the countries of the world มาตราฐานสากล
food safety standards - acceptable levels of food cleanliness and safety มาตราฐานความปลอดภัยของอาหาร
an incident - when an unpleasant event happens เหตุการณ์ที่เกิดขึ้น
food safety incidents - when lack of food safety causes damage and harm
a privilege - a right, advantage, or power that few people have (See glossary)
Japan-Thailand Economic Partnership Agreement (JTEPA) - (See )
critical - saying what is wrong or might be wrong about something
perspective - a way of thinking about something
tariff, import tariffs - a tax on goods coming into a country
non-tariff barrier - a barrier or restriction on trade with foreign countries that is not a tariff or tax
facilitate trade - help trade (create the conditions or situation that will make trade between countries happen)
have room to grow - there are market opportunities for companies to gain more market share
market share - the percentage of all purchases of a good in a market that a company has, the percentage of all customers it has
food processing - the methods and techniques used to transform raw ingredients into food for consumption by humans or animals (See Wikipedia)
contamination, bacterial contamination - การปนเปื้อนเชื้อแบคทีเรีย
Food exports
Exports of Thai food are expected to contract by almost 10% each in the first two quarters of this year.Food exports are forecast to decrease by 7% to 724 billion baht from last year's 770 billion baht.
Food exports may contract by as much as 12% and 17% in the second and third quarters respectively as the United States, Europe and Asean, which altogether dominate 60% of the industry's overseas shipments, are facing an economic slowdown.
The projection is made on the assumption that the world economy would expand by 0.5% this year, down from 1% in an earlier forecast, dragging down global trade to contract 2% compared to 4.8% growth in 2008.
In contrast, exports to Japan are expected to grow from about 100 billion baht in 2008 to 120 billion baht this year.
Japan and the US are Thailand's top two food export markets.
Thai textile exports
Japanese textile importers have shifted 30% of their purchases from China to Asean and Thailand had emerged as the biggest beneficiary of the move.By varying and diversifying the countries that imports come from, over-dependence on one source is avoided. For example, if food safety issues suddenly arise in a country or if a country experiences bad crops and reduced output, food imports can shifted away from one country to another.
Thailand has been assured that it would get 5% of all orders shifted from China to Asean.
Tariffs on textile exports to Japan have been waived under the JTEPA, which took effect in late 2007. Overall textile exports are forecast to be flat this year, or around $7.28 billion seen in 2008.
China has dominated half of the total textile market valued at $500 billion, with Thailand commanding only a 3% share, according to Chen Namchaisiri, chairman of the Federation of Thai Textile Industries.
But now Chinese manufacturers are losing their competitive advantages due to rising production costs, the yuan appreciation and stricter labour laws and environmental regulations.
emerged as Y - became
Y
beneficiary of the move - gained from and received benefits from the action
over-dependence one one source - if you only get a good from one place, if that place has problems your supply may be cut
assured that Y - told that Y will certainly happen
waive - give permission not to do something
commanding only a 3% share - only has 3% of the market
losing their competitive advantages - others can sell goods for cheaper and/or with better quality
yuan appreciation - the Chinese currency (the yuan) is becoming more valuable (so Chinese goods are becoming more expensive)
beneficiary of the move - gained from and received benefits from the action
over-dependence one one source - if you only get a good from one place, if that place has problems your supply may be cut
assured that Y - told that Y will certainly happen
waive - give permission not to do something
commanding only a 3% share - only has 3% of the market
losing their competitive advantages - others can sell goods for cheaper and/or with better quality
yuan appreciation - the Chinese currency (the yuan) is becoming more valuable (so Chinese goods are becoming more expensive)
(Source: Bangkok Post, business, 19/02/09, FTA with Japan helps cushion blow on Thai exports, NAREERAT WIRIYAPONG, link)
