Groundbreaking FTAs to be signed at ASEAN Summit in Thailand
by Jon Fernquest
The
14th annual ASEAN Summit is being held at the beach
resort of Cha-am, Thailand this week.ASEAN will sign Free Trade Agreements (FTAs) with Australia, New Zealand and South Korea this afternoon.
In all 15 trade agreements will be signed during the meeting.
The Asean-Australia-New Zealand Free Trade Area (AANZFTA) is featured in a front page article in the Bangkok Post business section today (Read article).
In July 2005 the Thailand-New Zealand FTA (named "Closer Economic Partnership") came into effect. Since then trade between Thailand and New Zealand has almost doubled. Thailand has a trade surplus with exports of Thai goods at NZ$1.2 billion against imports of NZ$850 million (Read about the details of this already existing agreement).
The ASEAN agreement being signed today is a regional FTA that includes 12 economies with total GDP of $1.2 trillion, much larger than the single country agreement with New Zealand.
Thai exports to New Zealand that will benefit include:
*
Leather goods
* Shoes and garments
* Shoes and garments
Exports to Australia that will benefit include:
*
Automotive parts
* Electrical components
* Textiles
* Chemicals
* Electrical components
* Textiles
* Chemicals
These sectors have been protected by high tariffs in the past.
Thai meat and dairy products will face increased competition under the new agreement. Australia and New Zealand hold significant production and export potential for these products. Thai products may "be disadvantaged due to a higher cost of production." (Read Bangkok Post article today on possible negative effects of FTAs, also read book review of economist Jagdish Bagwati's book arguing against FTAs)The AANZFTA agreement also covers other trade-related issues including customs procedures, investment, intellectual property and movement of people (i.e. immigration).
Once New Zealand's parliament has ratified the FTA, New Zealand would begin cutting tariffs.
The agreement calls for all tariffs to be eliminated over 12 years and includes "99% of New Zealand products exported to six Asean members including Thailand. "
The ASEAN Free Trade Area
The ASEAN Free Trade Area (AFTA) was established in 1993 with two goals in mind:1.
To make ASEAN as a whole more competitive in world markets by
eliminating tariffs
and non-tariff trade
barriers on goods flowing between countries within ASEAN.
2. To attract more Foreign Direct Investment (FDI) to ASEAN.
2. To attract more Foreign Direct Investment (FDI) to ASEAN.
Thailand has benefited greatly from AFTA:
Over
the
past 15 years, Thailand has enjoyed a substantial increase of trade
with Asean members, with Thai shipments to Asean topping US$40.11
billion, a rise of 22.5% from 2007, while imports were worth $30.05
billion last year, up 19.9%. Thailand thus posted a trade surplus
of up
to $10.1 billion over Asean last year.
[Note: ASEAN was first established in 1967 in Bangkok by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Several countries joined later: Brunei (1984), Vietnam (1995), Laos and Burma (1997), and Cambodia (1999).]
groundbreaking - something
new, important, and different
a summit - a meeting at which the leaders of countries discuss important issues
ASEAN - the political and economic organisation that unites and gives one voice to the 10 nations of Southeast Asia (See Wikipedia)
an ASEAN Summit - a meeting of the leaders of the countries in ASEAN
Free Trade Agreement (FTAs) - an agreement between a group of countries to eliminate many tariffs, quotas and preferences on goods passing between them (See Wikipedia)
Asean-Australia-New Zealand Free Trade Area (AANZFTA) - the free trade agreement being signed today between ASEAN states and the two countries Australia and New Zealand
came into effect - when a law or agreement officiall begins working, becomes active
a trade surplus - when a country has more exports than imports
posted a trade surplus - had a trade surplus
a trade deficit - when a country has more imports than exports
a regional FTA - an FTA that includes all the countries in a region of the world (the Southeast Asian or ASEAN region, for example)
Gross Domestic Product (GDP) - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary) ผลผลิตมวลรวมภายในประเทศ
garments - clothing tariffs - taxes on imports (a certain percentage of the value of the goods entering the country)
dairy products - products such as milk and cheese from cows
customs procedures - the procedures that people need to go through to bring goods into the country
intellectual property (IP) - legal property ownership rights over creations of the mind including copyrights, trademarks, patents, industrial design rights and trade secrets (See Wikipedia)
immigration - 1. people coming into a country to travel, live, and work there, 2. the controls that governments place on flows of people into the country
ratify - officially giving approval by signing or voting for it
ratified the FTA - give official approval for the FTA
ASEAN Free Trade Area (AFTA) - an agreement between Southeast Asian countries to lower tariffs and other barriers to trade in order to: 1. make the region as a whole more competitive, and 2. encourage Foreign Direct Investment (See Wikipedia)
Foreign Direct Investment (FDI) - when a foreign company builds a factory or starts operations in another country(See Wikipedia)
a summit - a meeting at which the leaders of countries discuss important issues
ASEAN - the political and economic organisation that unites and gives one voice to the 10 nations of Southeast Asia (See Wikipedia)
an ASEAN Summit - a meeting of the leaders of the countries in ASEAN
Free Trade Agreement (FTAs) - an agreement between a group of countries to eliminate many tariffs, quotas and preferences on goods passing between them (See Wikipedia)
Asean-Australia-New Zealand Free Trade Area (AANZFTA) - the free trade agreement being signed today between ASEAN states and the two countries Australia and New Zealand
came into effect - when a law or agreement officiall begins working, becomes active
a trade surplus - when a country has more exports than imports
posted a trade surplus - had a trade surplus
a trade deficit - when a country has more imports than exports
a regional FTA - an FTA that includes all the countries in a region of the world (the Southeast Asian or ASEAN region, for example)
Gross Domestic Product (GDP) - a measure of economic activity in a country, the value of the country's output of goods and services. GDP is defined roughly as: GDP = Household Consumption + Business Investment + Change in Inventories + (Government Spending - Taxes) + (Exports - Imports) (See Economist Glossary) ผลผลิตมวลรวมภายในประเทศ
garments - clothing tariffs - taxes on imports (a certain percentage of the value of the goods entering the country)
dairy products - products such as milk and cheese from cows
customs procedures - the procedures that people need to go through to bring goods into the country
intellectual property (IP) - legal property ownership rights over creations of the mind including copyrights, trademarks, patents, industrial design rights and trade secrets (See Wikipedia)
immigration - 1. people coming into a country to travel, live, and work there, 2. the controls that governments place on flows of people into the country
ratify - officially giving approval by signing or voting for it
ratified the FTA - give official approval for the FTA
ASEAN Free Trade Area (AFTA) - an agreement between Southeast Asian countries to lower tariffs and other barriers to trade in order to: 1. make the region as a whole more competitive, and 2. encourage Foreign Direct Investment (See Wikipedia)
Foreign Direct Investment (FDI) - when a foreign company builds a factory or starts operations in another country(See Wikipedia)
(Source #1: Bangkok Post, business, Trade with New Zealand could double, NAREERAT WIRIYAPONG, 27/02/09, link)
(Source #2: Bangkok Post, business, 27/02/09, THE NEGOTIATOR, Phusadee Arunmas , link)
(Source #3: Bangkok Post, 27/02/09, MORE WINNERS THAN LOSERS, SOMCHAI SUJJAPONGSE, link)
(Source #4: Bangkok Post, business, 27/02/09, BITTER HARVEST FOR SOME, Phusadee Arunmas and Charoen Kittikanya, link)
