Near Free Trade within ASEAN to be phased in after New Years
By Jon Fernquest
Tariffs on goods imported into
Thailand from nearby ASEAN countries will drop to zero
after New Years Day 2010 this week (See table on right). This could mean big changes in Thailand's economic future.
ASEAN economies may follow the same path as European economies which grew stronger from unity under the European Union.
Countries that are close economically will also, hopefully, fight less.
Cooperating as economic partners, friendship between Thailand and Cambodia may grow in the near future.
Thailand's government is taking action to help soften the negative impact of the new arrangement (Read article).
Today's article begins after the vocabulary:
AFTA (ASEAN Free Trade Area) -
a trade agreement by the countries in ASEAN to reduce and end tariffs
within ASEAN (See Wikipedia)
free trade - when goods and services can pass between countries without being taxed
phased in - introduced slowly and gradually (in stages)
tariffs, import tariffs - taxes paid on goods brought into (imported into) a country
ASEAN - the grouping of countries in Southeast Asia for political and economic cooperation, includes Thailand, Malaysia, Singapore, Brunei, Indonesia, Philippines, Laos, Cambodia, Myanmar and Vietnam (See Wikipedia)
follow the same path - do the same thing (and gain same benefits)
European Union - the economic and political union of 27 European countries and their economies (See Wikipedia)
cooperating - working together to achieve goals
economic partners - the other countries that a country works with to achieve its economic goals
negative impact of Y - bad things that happen from doing project Y
soften the negative impact - try to make the bad things that happen less bad
free trade - when goods and services can pass between countries without being taxed
phased in - introduced slowly and gradually (in stages)
tariffs, import tariffs - taxes paid on goods brought into (imported into) a country
ASEAN - the grouping of countries in Southeast Asia for political and economic cooperation, includes Thailand, Malaysia, Singapore, Brunei, Indonesia, Philippines, Laos, Cambodia, Myanmar and Vietnam (See Wikipedia)
follow the same path - do the same thing (and gain same benefits)
European Union - the economic and political union of 27 European countries and their economies (See Wikipedia)
cooperating - working together to achieve goals
economic partners - the other countries that a country works with to achieve its economic goals
negative impact of Y - bad things that happen from doing project Y
soften the negative impact - try to make the bad things that happen less bad
Economics
REGIONAL AGREEMENT
Free trade's bottom line
Consumers should notice benefits from Afta tariff cuts, but should also remember that they get what they pay for.
28/12/2009
Phusadee Arunmas
Consumers are likely to emerge as the biggest gainers once import duties on most products are eliminated at the dawn of the Year of the Tiger.
But shoppers in search of bargains should also be aware of and educated about the quality of the products and sanitary standards of foods, says Dusit Nontanakorn, the chairman of the Thai Chamber of Commerce.
"Consumers are of course entitled to have a greater choice to buy products at cheaper costs, but what they should be concerned about is the quality of the products and whether the imported products are safe," said Mr Dusit.
"Authorities need to strictly enforce sanitary standard measures for imported products to protect the interests of the country and local consumers."
the bottom line - the
most important (but unpleasant) thing, that you must think about
(example: "the bottom line is that it didn't work"....so what are we
going to do to make it work?)
tariff cuts - reducing tariffs
get what they pay for - an equal deal (no surpriging bargain, good deal, or special benefits)
likely to emerge as Y - likely to become Y in the future
the dawn of the Year of the Tiger - the beginning of 2010 (known as the "Year of the Tiger" by the Chinese, See Wikipedia)
sanitary - keeping things clean (removing garbage, removing waste water, keeping water supply clean)
sanitary standards - requirements for keeping things clean
tariff cuts - reducing tariffs
get what they pay for - an equal deal (no surpriging bargain, good deal, or special benefits)
likely to emerge as Y - likely to become Y in the future
the dawn of the Year of the Tiger - the beginning of 2010 (known as the "Year of the Tiger" by the Chinese, See Wikipedia)
sanitary - keeping things clean (removing garbage, removing waste water, keeping water supply clean)
sanitary standards - requirements for keeping things clean
Asean on Jan 1 will usher in almost unlimited free trade among six of its 10 member countries - Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Duties under its common effective preferential tariff (CEPT) scheme will fall to between zero and 5% for all products, including those previously deferred on countries' sensitive and highly sensitive lists.
The four less developed members of the regional bloc - Cambodia, Laos, Burma and Vietnam - have until 2015 to reduce their tariffs to 0-5% under their Asean Free Trade Area (Afta) commitments.
Import tariffs will fall to zero for a wide range of agricultural goods (see table [above on right]) and Thailand is obliged to eliminate import quotas for those products as well.
A handful of products remain on Thailand's sensitive list. Those that will carry a 5% tariff include coffee beans (down from 20%), copra (from 15%), potatoes (from 10%) and cut flowers (from 10%).
usher in
- introduce
something new, for the first time
duties - tariffs
common effective preferential tariff (CEPT) - the low 0 to 5% tariff that all ASEAN countries must limit themselves to on goods traded within ASEAN (See Wikipedia)
deferred - delayed, waiting for the future to do something
sensitive - an issue that must be dealt with very carefully, an issue that people are worrying about
a bloc - a group of countries
the regional bloc - a group of countries in a region
commitments - things you must do (because you promised to do them)
obliged to Y - must do Y
quotas - limits, the greatest amounts possible
import quota - the greatest amount of a good that can be imported
obliged to eliminate import quotas - must end limits on imports
a handful of products - a small number of products (could fit in your hand)
copra - the dried meat of the coconut (See Wikipedia)
duties - tariffs
common effective preferential tariff (CEPT) - the low 0 to 5% tariff that all ASEAN countries must limit themselves to on goods traded within ASEAN (See Wikipedia)
deferred - delayed, waiting for the future to do something
sensitive - an issue that must be dealt with very carefully, an issue that people are worrying about
a bloc - a group of countries
the regional bloc - a group of countries in a region
commitments - things you must do (because you promised to do them)
obliged to Y - must do Y
quotas - limits, the greatest amounts possible
import quota - the greatest amount of a good that can be imported
obliged to eliminate import quotas - must end limits on imports
a handful of products - a small number of products (could fit in your hand)
copra - the dried meat of the coconut (See Wikipedia)
Mr Dusit said a number of Thai sectors should gain substantially from free trade due to a decline in production costs. They include textiles and garments, leather products, food products, gems and jewellery, vehicles and parts, mineral products, and electronics,
But he remains concerned about the impact on some key agricultural products such as rice and palm oil.
For rice, Vietnam's lower production costs and rising output are expected to eat into Thailand's market share, while Thai palm oil is also more expensive than that produced by Malaysia and Indonesia.
mineral - a substance formed
naturally in rocks such as tin, sulphur, or even salt (See Wikipedia)
market share - the percentage of a market's customers that buys a company or country's products
eat into Thailand's market share - reduce Thailand's market share
market share - the percentage of a market's customers that buys a company or country's products
eat into Thailand's market share - reduce Thailand's market share
Nuntawan Sakuntanaga, director-general of the Foreign Trade Department, said the elimination of tariffs should result in product price reductions while also encouraging higher market competition.
However, she played down concerns over a possible influx of farm produce, particularly rice, saying Thailand is self-reliant in agricultural products, with no need for imports.
As well, she said that the government's new approach to agricultural support through a price insurance system that targets farmers directly is likely to help reduce smuggling, which occurred rampantly under the traditional crop-mortgage programme.
concerns - things or
issues that people worry
about and think
a lot about
played down concerns over Y - tell people they should not worry about issue Y
influx - large amounts of things or people coming into a place
price insurance system - a way to make sure that farmers get a fair price for their crops
smuggling - take things illegally into a country or other place
occurred rampantly - many many people were doing it
traditional crop-mortgage programme - the old system of buying some crops from farmers at a high price and storing them in government warehouses until they can be sold for a profit
played down concerns over Y - tell people they should not worry about issue Y
influx - large amounts of things or people coming into a place
price insurance system - a way to make sure that farmers get a fair price for their crops
smuggling - take things illegally into a country or other place
occurred rampantly - many many people were doing it
traditional crop-mortgage programme - the old system of buying some crops from farmers at a high price and storing them in government warehouses until they can be sold for a profit
Prime Minister Abhisit Vejjajiva said last week that Afta expansion would affect the Thai economy both negatively and positively but the good would far outweigh the bad.
Agricultural produce, forest cultivation and some entrepreneurs may be affected but the government has mapped out assistance measures funded by various ministries, he said.
the good would far outweigh the bad - good
things would be greater
than bad things, benefits would be greater than costs
cultivation - growing plants
forest cultivation - growing trees in a forest
measures - actions taken to solve a problem
assistance measures - actions taken to help people people with a problem
mapped out assistance measures - planned assistance measures
cultivation - growing plants
forest cultivation - growing trees in a forest
measures - actions taken to solve a problem
assistance measures - actions taken to help people people with a problem
mapped out assistance measures - planned assistance measures
The government has also pledged stringent import regulations to ensure the quality of farm goods, as well as to protect Thai consumers. Genetically modified products will be barred from entering the country.
However, the premier has called on entrepreneurs to adjust to be more competitive and lessen the negative impacts.
pledge - promise
stringent regulations - strict regulations, regulations with a lot of control over an activity
pledged stringent import regulations -
Genetically modified products, Genetically Modified (GM) food - food and products that come from genetically modified organisms(See Wikipedia)
Genetically Modified Organisms (GMO) - a organism (plan or animal) whose DNA has been changed using genetic engineering methods (See Wikipedia)
barred from entering - cannot enter, prevented from entering
stringent regulations - strict regulations, regulations with a lot of control over an activity
pledged stringent import regulations -
Genetically modified products, Genetically Modified (GM) food - food and products that come from genetically modified organisms(See Wikipedia)
Genetically Modified Organisms (GMO) - a organism (plan or animal) whose DNA has been changed using genetic engineering methods (See Wikipedia)
barred from entering - cannot enter, prevented from entering
In 2009, Thailand's exports to Asean countries were worth US$40 billion while imports were worth $30 billion, for a trade surplus of $10 billion.
Wiboonlasana Ruamraksa, deputy director-general of the Foreign Trade Department, said Thailand was competitive enough against other Asean rivals, with higher production capacity and technology. "This will help Thai products gain access to a regional market that incorporates many substantial advantages: a population of more than 580 million, $1.5 trillion gross domestic product, convenient transport systems, huge international trade worth $1.7 trillion a year, and foreign investment of $60 billion," said Ms Wiboonlasana.
"And at the same time, our processing factories are expected to enjoy cheaper imported raw materials in the face of the tariff elimination, cutting their production costs."
Asean rivals - ASEAN
countries that Thailand competes with in the same markets, with the
same products
production capacity - the most that can be produced (given current current factories and resources)
production capacity - the most that can be produced (given current current factories and resources)
(Source: Bangkok Post, business section, Free trade's bottom line, 28/12/2009, Phusadee Arunmas, link)
