Thailand’s Agricultural Sector and Free Trade Agreements

by Zamroni, Asia-Pacific Trade and Investment Review Vol. 2, No. 2, December 2006

Abstract: "The agricultural sector has played an important role in developing the Thai economy and the Thai Government has opened up the sector to international competition. As a major agricultural exporting country, Thailand among other Asian countries is relatively ready to open its markets in order to obtain benefits from the liberalization of the agricultural sector.

"Thailand has been the most active Asian country in promoting its international trade since the Asian financial crisis erupted in mid-1997. Intensive talks have been held with many developed and developing countries, such as Australia, China, India, Japan and the United States. When signing bilateral free trade agreements (FTAs), the Thai Government should not undermine the bargaining power of countries belonging to the Association of Southeast Asian Nations (ASEAN) as a single entity. In order to improve the terms for free trade, the following considerations should be taken into account: (a) regional deals are more efficient and have more advantages than bilateral ones; (b) steps should be taken on a gradual basis to empower the agricultural production sector and farmers; and (c)
FTAs should have comprehensive coverage and depth, and include non-tariff barriers, investment, human resources development, intellectual property rights protection and the environment.

"As an open developing country, Thailand should be aware of the importance of its agricultural sector and yet its farmers have received relatively few benefits from trade liberalization so far and are often poor. In order to maximize the potential benefits of existing FTAs and minimize the possible negative impacts, the Thai Government needs to satisfactorily make the necessary adjustments to its economy and develop the competitiveness of its enterprises in emerging free markets. Restructuring and adjustment processes in the Thai agricultural sector, especially for the empowerment of Thai farmers, are critical in order to keep pace with the rapid changes brought about by globalization and increased trade and to gain more benefits from FTAs for society at large. In addition,
Thailand has to be aware of the distribution of benefits to each domestic sector involved. A balanced distribution would create a better-off society and improved acceptance of FTAs by the public. Developing productivity and increasing competitive ability will empower farmers and improve their business potential.

"The central Government has to pay due attention to these circumstances prior to the liberalization process and adopt policies which would make farmers more competitive and preserve the sustainability of agricultural development as a whole. The benefits of free trade should be measured first in the national context or in terms of national benefits. For those already suffering losses as a result of free trade, the Government should assist them to improve their productivity and competitiveness."