Thailand and the European Union (EU) are now back in talks to establish a Free Trade Agreement (FTA), for the first time since the initiative was put on hold in 2014.
The two countries opened the discussion about various topics, as well as gauge the future prospects of resumption of FTA talks between Thailand and the EU, in order to facilitate and expand opportunities for businesses from the two regions.
In 2020, trade value between the two economies totaled 33.1 billion USD which accounted for 7.56% of Thailand’s global trade.
Thai exports to the EU were 17.6 billion USD; top export categories included computer and components, gems and jewelry, rubber products, air conditioners and components, vehicle equipment and components, circuit boards, machinery and components, motorcycles and components, electrical appliances and components and lenses.
Thai imports from the EU totaled 15.4 billion USD; top import categories were machinery and components, chemicals, medical and pharmaceutical products, electrical machinery and components, automotive components and equipment, scientific instruments and aircraft.
However, the path will not be easy. There are a number of issues that need to be resolved between EU and Thailand to come to an agreement.
Some critical points in the negotiations identified by the EU include the high taxation of alcohol in Thailand, unclear public procurement procedures and sector-specific market access problems. It is also unlikely that the EU can significantly increase market access for Thai agricultural and seafood products.
For Thailand, concerns over a free trade agreement largely relate to the need to meet the EU's higher regulatory standards and remove non-tariff barriers. In addition, labor and environmental standards and intellectual property will be discussed.
However, Thailand must try to pick up the pace. The EU free trade agreement with Vietnam entered into force in 2020 and this increases the Thai government's urgency to reach an agreement. Like Thailand, Vietnam is strong in export-oriented manufacturing, but its low EU tariffs give it a competitive edge in the region.