Free trade agreements (FTAs) between China and Thailand have eliminated or reduced the import duties on a vast variety of goods and services. Thailand has cut the import duties on dairy products, pharmaceutical products, paper, commercial trucks, aluminum structures, dishwashers and other products to facilitate trade with China and other Association of Southeast Asian Nations (ASEAN) members. Reduction in import duties from China should enable the manufacturers in Thailand to procure raw materials at cheaper price and export the finished goods at competitive rates to other countries.

Promotion of Bilateral Trade and Economy

A reduction in import duties for goods originating from China to Thailand should boost the bilateral trade between the two countries and help them to improve their economies. As a result of the China-ASEAN free trade agreement, investments between China and Thailand have increased. Based on the data provided by the Thai Department of Trade, the FTA enabled a cut on duties on 188 fruits and vegetables, and it eventually helped Thailand to record $200 million of surplus trade with China from October 2003 to February 2005.

Industries Benefited

A cut in the import duties from China to Thailand has enhanced the trade to $36 billion in 2008, which is an increase of 20 percent over 2007. Reduction in tariffs has benefited the following industries: dairy, pharmaceutical, iron and steel, pulp and paper, aluminum and consumer electronics. Direct foreign investments in Thailand have increased due to the lowering of import duties, and the Thai industries are achieving better competitive advantage than other economies. As of 2009, it was also planned to cut the duties on three types of animal feed: soybean, corn and fish meal.

Future Prospects

The lowering of import duties, due to the FTAs between China and Thailand, shows the prospect for the development of infrastructural projects, such as railways. This should provide better and cheaper logistics to corporations and also enhance tourism in Thailand. Since Thailand currently enables the trading of almost 99 percent of goods with other ASEAN countries at a negligible tariff, it has promoted the mutual development of the economies of the ASEAN bloc. It can be inferred that a similar agreement with China will boost the economic development of Thailand as well as China.