If you are a foreigner and want to start a business in Thailand, any type of bilateral agreement of your nation with Thailand can be of great help. Such agreements or treaties help in free-trade permissions to or from Thailand. This further facilitates the incorporation and continuity of your business in Thailand.
A Free Trade Agreement (FTA) is a treaty between two or more countries that aims to reduce trade barriers and facilitate trade. The FTA enables the purchase and sale of goods across international borders. It is with little to no government tariffs, quotas, or subsidies, resulting in a more open and competitive global market.
Thailand has signed 15 free trade agreements (14 of which are in effect), is a party to 14 proposed FTAs, and has begun discussions on a further nine FTAs, according to the Asia Regional Integration Center (ARIC). Thailand has also entered into bilateral trade agreements with China.
Association of Southeast Asian Nations (ASEAN)
Thailand is also a member of the Association of Southeast Asian Nations (ASEAN), which was founded in 1967. Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam are among ASEAN’s ten members.
ASEAN-Australia and New Zealand, ASEAN-China, ASEAN-India, ASEAN-Japan, and ASEAN-Korea are among the FTAs that ASEAN has implemented with its trading partners. In November 2020, eleven ASEAN countries and their six trading partners, namely Australia, China, India, Korea, Japan, and New Zealand, signed the Regional Comprehensive Economic Partnership (RCEP), which is a Free Trade Agreement between ASEAN and its six trading partners.
Trade in Goods
At least 92 percent of products traded among RCEP members will be tariff-free, and greater rules will allow duty-free trade across the area.
Non-Tariff Measures (NTMs) to Start Business in Thailand
Import licensing procedures, for example, are provisions that enable better openness and tougher discipline for NTMs.
Rules of Origin
Streamlined laws provide enterprises more freedom to take advantage of preferred market access and regional value chains.
Customs Procedures
Simplified customs procedures and improved trade facilitation reduce transaction time and costs while providing greater assurance to exporters and importers.
Trade in Services
At least 65 percent of the services sector in RCEP countries will be fully open, with more transparent norms and procedures.
Investment
Investor performance criteria, such as entry, expansion, and operation conditions in RCEP nations, are prohibited.
E-Commerce
Consumer safety, online personal information protection, openness, paperless transactions, and other factors contribute to a safer trading environment.
Intellectual Property (IP)
In the RCEP zone, businesses can get protection for non-traditional trademarks and a broader range of industrial designs.
Competition
Businesses are protected from anticompetitive actions by a commitment to preserving competition law frameworks based on worldwide best practices.
Government Procurement
Businesses competing on public procurement projects in RCEP countries benefit from more transparent rules, regulations, and procedures.
Free Trade Agreement between Thailand and China
The Free Trade Agreement (FTA) between China and Thailand was signed in June 2003 and went into force four months later, in October 2003. A “farm trade early harvest arrangement” is what it’s called. Before the larger China-ASEAN FTA took effect in 2010, both countries opened their agricultural markets, and tariffs on 188 different fruits and vegetables were cut to zero overnight as part of the deal. Therefore, if you want to start a business in Thailand in the agricultural sector, it will be great!
NGOs, farmers’ groups, academia, and the media in Thailand have all documented the detrimental effects of the China-Thailand Free Trade Agreement. Thai garlic, longan, and other fruit and vegetable growers, for example, have lost their livelihoods as a result of cheap Chinese imports, particularly in the north. Despite government promises, only Thai cassava exports increased. Local warehouse operators, on the other hand, let Thai produce entering China decay at the entrance point, preventing it from being commercialized, according to investigations.
Thais have slammed inexpensive Chinese fruits and vegetables for having high pesticide residue levels from the start. However, this has spurred the two nations to develop joint private food safety standards (Thai-China GAP), promoting corporate farming and concentration even further.
Small farmers on both sides of the border have suffered as a result of the China-Thailand Free Trade Agreement. It has only benefited merchants who have control over the trade and can use it to expand their contract farming operations, such as Thailand’s Charoen Pokphand Group, which is owned by Chinese investors. Therefore, to start your business in Thailand in this trade, you can get in association with the Chareon Pokphand Group.
Statistics
Thailand is China’s third-largest trading partner in ASEAN, behind Malaysia and Singapore. It is China’s 14th-largest trading partner in the world. Thailand was one of the countries to sign up for the EHP Part 2. It was the Sustainable Development Goals from Member countries’ perspectives. Moreover, the implementation of Thailand 43 was prior to the signing of the ASEAN-China Agreement on Trade in Goods in 2004. The EHP, which ran from January 2004 to January 2006, allowed for early tariff reductions on agricultural products.
Since the adoption of EHP in January 2006, Thailand has had a trade surplus on primary agricultural items. However, it still has a trade deficit with China. The top ten exports of Thailand to China in descending order are as follows:
- Automatic data processing machines and parts;
- Rubber;
- Chemical products;
- Ethylene polymers;
- Rubber products;
- Tapioca products;
- Electronic integrated circuits;
- Refined fuels;
- Wood and wood products; and
- Electrical equipment.
There is growth in Thai exports to China by 39%. It is US$17.42 billion in the first ten months after implementation of the ASEAN-China FTA on January 1, 2010. Additionally, growth in imports is by 46% to US$20 billion.
Going Global
Because of enormous inward FDI, China is now the world’s largest exporter and second-largest economy. As China’s economy grows, it will encounter a number of obstacles, including rising wages, environmental concerns, and anti-Made in China groups. As a result, China’s “Going Global” policy invites FDI from other countries.
The ASEAN-China Foreign Ministers’ Connectivity Meeting took place in Kunming on January 25, 2010. It is to discuss how China and ASEAN may improve connectivity among ASEAN member nations and between the two sides. The ASEAN-China Free Trade Area (ACFTA) is an important component of soft infrastructure support. Moreover, it will help enhance ASEAN-China economic ties and will be useful in concert with sophisticated infrastructure development.
More FTAs with Chinese Regions: Good to Start Business in Thailand
Following the signing of the first FTA with the Chinese province of Hainan, Thailand’s government intends to negotiate mini-FTAs with other Chinese provinces. According to Commerce Minister Jurin Laksanawisit, the ministry plans to organize online business matching activities between Thailand and Hainan by the end of 2021. Additionally, a trade fair showcasing world-class Thai brands at the Hainan Expo will focus on promoting health, wellness products, and services.
Thai officials are eager to sign such agreements in order to boost bilateral trade with more Chinese provinces. A province like Gansu in the north is mostly Muslim and hence a suitable match for Thai halal products, according to him. The Chinese government declares Hainan a free trade port, attaching it to countries as part of the “Belt and Road” strategy. It is to boost trade activity there, according to the Commerce Ministry.
Hainan, China’s smallest province, is a vital link in the “Maritime Silk Road”. This connects the Greater Bay Area of Guangdong, Hong Kong, and Macau to Southeast Asia. ASEAN (Thailand)-China cooperation has the potential to be a cornerstone of East Asia’s economic integration and community building.
Therefore, if you are from China and planning to start a business in Thailand, this Free-Trade Agreement can help you a lot in the procedures. But as a foreigner, you will always need local legal support in the process. Email us at [email protected] for any and all types of support in Company Registration, Accounting, and Taxation in Thailand.
