Thailand Law Journal 2009 Fall Issue 2 Volume 12

In specific product, Thailand has the tariff rate of beef meat on 1 July 2003 at 51 per cent but since the Agreement came in to existence, Thailand has decrease its tariff rate on beef meat to 40 per cent and will phase down to 0 per cent in 2020.⁸⁶ Thai rate tariff of sheep meat at 1 July 2003 is 32 percent and Thailand offered to cut tariff to 30% on entry into force, then phase to 0% in 2010. Moreover, Thailand has the rate of offal meat on 1 July 2003 at 42 percent and it will immediately cut its tariff to 30 percent on the entry in to force of TAFTA ⁸⁷ Australian dairy products also gains benefit from TAFTA.

Thai tariff in dairy product will be inclined when the TAFTA is in existence. For example, Thai tariff for butter was 33 percent on 1 July 2003 but it has been 33 precent after TAFTA in used and then phase to 0 per cent in 2020.⁸⁸ Thai has increased its quoter of 120 tonnes for milk and cream product that intervals until 2025, when all tariffs and quotas will be eliminated.⁸⁹Moreover, Thai tariff of alcohol products will decrease from the old rate. The tariff of wine and spirits has been decreased from 60 to 40 and 60 to 30 respectively in the date of entry of TAFTA and phasing down to 0 percent in 2015.⁹⁰ However, Australian alcohol tariff products have been removed to 0 percent since the day of entry of TAFTA.⁹¹

The agricultural products are seen as the important part of the reduction of tariffs in TAFTA. Thailand and Australia have the remedies for protect the agricultural products which are fragile market for the reduction of tariff in the TAFTA. Thailand has focusing in the dairy product and frozen beef because of the strong performance of producing these products of the Australian agricultural sectors.

Thai milk importing quota

Source: DTN Ministry of Commerce Thailand

Thai dairy producer can not produce its product to sufficient Thai consumers. Thailand, therefore, has to import the skim milk powder 70,000 tones to combine it with waters for satisfying the demand in Thai market.⁹² Thailand is bound by the WTO to import the skim milk powder at least 50,000 tones a year with 20 % of tariff rates but, in practice, Thailand imports the powder 70,000 tones a year.⁹³  After TAFTA is in used Thailand will specially open for Australian dairy exporter 2,000 tones per annual.⁹⁴ The Thai tariff rate of the dairy product will be gradually decreased 1 percent every year until phasing down to 0 percent in 2020.⁹⁵

Moreover, Thailand concerned the frozen beef and pork meat that will be imported to its market. Thai market of these products is very delicate due to the fact that the importing the huge amount of the products to Thailand will vastly affected Thai farmers. The time in decreasing of these products are, therefore, longer than other agricultural products. It will be implementation of special safeguard to protect the importation of the meat product to Thailand. 

 Thai special safe guard for meat market

Source: DTN Ministry of Commerce Thailand

The Thai special safeguard is that if there is the amount of this importing meat over than ?Trigger Level?⁹⁶ , Thailand can reused the tariff rate that is set out before there will have been the passing of Trigger Level or can rely on the MFN rate of that products that the rate must be less than another one. For example, the beef meat that its original rate is 51 percent will decrease to 40 percent in first year and to 34.4 percent in third year. In this third year, the amount of imported beef meat product must not exceed 855.5 tones but if there is the overing of the controlled amount Thailand can reuse the original rate at 51 percent. It can be seen that Thailand has the implement of special safeguard for prevent its market.

However, Australia also adopted the special safeguards for its market of agricultural product. Australia approached to use the special safeguard because Thailand is the major exporter for products such as tuna and fruit juices. Australia concerns that the importing tuna from Thailand will significant increase. Thailand has is Australia?s major exporter of tuna that Thailand has share in Australian tuna market about 94 percent.⁹⁸ This can contribute to Australia to adopt the special safeguard for the tuna product.  Australia set out the special safe guard to adjust its tuna market as seen in the table below that set out the quota for Thailand in importation of Tuna and pineapple juice to Australia.

Australian special safeguard for agricultural product

Source: DTN Ministry of Commerce Thailand

This article is published with the kind permission of Pornchai Wisuttisak, current PhD candidate, School of Business Law and Taxation, ASB, University of New South Wales, Master of Commercial Law, Macquarie University, BA, Political Science, Thammasat University, Thailand. This article originally appeared in the Thailand and Australia Free trade agreement (TAFTA): The advantage pace of foreign investment of both countries.