Thailand Law Journal 2009 Fall Issue 2 Volume 12

THAILAND AND AUSTRALIA FREE TRADE AGREEMENT (TAFTA): THE ADVANTAGE PACE OF FOREIGN INVESTMENT OF BOTH COUNTRIES

By Pornchai Wisuttisak¹

1. INTRODUCTION

It is confidently to state that the global trade is focusing on the liberalisation. WTO, with the notion of liberalisation, is the significant institution for establishing the free and fair trade among countries. WTO, however, may contribute to the liberalised international trade by the long term due to the fact that its conference combines with a number of countries that try to protect their own local market. It, thus, has the new trend of liberalisation of trade by using bilateral agreement. For example, North America Free trade agreement (NAFTA), this free trade agreement leads to the flow goods between USA and Canada which significantly catalyses the export and import by removing barriers of trade such as customs and tariffs. From the NAFTA that can be seen as the prototypes of the implement of trade liberalisation by Free Trade Agreement, it contributes to the international bilateral agreements of many countries for keeping their performance in competitiveness in global market. Thailand and Australia with the view of opportunity from Free Trade Agreement have constituted ?Thailand-Australia Free Trade Agreement? (TAFTA) between both countries to increase their international trade. This agreement has been in use since 1 January 2005. It contains the obligation to gradually reduce and remove their trade barriers in tariff and non-tariff. The TAFTA is, therefore, the important pace of Thailand and Australia. It provides the facilitation of cross boarder commerce for each party which may contribute to the growth of economy of both countries. Moreover, it brings both parties the tight relations in the long run by the cooperation. The TAFTA contains the significant obligation that has to be focused. This paper, therefore, tries to present the impact of TAFTA on Australia and Thailand when this agreement is come in to existence. It will, firstly, show the development in international relationships between Thailand and Australia. Secondly, with the main point of the agreement, the paper will provide the impact of the Agreement on restricted rule such as reduction of tariff, decrease of the obligation of direct investment, entry of businessperson, and right to hold the shares in company for foreign investors. It will, next, show the impact of TAFTA on both parties? economy by the deregulation from the Agreement.  The paper, then, will discuss on the reaffirmation of non-tariff barrier in TAFTA that may be seen the obstruction of free trade. In the final part, it will provide volume of trade during 5 months of enforcement of TAFTA and conclusion.

The relationship between Thailand and Australia

Background

The connection of official diplomat between Thailand and Australia were limited due to the influence of British over Australian foreign policy and the European power in Southeast Asia region. However, it has some evidence show that Australia had contacted with Thailand in 1880s.² For instance, in 1882, the Thai language press presented that Louse, the son of Anna Leonnowens (the writer of the King and I fame) returned from Victoria with shipload of 200 horses, carriage equipment and a gift of Australia animals from the Victorian Zoological Gardens.³ Also in the 1880s, it has the touring of Australian circus in Thailand that is the first circus to visit Thailand.⁴ At this time, Horses from Australia were popular in Thailand because of demand for cavalry and racing industries in upper society of Thais.⁵

In commerce, there were important contacts for Australian food products which were sold in Bangkok and Phuket.⁶ Moreover, it had the investment in tin mining at Phuket. In 1906 Thai government singed the agreement with Captain E,T Miles of Tasmania which ignited the tin mining industry by the use of dredges.⁷

Giblin, a Tasmanian Surveyor worked in Bangkok?s Royal survey department in 1894, becoming Director in 1901. He held this position for a decade with 20 Europeans and 306 Thai staffs.⁸ During the coup in 1932 which overthrew the absolute monarchy to democracy, the small number of Thai aristocrats immigrated to Australia as political refuges but there still were a few Thais in Australia.⁹  Ronald Mr. Francis Struart, an oxford educated Australian served in British Consular Service from 1937 and 1941 in Bangkok.¹⁰ Although, there were contacts between Thailand and Australia, Australian were little known to Thais as same as the knowledge about Australia in Thailand.¹¹

In early of WW II, January 1941, it has the important diplomat, that Prime Minister Menzies made an unofficial visit to Thailand in meeting Field Marshal Phobun Songkram, Thai Prime Minister¹². During the period of WW II there was a sad event which riveted the picture of Thailand into Australian minds. The Australian prison of war was barbarically treated on the infamous Thailand-Burma Railroad.¹³ Japanese discriminated Australians brutally but Thai villagers provided some assistance to the Australian prisoners.¹⁴ At the end of the war, officially 2800 Australians died in Thailand therefore Australia assisted Thailand in the negotiation with British with the final part contained the upkeep of Commonwealth war grave at Kanchanaburi. Its task is continued today.¹⁵ There is 1360 are buried at commentary.¹⁶ Since the end of World War II and the raise of the decolonisation, The Australia diplomatic affair emerge to deal with Southeast Asia region.

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.