Thailand Law Journal 2009 Fall Issue 2 Volume 12

The Thai real GDP will also follow the same fashion of real consumption; it will climb up to 25.2 US$ billions at the beginning of the enforcement of the Agreement. The GDP will steadily decline from20.6, 17.4, and 15.6 US$ billions during the 10 years phasing down of tariff by the obligation of TAFTA. It can be pointed out that the enforcement of TAFTA influence differently trends for Thai and Australia economies. Australia is predicted to have benefit from the agreement in its real consumption and GDP more than Thailand counter part. The trends of Australian of real consumption and GDP are stable; in contrast with Thailand that its real consumption and GDP will decrease after there have been the phasing down from TAFTA. It has to state that the establishment of the Agreement have to impact on the economy of its parties. This can be seen that the TAFTA in economical view may provide the advantageous in favour of Australia. The Agreement  will liberalise international trade of both parties by decreasing the barriers that have obstructed the flow of the international trade. However, TAFTA may not significantly facilitate the commercial activities between its parties due to the fact that there is the existence of non-tariff barrier in its chapters.

Non tariff barrier of Australia and Thailand

The barrier of international trade can be categorised as tariff and non-tariff barrier. The tariff barrier is considered as the tax that used for the imported and exported goods, while non-tariff barrier is known as the law regulation, policy, or practice of government other than an import duty that restricts on trade.¹¹⁹ In TAFTA, although there has been the establishment of the obligation to reduce the tariff barrier, it still contains reaffirmation of the Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary Measures (SPS) of each party in chapter 6 of the agreement. The TBT and SPS, classified as the non- tariff barrier of international trade, can establish the obstruction of the cross boarder trade between Thailand and Australia. It, therefore, has to point that the TAFTA may lead to the consolidation of non-tariff barrier for parties, though, in the Article 607, 608 and 609 of the Agreement, there are provision of the cooperation in the exchange of information in the SPS of both countries. The existence of non-tariff barrier of each party in TAFTA may contribute to difficulties of flow of the trade between parties. Thai export to Australia that is encouraged from the reduction of tariff might be obstructed by the Australian strict SPS. The Australia SPS are significantly restricted on the agricultural products from other countries. For example, there are complains of European Union and US in Australia's entire quarantine systems that US Trade Representative Bob Zoellick pointed out that one of the biggest problems in trade with Australia was the stringent quarantine system which is costing US farm producers 100-500 million US dollars a year, and European Trade Commissioner Pascal Lamy stated that Australia has built a quarantine system that can block the import of agricultural products into this country.¹²⁰ Moreover, Australian government provided, in the WTO report, that ?it takes a conservative approach to biosecurity consistent with the WTO SPS Agreement.¹²¹  Australia takes a ?managed risk? approach to biosecurity based on scientifically justified measures that are the least trade restrictive possible?¹²² The strict in system of quarantine of Australian SPS may cause unfavourable condition for the Thai exporters. Thais exporters who view the TAFTA as the opportunity to access their products to Australian market have to be challenged with the cost of Australian SPS system that can impose the discouragement of the international trade. For the aspect of Australian TBT, it can be present that the Australian government have improved its TBT such as countervailing and anti-dumping procedures. It, however, can be seen that the traditional anti-dumping is used by the Australian government.¹²³ Australia appears to have accounted for six to eight per cent of the anti-dumping cases initiated internationally in recent years, and it continues to be one of the more frequent users of anti-dumping measures.¹²⁴

However, Thai government also set out its TBT and SPS for use as the implement of preventing its market. Thai government maintain the regulation that can be classified as the TBT and SPS, for instance, Food Act B.E. 2522 (1979) that Imported products have to be regulated by the Food and Drug Administration and the Ministry of Agriculture and Cooperatives, and Health and Sanitary certificate that requires the exporting country must accompany imports of certain food products.¹²⁵ Thailand also remains the system of import licensing and prohibition that its main purpose is to protect infant Thai industries.¹²⁶ 

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.