Thailand Law Journal 2009 Fall Issue 2 Volume 12

The evaluation of impact from TAFTA

After there has been the existence of TAFTA, the trade between both parties has changed its trend. The positive balance of trade that has been occupied by Thailand is now on the Australia counterpart. The increase of import volume from Australia to Thailand contributes to the imbalance of trade for Thailand. As seen in the table below. The table present the comparison of trade between Thailand and Australia.  

The value of trade between Thailand and Australia     

Note: the exchange rate is approximately Bht 31:$A 1
Soures: Customs department of Kingdom of Thailand

Thailand?s value of trade is increase both in the sector of import and export during 5 months of enforcement of TAFTA. The export volume increase from Bht 28,316.6 to Bht 34,651.30 when compare between January to May 2004 and 2005. Thai import from is follow the same trend that it raises from Bht 25,407.70 to Bht 44,154. However, when focusing on the balance of trade the Thai balance of trade considerably plumb from Bht 2,908.90 to Bht -9,503.20.  This can lead to point that, at the early period, the TAFTA contribute to benefit for Australia. However, the Thai government claims that the significant decrease of its balance of trade is resulted from the import of gold from Australia; the demand from consumption of gold during that period.¹²⁷ Nonetheless, there is the positive signal for the expansion of trade between Thailand and Australia from the impact of TAFTA. The rate of trade between both countries is increased that the rate of Thai export to Australia raises from 21.03 per cent in 2004 to 46.69 per cent on the first period of 2005.  

The rate of trade expansion between Thailand and Australia

Source: Customs department of Kingdom of Thailand.

As seen the data of evaluation during 5 months of TAFTA, it has to be concluded that the TAFTA has contribute to the expansion between its parties. There is the increase of the trade in and out between its parties. TAFTA has facilitated the bilateral merchandise between Thailand and Australia, though the benefit of the Agreement can be seen in the Australian market. TAFTA has significantly impacted the restricted rule of trade. Its obligation establishes the change of restricted rules of trade between the parties. It causes the significant reduction of high tariffs of merchandise, and the decrease of the prohibitions of Thai and Australian foreign investment and service. Moreover, TAFTA is predicted to be the factor of economical change in Thailand and Australia. The expansion of trade may lead to the change in the real consumption and real GDP of Thailand and Australia. TAFTA is, however, still contains the non-tariff barrier that can obstruct the free flow of trade of its parties.

Nonetheless, TAFTA has to be focused on its long term implication. The TAFTA can be seen as the important pace of the legal, political and economical cooperation of its parties, and it consequently can lead to the establishment of strong international relation between Thailand and Australia. 

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.