Asia’s Free Trade Agreements

Asia’s Free Trade Agreements

How is Business Responding?

ADBI series on Asian Economic Integration and Cooperation

Edited by Masahiro Kawai and Ganeshan Wignaraja

The spread of Asia’s free trade agreements (FTAs) has sparked an important debate on the impact of such agreements on business activity. This pioneering study uses new evidence from surveys of East Asian exporters – including Japan, the People’s Republic of China, the Republic of Korea and three ASEAN economies of the Philippines, Singapore and Thailand – to shed light on the FTA debate.

Chapter 7: Thailand

Ganeshan Wignaraja, Rosechin Olfindo, Wisam Pupphavesa, Sumet Ongkittikul and Jirawat Panpiemras

Subjects: asian studies, asian business, asian economics, business and management, asia business, international business, economics and finance, asian economics, international economics


Ganeshan Wignaraja, Rosechin Olfindo, Wisarn Pupphavesa, Jirawat Panpiemras and Sumet Ongkittikul 7.1 INTRODUCTION Since the 1970s, outward-oriented policies have transformed Thailand into a regional production hub and improved the country’s economic prosperity. Thailand has emphasized regional trade agreements as a vehicle of commercial policy since the 1990s (Chirathivat and Sabhasri 2009). It has participated in the Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) since 1993 and has pursed bilateral free trade agreements (FTAs) since 2001. By February 2010, Thailand was one of East Asia’s most active FTA users, having concluded 11 FTAs and engaged in another seven FTA negotiations. In response to Thailand’s trend toward participating in FTAs, there is growing academic interest in the evaluation of Thailand’s FTAs. Studies done before the conclusion of FTAs use global computable general equilibrium (CGE) models to simulate the economic effects of alternative FTA scenarios. The Thailand Development Research Institute (TDRI) (2006) suggested that higher welfare effects of tariff reduction were visible from bilateral FTAs with traditional markets such as Japan and the United States (US) than those with new markets. Kawai and Wignaraja (2009b) found that ASEAN’s FTAs generated significantly larger welfare gains for Thailand, especially if the CGE analysis incorporated reductions in tariffs and services barriers and improvements in trade facilitation. Studies done after the conclusion of FTAs rely on industry analysis to assess the effect of FTAs. In a study of the automotive industry, Kohpaiboon and Jongwanich (2006) concluded that overall FTA utilization rates were relatively low...

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