How is Business Responding?
ADBI series on Asian Economic Integration and Cooperation
Edited by Masahiro Kawai and Ganeshan Wignaraja
Chapter 7: Thailand
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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