Thailand-Australia Free Trade Agreement (Tafta) Essay

On October 19, 2003, negotiation between Thai and Australian Government had finally completed, giving birth to Thailand-Australia Free Trade Agreement (TAFTA), the first comprehensive free trade agreement between Thailand and a developed country and the third free trade agreement for Australia. Since entering into force during January 2005, TAFTA has greatly affected on investment flows between Thailand and Australia. Like most Free Trade agreements, the main objective of TAFTA are to facilitate trades, open up business opportunities to bring about mutual Benefits for the two partners.

To begin with, the reductions and eliminations of trade barriers such as certain tariff rates is one of the results from TAFTA. Before, Thailand’s average tariff rate was around 15% which had considered to be much higher comparing to Australia’s which was only 3. 9%, However, after TAFTA has come into force, tariffs on 80% of products exported from Australia to Thailand have started to be reduced or eliminated by this 2010.

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Moreover, both countries also have been expected to enjoy the ease of foreign investment restrictions and protections of investment through guarantees against expropriation as well as nationalization. As a result, Australia firms can gain opportunities to invest in other service sectors such as telecommunications, airline, catering, and hotel sectors apart from those sectors that are very important to Australia such as mining industry since foreign equity restrictions were lift off to help investors.

Moreover, under TAFTA, both countries have cooperated to take strong measures to prevent the export of goods which infringe copyrights or trademarks as well. Apart from trading benefits, better social welfares are also other benefits of TAFTA. Australia has canceled Labor Market Test for Thai citizen which has fastened process for Thai citizens when applying to work in Australia. In addition, the establishment of Working Holiday scheme has allowed Thai students who studying in Australia to work during their stays.

Despite its aim to bring about economic prosperity for both countries, there are criticisms regarding some negative outcomes of TAFTA. First of all, even it has appeared that there are more products that tariff rates to be reduced or eliminated by Australia, however, the percentages of tariff rate reductions from Thailand have been much higher than Australia resulting in more significant income losses for Thailand. According to some researches, only a small group of industrialists in Thailand are gainers from this deal while people in agricultural sector have been experienced losses.

There are disadvantages for Thai daily and meat producers since Australia importers are known for their high expertise and production capacities that many Thai producers still have not be able to compete with by now. As a result, the increase in Australian dairy imports has put many Thai dairy farmers out of business. Furthermore, there have been major conflicts in the area of quality control and food safety concerns, especially in the fisheries and agricultural sectors.

So far, many Thai producers have failed to pass Australia’s quality inspection and thus resulting in banning of some Thai products such as Thai shrimps. As a result, the opportunities for many Thai exporters have been limited due to these factors. In conclusion, despite all the benefits TAFTA has brought, Thailand might not be the big winner from this agreement after all. However, Thailand could not afford to pass out this FTA opportunity with Australia since it needs to keep some advantages from this deal.

Otherwise, Thailand or even Australia may not be able to guarantee its power in the future due to more economic interactions and globalization since nowadays, like many countries, Australia is also in the process of negotiations of with China, Japan, Malaysia, the Republic of Korea, the Gulf Cooperation Council, as well as the Trans Pacific Partnership. References ?www. dfat. gov. au/trade/negotiations/aust-thai Accessed 12 May 2010 ?www. thaifta. com/english/eng_au. html Accessed 12 May 2010 ?www. ThailandOutlook. com FPRI-FTA Seminar Series Accessed 15 May 2010 ?www. bilaterals. rg › Negotiations › Australia-Thailand Accessed 20 May 2010 ?www. wikipedia. org Accessed 12 May 2010 ?www. thailaws. com/law/e_laws/freetrade/australia/tafta_business_guide. pdf Accessed 20 May 2010 ?www. thailawforum. com/database1/ftathaiaustra. html Accessed 15 May 2010 ?www. mfa. go. th/internet/BDU/TAFTA%20benefit. doc Accessed 12 May 2010 ?www. thailandwto. org/Doc/News/392. pdf Accessed 12 May 2010 ?www. mayerbrown. com/publications/article. asp? id=5073 Accessed 12 May 2010 ?www. austrade. gov. au/TAFTA-takes-off-in-Thailand-for-Australian-Exporters Accessed 12 May 2010


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