72780 v1 World Trade Indicators 2009/10 Thailand Trade Brief Trade Policy External Environment Thailand’s latest MFN Tariff Trade Restrictiveness Thailand’s exports have worse access to international Index (TTRI)1 of 6.6 percent shows the result of a markets that those of its comparators. Its latest Market gradual reduction in import tariffs over the past Access TTRI4 (including preferences) of 4.3 percent is several years. Most of the progress was made in the higher than that of an average EAP or lower-middle- non-agricultural goods sector, which now has a TTRI income country (3.8 and 2.4 percent, respectively). The of 5.8 percent compared to 21.1 percent for weighted average rest of the world tariff faced by Thai agricultural goods. Thailand is less open to trade than exports is 4.5 percent. In 2008, Thailand had 13 anti- an average East Asia and Pacific (EAP) country (TTRI dumping investigations initiated against it, which was of 4.8 percent) but more open than an average lower- an increase from 8 in 2007. This is much higher than middle-income country (TTRI of 8.4 percent). Based the regional average (excluding China), which was less on the MFN TTRI, it ranks 74th out of 125 countries than two per country. Three additional investigations (where 1st is least restrictive). The simple average of have been initiated against the country in 2009. Over the MFN applied tariff rate has decreased significantly the course of 2008 the real effective exchange rate of since 2000 and was 9.9 percent as of 2006, latest the Thai baht appreciated by 2.4 percent, making available year, yet remains only slightly lower than the exports relatively less competitive abroad. average of 10.5 percent for the EAP region. Thailand’s maximum tariff on all goods (excluding alcohol and As a member of the Association of South-East Asia tobacco) was 136.2 percent as of 2006. The trade Nations (ASEAN), Thailand signed a free trade policy space, as measured by the wedge between agreement (FTA) with Japan in March 2008, whereby bound and applied tariffs (the overhang), was 17.1 Japan will remove tariffs on 93 percent of ASEAN percent. Regarding the extent of its commitment to exports. In February 2009, a comprehensive free trade trade liberalization in services, Thailand ranked 69th deal was signed between ASEAN members and out of 148 countries on the GATS Commitment Australia and New Zealand and is expected to come Index. into effect by the end of 2009. In August 2009, an FTA was signed between India and ASEAN countries Rising food prices prompted the government to and is expected to take effect on January 1, 2010.5 remove tariffs on soybean meal in March 2008. Export Over the course of 2008, the Thai baht appreciated by bans were placed on pigs to prevent further escalation 3.5 percent in relation to the U.S. dollar.6 in the price of pork.2 Moreover, in October 2008, the government banned maize and tobacco imports and bartered rice for Iranian oil.3 In the context of the Behind the Border Constraints global economic downturn, in March 2009, a stimulus Thailand has a favorable business environment, package was announced that included measures to ranking 12th out of 183 countries in the 2010 Ease of support the tourism sector. Doing Business Index, which ranks institutional environments based on their conduciveness to business. The Logistics Performance Index, a measure of the extent of trade facilitation, rates Thailand at Unless otherwise indicated, all data are as of August 2009 3.31 on a scale from 1 to 5 with 5 being the highest and are drawn from the World Trade Indicators 2009/10 performance, compared with 2.58 for the EAP region. Database. The database, Country Trade Briefs and It ranked 31st in the world and 3rd in the EAP region Trade-at-a-Glance Tables, are available at (with Malaysia leading the regional group). Its http://www.worldbank.org/wti. strongest performance was in the timeliness of If using information from this brief, please provide the shipments in reaching their destination, while its following source citation: World Bank. 2010. ―Thailand weakest performance was in customs procedures. In Trade Brief.‖ World Trade Indicators 2009/10: Country Trade late 2008 and early 2009, as trade financing grew Briefs. Washington, DC: World Bank. Available at scarce, the Export-Import Bank of Thailand http://www.worldbank.org/wti. petitioned for funds from the central government to World Trade Indicators 2009/10 Thailand Trade Brief boost the availability of credit, and the government Notes put in place policies designed to increase the availability of credit for exporters. 7,8 1. TTRI calculates the equivalent uniform tariff that would keep domestic welfare constant. It is weighted by import shares and import demand elasticity. Trade Outcomes 2. ESCAP, 2008, pp. 4 and 6. The downturn in global trade coupled with the recent 3. FAO, 2009, and World Bank PREM Trade Group, political instability is expected to lead to a contraction 2009, p. 15. of the economy in 2009.9 Thailand’s growth rate of 4. MA-TTRI calculates the equivalent uniform tariff of total trade has stayed relatively steady in recent years trading partners that would keep their level of imports and continued to grow in 2008 at an estimated 6.4 constant. It is weighted by import values and import percent in real (constant 2000 U.S. dollars) terms. Thai demand elasticities of trading partners. exports of goods and services grew in real terms by an 5. Bilaterals.org, 2009a–c. estimated 5.5 percent in 2008. Real import growth 6. IMF, 2009. more than doubled from its 2007 rate to an estimated 7. World Bank PREM Trade Group, 2009, p. 15. 7.5 percent 8. Chauffour and Farole, 2009, p. 13. 9. World Bank, April 2009, p. 52. In nominal U.S. dollar terms, total trade grew by an 10. Asian Development Bank, 2009, p. 257. estimated 20.7 percent in 2008. Thailand, the leading 11. IMF, 2009. exporter of rice in the world, experienced a rise in 12. Bank of Thailand, 2009. exports during the first half of 2008 as prices of rice rose. In the second half of 2008, prices and demand for rice declined. Despite the decline, total exports References rose by an estimated 17.9 percent for the year. The increase was led by an increase in services exports of Asian Development Bank. 2009. Asian Development 20.6 percent, although tourism, which accounts for Outlook 2009: Rebalancing Asia’s Growth. Asian half of all services exports in Thailand, fell due to the Development Bank, Manila. recession in many developed countries and the Bank of Thailand. 2009. International Trade Statistics: ongoing domestic political instability.10 In the first Exports Classified by Product Group. high-tech products, which account for 65 percent of Bilaterals.org. April 2009a. ―AANZFTA.‖ . and second quarters of 2009, respectively, over the ———. August 15, 2009b. ―India-ASEAN FTA: Trade same quarters of 2008.12 Goods exports continued to in Goods (2009).‖ . fall through June 2009, but at a slower rate, such that ———. April 2009c. ―Japan-ASEAN.‖ . percent on a year-on-year basis. Exports dropped Chauffour, Jean-Pierre, and Thomas Farole. June 19, significantly to other ASEAN partners, as well as to 2009. ―Trade Finance in Crisis: Market Adjustment the United States, EU, and Japan, and to a lesser or Market Failure?‖ PRMTR, World Bank, extent China. Total imports grew by an estimated 26.8 Washington, DC. percent in 2008, due in part to the increases in Economist Intelligence Unit (EIU). June 2009. ―Country commodity prices, but are expected to significantly fall Report: Thailand.‖ EIU. in 2009. Imports of goods in dollar terms dropped by Economic and Social Commission for Asia and Pacific 35.1 percent on a year-on-year basis in the first half of (ESCAP). April 2008. E-TISNET Monthly News. 2009. Foreign direct investment as a share of GDP fell United Nations, New York. to 3.8 percent in 2008 from 4.8 percent in 2007. Food and Agriculture Association of the United Nations (FAO). 2009. ―Policy Measures Taken by Governments to Reduce the Impact of Soaring Prices (As of 15 December 2008).‖ United Nations, New York. Thailand Trade Brief World Trade Indicators 2009/10 International Monetary Fund (IMF). August 2009. International Financial Statistics (Country Tables). IMF, Washington, DC. U.S. Department of State: Bureau of East Asian and Pacific Affairs. January 2009. ―Background Note: Thailand.‖ Washington, DC. World Bank. April 2009. ―East Asia and Pacific Update: Battling the Forces of Global Recession.‖ World Bank, Washington, DC. World Bank PREM Trade Group. January 14, 2009. ―The World Bank, Update on the Impact of the Financial Crisis on Trade and Trade Finance.‖ World Bank, Washington, DC.