In Brief
The prime ministers of Japan and Thailand on 3 April signed a free trade agreement (FTA) in Tokyo, bringing three years of negotiations to a close. The accord is set to remove tariffs on more than 90 percent of trade between the two countries over the next ten years.
Under the agreement, Japan will eliminate 92 percent of its tariffs on Thai imports. Thai agricultural exports are expected to be a major beneficiary: Japan’s duties on shrimp and tropical fruits are set to be eliminated immediately, as is its 12 percent tariff on textiles. The duty on Thai chicken will be halved in five years. Japan succeeded at excluding its highly-protected rice sector from the agreement. It will maintain tariffs on Thai flour as well.
Thailand will remove tariffs on 97 percent of Japanese goods over the next 10 years, including steel, automobiles and auto parts.
The FTA also pledges cooperation in labour, technology, and environment issues. Under the agreement, visa requirements will be relaxed for Thai cooks, entertainers, and boxing instructors, allowing them to work in Japan. The two countries have promised to continue talks on labour mobility in other sectors.
Critics claim the agreement will permit Japan to dump industrial waste in Thailand. They have also warned that it may raise the cost of medicines in the poorer country, and provide Japanese investors with excessive rights. Thailand’s steel industry has expressed concern about the ability of small and medium sized businesses to compete with Japanese firms.
A group of NGOs in Thailand unsuccessfully attempted to secure a legal injunction to prevent the military-installed government from signing the agreement, claiming that officials had failed to make information about the deal public. Although the negotiations were completed in 2005, the agreement was not signed amidst political instability in Thailand that culminated in last September’s military coup.
Bilateral trade between the two nations is currently about USD 45 billion annually. Japan is the leading export market for Thai goods and the largest foreign investor.. Bangkok hopes that the FTA will improve their credibility with investors globally.
The FTA has been approved by the Thai cabinet and is expected to win approval in Japan’s parliament.
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