1 December 1995
economic success set to continueas exports keep growing Back to top
Thailand's implementation of more outward-oriented
policies, which include placing export and domestic sectors on a more equal footing, have
created a more open economy and have increased the exposure of Thailand's industry to
international competition. According to a WTO Secretariat report on Thailand's trade
policies and practices, the country's rapid economic growth has led to a high degree of
resource utilization and higher unit costs. It has also exposed infrastructural weaknesses
and exacerbated environmental problems. Consequently, manufacturing is now moving away
from low value-added activities to more technology intensive goods. In 1992, the
government updated a variety of environmental regulations and increased penalties for
pollution, adopting the "polluter pays" principle.
Thailand is one of the world's fastest-growing
economies. After achieving an average GDP growth rate of more than 11.5 per cent from 1986
to 1990, the government, in an effort to prevent the economy from overheating, began to
tighten its financial policies and managed to slow average GDP growth down to slightly
more than 8 per cent from 1990 to 1994.
The report attributes Thailand's strong economic
growth to the government's prudent financial management. Its policies have resulted in a
government budget surplus since 1988, an inflation rate of less than five per cent and an
unemployment rate of less than three percent. The share of exports in GDP has risen
continuously for the past four years, from 32 per cent in 1990 to 41 per cent in 1994.
Thailand has continued with its tariff reform which
it began in 1990. Measures initiated in January 1995 will reduce the maximum tariff from
100 per cent to 30 per cent in most cases and will lower rates on some 4,000 items,
thereby cutting the average applied tariff from about 30 per cent in 1994 to 17 per cent
by 1997. One main exception, states the report, concerns automobiles where the average
tariff will remain about 38 per cent, with other rates ranging to 80 per cent.
The report states that under Thailand's Uruguay
Round commitments, virtually all agricultural tariffs have been bound. Tariffication
applies to 23 agricultural product groups. To date, tariffs are in effect for 12 such
groups with the remainder, including such products as unconcentrated milk, copra, pepper
and garlic, to be implemented by the end of 1995. The level of bindings for industrial
products has increased from two to 68 per cent. Agricultural bindings are generally at
applied rates, while bound rates for industrial products are somewhat higher than applied
rates. According to the report, tariff concessions and exemptions are currently in effect,
but detailed information on their applicability is not available. Revenue losses from
exemptions and reductions on machinery and raw materials was estimated in 1994 to total
$2.3 billion. By 2003, the average tariff of products in the ASEAN (Association of South
East Asian Nations) Free Trade Area (AFTA) are to fall to 2.45 per cent, down from the
current 19 per cent tariff which Thailand applies to imports from the region. See footnote 1
Trade in services accounts for nearly half of
Thailand's GDP and some 30 per cent of total employment. According to the report, Thailand
is among the world's top twenty services traders. The main source of services income is
tourism, with remittances from overseas labour a distant second. In spite of limits on
ownership by foreigners, foreign direct investment is strong in pipeline transport,
telegraph and telephone services and tourism. The report states that Thailand is convinced
that the General Agreement on Trade in Services (GATS) will promote the expansion of world
services trade. Thailand, however, fears that domestic firms will not be able to compete
with foreign service providers, especially in such areas as financial services, marked by
weak capitalization and a lack of banking experience. Thailand's schedule of commitments
for services covers 95 activities and 10 major sectors, including financial services,
tourism and transport.
Thailand has accepted the Uruguay Round Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPs) and intends to implement the
agreement by the year 2000. As of September 1995, a bill to set up an intellectual
property and international trade court was before Thailand's National Legislative
In world trade, Thailand has continued to shift more
of its trade to the seven ASEAN member countries. The report states that there has also
been a re-orientation of Thailand's exports away from Europe and towards neighbouring
Asia. The share of Thailand's trade with ASEAN countries and the East Asian
newly-industrialized economies has increased to more than 25 per cent. Japan and the
United States remain Thailand's largest individual trading partners and accounted for
about 38 per cent of the country's trade in 1994. Thailand receives General System of
Preferences (GSP) advantages from 27 of its trading partners. Last year, Thailand exported
goods worth about $9 billion under the GSP, equalling some 34 per cent of total exports.
The report concludes that Thailand's economy stands
to benefit from the strengthened trade rules agreed in the Uruguay Round and from its own
efforts to further liberalize its economy. Such developments will not only help Thailand
achieve a more complete integration into the multilateral trading system but will provide
increased market access opportunities for Thailand's trading partners. The report also
encourages Thailand to be more transparent, especially in regard to providing detailed and
up-to-date statistical information.
Notes to Editors:
The WTO Secretariat's report, together with a report
prepared by Thailand, will be discussed by the WTO Trade Policy Review Body (TPRB) on 19
and 20 December 1995.
The WTO's TPRB conducts a collective evaluation of
the full range of trade policies and practices of each WTO member at regular periodic
intervals and monitors significant trends and developments which may have an impact on the
global trading system.
Two reports, together with a record of the TPRB's
discussion and of the Chairman's summing up, will be published in due course as the
complete Trade Policy Review of Thailand and will be available from the WTO Secretariat,
Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
The reports cover development of all aspects of
Thailand's trade policies, including domestic laws and regulations, the institutional
framework, trade practices by measure and by sector. Since the WTO came into force, the
"new areas" of services trade and trade-related aspects of intellectual property
rights are also covered. Attached are the summary observations from the Secretariat and
government reports. Full reports will be available for journalists from the WTO
Secretariat on request.
Since December 1989, the following reports have been
completed: Argentina (1992), Australia (1989 & 1994), Austria (1992), Bangladesh
(1992), Bolivia (1993), Brazil (1992), Cameroon (1995), Canada (1990, 1992 & 1994),
Chile (1991), Colombia (1990), Costa Rica (1995), C˘te d'Ivoire (1995), Egypt (1992), the
European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong
(1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and
1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992),
Macau (1994), Malaysia (1993), Mauritius (1995), Mexico (1993), Morocco (1989 & 1995),
New Zealand (1990), Nigeria (1991), Norway (1991), Pakistan (1995), Peru (1994), the
Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992),
Slovak Republic (1995), South Africa (1993), Sri Lanka (1995), Sweden (1990 & 1994),
Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the United States
(1989, 1992 & 1994), Uganda (1995), Uruguay (1992) and Zimbabwe (1994).
Secretariats report: summary Back to top
TRADE POLICY REVIEW BODY: THAILAND
Report by the Secretariat Summary Observations
Thailand over the past four years has made progress
in implementing more outward-oriented policies, seeking to equalize incentives between the
export and domestic sectors. Integral to this has been a shift in investment incentives
away from export promotion, and a further opening of the economy, increasing the exposure
of Thai industry to international market forces and thus promoting efficiency. However, a
certain lack of transparency remains; for example, the last published tariff dates to
Economic growth has been rapid since Thailand's
previous Trade Policy Review in 1991, led in part by external demand. The share of exports
in GDP has increased continuously, from 32 per cent in 1990 to 41 per cent in 1994.
Growth, however, has led to a high degree of resource utilization, raising unit costs.
Consequently, manufacturing is moving away from low value-added activities, and Thailand
is becoming a producer and exporter of more technology intensive goods.
The fast pace of development has further exposed
infrastructural weaknesses and exacerbated environmental problems. The authorities are
acting to overcome the resulting bottlenecks in various ways, including an increase in
compulsory education, incentives to locate industry outside the Bangkok area and new
transport facilities. In 1992, the Government updated a variety of environmental
regulations and increased penalties for pollution, adopting the 'polluter pays' principle.
Thailand in World Trade
Thailand has been one of the world's fastest-growing
economies since the mid-1980s. After averaging over 11.5 per cent in the four years to
1990, real GDP growth moderated to somewhat over 8 per cent in the next four years. This
reflected mainly a tightening of financial policies, as the authorities sought to prevent
an overheating of the economy. Nevertheless, since 1990 unemployment has declined to well
under 3 per cent. Concurrently, the deficit on the current account was about 6 per cent a
year. These deficits were more than financed by an inflow of foreign capital, which
together with a high rate of domestic savings supported investment levels close to 40 per
cent of GDP. Since 1990, international reserves have risen from some US$14 billion to more
than US$34 billion by end July 1995, equivalent to about six months of imports of goods
Thailand's sustained economic growth has been
underpinned by prudent financial management. The Government's budget has been in surplus
since 1988. Disciplined monetary policy has helped to bring inflation to under 5 per cent
a year, although recently the rate has again risen, partly as a result of a
drought-induced surge in food prices.
Thailand's intra-industry trade has grown
significantly, especially with ASEAN countries; such trade is particularly high in
precious stones and metals, non-electrical machinery, electrical machinery, and office
supplies. In addition, there has been some reorientation of Thailand's exports away from
Europe towards neighbouring Asia; the share of ASEAN countries and the East Asian NIEs has
increased to over 25 per cent. Japan and the United States remain Thailand's largest
individual trading partners, together with about 38 per cent of total trade in 1994.
Thailand adopted a new Constitution in December
1991, establishing a parliamentary democracy under the King as constitutional monarch.
Executive authority is exercised by the Cabinet, chaired by the Prime Minister and
currently comprising 14 Ministries. Cabinet approves policy actions, which are normally
formulated and implemented by the Ministries. The Prime Minister's Office co-ordinates
inter-ministerial issues such as preparation of the budget and Thailand's five-year plans.
The Government reviews trade policy principally
through the agency of the National Economic and Social Development Board in the Office of
the Prime Minister. The Government also seeks advice from the Thailand Development
Research Institute, a private body, as well as from relevant departments in universities.
The private sector participates in policy issues through such organizations as the Joint
Public-Private Consultative Committee.
Trade Policy Features and Trends
Thailand's trade policy objectives are outlined in
its five-year development plans and implemented through legislation, notifications and
regulations. These policies have evolved over the past decades. An initial emphasis on
import-substitution was followed from the mid-1970s by a switch to export orientation,
which helped fuel growth of about 7 per cent a year. This began to expose constraints and
lead to rising costs, eroding the external competitiveness of Thailand's labour-intensive
agricultural and manufacturing base. Thus, since the early 1990s, Thailand has sought to
move its economy in an outward-oriented direction, towards a more neutral balance of
incentives. Besides trade liberalization, an important element in this has been a
redirection of the investment incentives offered by the Board of Investment (BOI) away
from export promotion to regional development, with all remaining export-related
incentives to be phased out by 2002.
Thailand became a member of GATT in October 1982,
and is a founding member of the WTO. It applies at least m.f.n treatment to all WTO
members. Thailand is also a founding member of ASEAN, whose members agreed in 1992 to
establish the ASEAN Free Trade Area (AFTA) by 2008, a date that in 1994 was advanced by
five years. In 1993, ASEAN brought into operation the Common Effective Preferential Tariff
(CEPT) as the core mechanism for implementing AFTA: by 2003 the average tariff on AFTA
products is scheduled to be an estimated 2.45 per cent, compared to Thailand's current
rate on AFTA imports of 19 per cent; and rates on manufactures that are presently above 20
per cent will decline to a maximum of 5 per cent, thus sharply reducing intra-regional
tariff peaks. Thailand also receives GSP preferences from 27 of its trading partners; in
1994, Thailand exported goods worth about US$9.0 billion under GSP, some 34 per cent of
Thailand is a member of the Asia-Pacific Economic
Cooperation (APEC) forum. Almost three-quarters of Thailand's external trade is with APEC
members. Under the 1994 Bogor Declaration, APEC is to achieve full and open trade and
investment in the region by 2020.
Thailand encourages foreign direct investment (FDI)
through the BOI. Both non-tax and tax incentives, such as tax holidays and waivers of
duties on imported capital goods, are offered as part of general investment policies. With
certain exceptions, foreign equity participation may not exceed 49 per cent of registered
capital; for many financial services, the maximum equity limit is 25 per cent.
Thailand has continued with the tariff reform it
began in 1990. Measures initiated in January 1995 will reduce the maximum tariff from 100
per cent to 30 per cent in most cases and lower rates on some 4,000 items, thus cutting
the average applied tariff from about 30 per cent in 1994 to 17 per cent by 1997; the
number of tariff rates will decline from 39 to 6. A notable exception is the motor vehicle
sector where the average tariff will remain about 38 per cent, with rates ranging to 80
Under Thailand's Uruguay Round commitments,
virtually all agricultural tariffs have been bound and the level of bindings in industry
increased from 2 to 68 per cent. Agricultural bindings are generally at currently applied
rates, with the bound average to decline by some 33 per cent over the implementation
period to 2004. Tariffication applies to 23 agricultural product groups; to date this has
been put into effect for 12 such groups with the remainder, including for unconcentrated
milk, garlic, pepper and copra, due to be implemented by end 1995. In industry, bound
rates are to decline by an average of 28 per cent. Domestic support to agriculture will
decrease by about 13 per cent in value terms by 2004. In the area of services, Thailand's
schedule of commitments as of end-July 1995 covers 95 activities and 10 major sectors,
including financial services, tourism and transport.
In 1992, Thailand removed import surcharges on motor
vehicles, which had ranged from 20 to 50 per cent. Since its previous review, however,
Thailand has introduced excise taxes on motor vehicles, ranging from 27 to 45 per cent.
Exemptions from these taxes are currently granted to passenger cars and certain trucks
provided their manufacturer satisfies local-content provisions. On countertrade,
Thailand's policy is aimed at promoting exports and mitigating the trade imbalance; it
requires that any imported procurement valued above Baht 500 million by State enterprises
must apply countertrade measures.
Under Thailand's obligation to phase out performance
requirements inconsistent with the Uruguay Round Agreement on Trade Related Investment
Measures (TRIMs), 14 local content measures were abolished for investment projects that
received approval after April 1993 for BOI incentives. However, local content requirements
still apply to such items as dairy products and motor vehicle engines; a substantial
number of projects previously approved for BOI incentives are also obligated to continue
observing local-content requirements for a fixed time period. Thailand's remaining local
content requirements are to be eliminated by the end of 1999.
Thailand accepted the Uruguay Round Agreement on
Trade Related Aspects of Intellectual Property Rights (TRIPS), and intends implementation
within the transition period permitted to developing countries. As of September 1995, a
bill to set up an intellectual property and international trade court was in the approval
process of the National Legislative Assembly.
Type and incidence of trade policy instruments
Thailand's applied import tariffs in 1995 range from
zero to 100 per cent (excluding the effect of specific rates), with a simple average of
about 23 per cent. Tariff peaks, up to 100 per cent, apply to imports of certain knitted
goods, footwear, rubber products and motor vehicles. The highest average tariffs are for
distilled spirits and malt liquors (60 per cent), canned fisheries products (55 per cent),
wine and beverages (about 54 per cent). Escalation is not a general feature of the Thai
tariff, but is significant in some sectors, including textiles, paper and rubber products
and basic and fabricated metals.
Specific rates apply to less than 3 per cent of
tariff lines. However, alternative tariffs apply on about 50 per cent of lines for
agricultural raw materials and livestock, and on about 30 per cent of those for industry.
Surcharges or special duties are imposed on fish meal, wheat and meslin flour, corn for
animal feed and sheets and plates of iron and steel. Tariff concessions and exemptions are
in effect, but detailed information on their applicability is not available; total
estimated revenue losses from exemptions and reductions of tariffs on machinery and raw
materials was Baht 59 billion in 1994. The lack of transparency in this area undermines
the transparency of the Thai tariff.
Import licensing in Thailand has been reduced
significantly since the previous review, but non-automatic licensing continues to apply to
a number of imports, including fish meal, coffee beans, pepper, sugar, jute and certain
gunny bags. A number of products, such as liquified petroleum gas, kerosene, motorcycles
and certain buses, are subject to conditional import prohibitions. Thailand's only
remaining import quota is imposed on garlic. Thai food standards and regulations,
according to the authorities, are mostly in conformity with CODEX and other international
standards. As of April 1995, 1,446 Thai industrial standards had been published, of which
41 were compulsory technical regulations.
Government procurement in Thailand is through
various types of tenders of the Ministry concerned; there is no centralized purchasing
agency, and information is not available on the amount or distribution by tender of
government procurement. Thai products and services, except construction, receive a 10 per
cent price preference in procurement, provided they meet the requirements of the Thai
Industrial Standards Institute; certain State-trading organizations get the same advantage
in procurement. The Government is currently privatizing or liquidating a number of its 22
Thailand's restraints on its exports of textile and
clothing that had been negotiated under the aegis of the MFA were "rolled over"
as the starting point for the 10-year phase-out of the Arrangement. For tapioca products,
the Thai voluntary export restraint was eliminated following tariffication of imports by
the European Union. Quota and monopoly export arrangements for sugar were cancelled in
The Export Import Bank of Thailand was established
in February 1994, assuming operation of the export refinancing facilities formerly
administered by the Bank of Thailand. The Packing Credit Scheme, continues to be the main
export refinancing facility for supplying export credits through commercial banks;
small-scale exporters have some access to commercial credits.
The Government has identified agro-industry and
food-processing, textiles and garments, electronics, metal-working, petrochemicals and
iron and steel as industries where Thailand has an international competitive advantage; in
this context, government support takes the form of investment incentives. In agriculture,
government policies are currently geared to increasing productivity and making higher
value added products, while shifting development emphasis to the rural sector as a whole,
including the promotion of local industries.
Agricultural growth lags the rest of the economy,
although exports remain substantial. The reduced availability of new farmland and weak
commodity prices are the main factors behind the lower growth rate. In recent years
production has been shifting away from coffee, rice, cassava and pepper into such higher
value-added activities such as cattle-raising, orchards and fisheries. In some
agricultural sectors, such as sugar, labour shortages are developing.
Agriculture is a low-productivity sector, with a
substantial difference between its 60 per cent share of employment and 11 per cent
contribution to GDP. This is reflected in the accelerating income gap between the farm and
non-farm sectors, from a ratio of 1 to 8 in 1990 to 1 to 11 by 1994. Measures to achieve
Thailand's agricultural policy objectives include tariff protection for
"sensitive" products, soft loans to farmers, the supply of input factors at
either no cost or at reduced prices, providing water supplies, encouraging research and
facilitating technology transfer. Investment incentives are available from the BOI for a
variety of agricultural activities.
Current applied tariffs for agricultural raw
materials and livestock range from zero to 65 per cent, with a simple average of 38 per
cent. For fisheries and forestry products, applied tariffs range from zero to 60 per cent,
with simple averages of 55 and 15 per cent. Thailand's exceptions to Uruguay Round
agricultural tariff bindings include certain live animals, animal fats and coral.
State-trading organizations are the exclusive recipients of the import allocations under
the in-quota part of the tariff quotas established for a number of products subject to
Domestic support levels will drop from Baht 21.8
billion to 19 billion between 1995-2004 as a result of the Uruguay Round. Thailand
maintains export subsidies on agricultural products in a manner, according to the
authorities, consistent with those of developing-country members under the Uruguay Round
Agreement on Agriculture; no information on these subsidies was available. Thailand has no
Uruguay Round commitments for the reduction of such export subsidies.
Textiles and clothing remains Thailand's dominant
manufacturing activity in terms of gross output, followed by machinery (including
electronics), food products and transport equipment. Manufacturing output expanded by 18
per cent in 1991, 13 per cent in 1992 and 11 per cent in 1993, with value added increasing
by slightly higher rates over the same time period. Manufactured imports expanded by about
10 per cent in 1992, 15 per cent in 1993 and 20 per cent in 1994; exports expanded by 15,
17 and 22 per cent over the same time period.
Export competitiveness in some labour-intensive
manufactured products such as up-scale garments, shoes and canned seafood has been
maintained through quality improvements. Production efficiency in "new"
manufactured items is reflected in a substantial increase in exports of high technology
products such as electrical appliances, computers and computer parts, integrated circuits
and parts, transformers and generators, optical instruments and vehicle parts. The
importance of intra-industry trade in radio, television and telecommunications equipment,
Thailand's major assembly industries, means that this product group had the largest share
of both imports and exports in 1994.
Infrastructural weaknesses and a shortage of skilled
labour are seen by the authorities as the greatest hurdles to continued manufacturing
growth. The Government has increased fiscal expenditure, privatized state enterprises and
sought joint ventures with the private sector to address the infrastructure. In addition,
an increase in the compulsory education level will be implemented nationwide from 1996,
and scholarships will be increased for studies in areas suffering labour shortages, such
as engineering and the sciences.
Approximately 80 per cent of Thai industries are
small and medium-sized enterprises (SMEs). Few linkages exist between large firms and the
SMEs, except in such sectors as textiles, but prospects are seen by the Government for
increased linkages in the electronics and automotive sectors. In an effort to help promote
SMEs, the BOI in 1993 reduced the minimum capital requirement for promoted projects to
Baht 1 million.
Services account for nearly half of Thailand's GDP
and some 30 per cent of total employment; Thailand is among the world's top twenty service
traders. The main source of services income is tourism, with remittances from overseas
labour following well behind.
Despite ownership limitations, FDI has flowed into
such Thai services as pipeline transport, telegraph and telephone, and tourism. The
authorities are convinced that the GATS will promote expansion of world trade in services;
however, they fear that Thai firms will not be able to compete, particularly in financial
services, because of weak capitalization and a lack of experience.
To address concerns over competitiveness, BOI
investment incentives are authorized for a significant number of services activities. In
power generation and telecommunications, privatization is also an important government
Anti-dumping action was taken in 1994 against
imports of hydrogen peroxide from India, with provisional and final duties of 30 per cent
imposed in June and November 1994, respectively.
Trade Policies and Foreign Trading Partners
From Thailand's perspective, the Uruguay Round
results will benefit the economy through tariff reductions on exports, improved long-term
rules for agricultural products and the phasing-out of textiles and clothing quotas.
Thailand regards the GATS as promoting expanded world trade in services by providing
transparency and progressive liberalization. Despite overall satisfaction with the Round,
Thailand has a number of concerns, including the perceived absence of meaningful
concessions on certain items; exclusion of fisheries products from the negotiations on
agriculture; remaining distortions in agricultural trade, despite tariffication; and the
reduction of Thailand's investment policy options under the TRIMS Agreement.
Thailand's economy will benefit from the
strengthened trade rules agreed in the Uruguay Round, which together with unilateral
domestic liberalization, will result in more complete integration into the multilateral
trading system. Trading partners will also benefit from increased market access and
greater predictability as a result of both domestic reforms and Thailand's implementation
of the Uruguay Round Agreements. However, further progress in terms of transparency,
including the detailed and up-to-date presentation of statistical information, must also
report Back to top
TRADE POLICY REVIEW BODY: THAILAND
Report by the Government - Summary Extracts
As one of the fastest growing economies in the
world, Thailand has long recognized the importance of trade policy in its development.
Trade measures have been instrumental in strengthening the competitiveness of domestic
industries to compete in the world market. Being an open economy, Thailand has
participated actively in various international forums such as the Uruguay Round of
multilateral trade negotiations, the Asia-Pacific Economic Cooperation forum (APEC), and
the ASEAN Free Trade Area.
Since its accession to the World Trade Organization
on 1 January 1995, the Thai Government has implemented various measures in compliance with
its commitments in the WTO. The tariff system has been restructured while a law was
enacted in accordance with the TRIPs agreement, to be followed by numerous other laws
which are being drafted. Most of the services sector are on the verge of liberalization.
In addition, quantitative restrictions on many agricultural products have already been
dismantled and replaced by tariff measures in line with the procedure prescribed in the
agriculture agreement. In short, Thailand has tried its utmost to quickly and sincerely
implement its commitments in the WTO.
Thailand is also enthusiastically participating in
various regional cooperation schemes. As a country in the Asia-Pacific region, Thailand
closely follows developments in APEC and will endeavour to ensure that this forum will
remain consistent with multilateralism, the concept enshrined in the creation of the WTO.
As one of the leading economics in ASEAN, Thailand proposed the establishment of AFTA and
contributes considerably in its actualization process. In addition, the country is engaged
in various sub-regional cooperation with its neighbours, hoping that this would bring
about affluence to the region in the future.
In summary, Thailand has realized the importance of
free and open trade to the country's development. Thus it shall continue to uphold its
belief in liberal trade as well as conduct its trade policy in a transparent and fair
manner. With this, Thailand hopes to achieve the double benefits of attaining economic
prosperity and remaining a significant player in the world trade arena.
THE ECONOMIC AND TRADE ENVIRONMENT
Economic Developments 1992-1994
After four consecutive years of rapid expansion
averaging over 10 per cent per annum, the Thai economy appeared to return to a more
sustainable path. Thailand's Gross Domestic Product (GDP) moderated to 8.4. per cent in
1991 due to cautious monetary and fiscal policies and a slow-down in private consumption
In 1992, the pace of Thailand's economic expansion
moderated further in response to the slowdown in the world economy and the domestic
political uncertainty early in the year. The economy grew by 7.9 per cent, slightly less
than in 1991 but still relatively high by region's standard. Many important monetary and
fiscal measures were implemented, in particular, the abolition of interest rate ceilings,
the relaxation of foreign exchange control, the broadening in the spectrum of business
operated by financial institutions, the promulgation of the Securities and Exchange Act
B.E. 2535 (1992), the modification of the tax structure and the substitution, of the value
added tax for the business tax.
In 1993, there was an overall improvement in the
Thai economy with a growth rate of 8.4 per cent. The expansion was underpinned by buoyant
domestic demand, particularly private investment, and supported by a strong performance in
manufactured exports. However, in the first half of the year, the pace of economic
expansion was constrained by several factors including depressed farm prices, a lacklustre
performance of the agricultural sector, and delays in budgetary disbursements and
large-scale investment projects.
In an attempt to further deregulate the Thai
financial system, the Thai government established the Bangkok International Banking
Facility (BIBF) in March 1993 and permitted commercial banks and finance and securities
companies to undertake new businesses. These measures are designed to pave the way for
Thailand to become a regional financial centre. Furthermore the Export-Import Bank (EXIM
Bank) was set up in 1993 to provide comprehensive financial services to business
In 1994, the Thai economy recovered strongly for the
second consecutive year from the trough of 1992. In line with the pick up in the world
economy, economic growth accelerated to 8.7 per cent, driven by strong exports and robust
domestic spending. Major factors contributing to the rapid economic growth in 1994 were
the improvement in the economies of the Thailand's major trading partners and the
associated rise in the demand for Thai exports, an increase in both public and private
investment and the buoyant agricultural sector.
TRADE POLICY DEVELOPMENTS 1992-1995
As Thailand's economic performance has become
increasingly dependent on international trade, the primary goal of Thailand's trade policy
is to ready the country for a greater role in the world community. Thus, the government
has emphasized measures such as conducting liberal economic policy through a free and open
market mechanism, liberalising trade domestically and encouraging a constructive and
competitive economic structure.
The Uruguay Round
Thailand has been actively involved in the Uruguay
Round negotiations with an objective to assure greater trade liberalization through
reducing or eliminating tariff and non-tariff barriers, improving the effectiveness of the
rules governing international trade, bringing about fairness and transparency in the world
market and preventing new trade barriers that may obstruct international trade.
In general, Thailand is content with the successful
conclusion of the Uruguay Round negotiations. Thailand believes that the establishment of
the WTO and the improvement of international trade rules and negotiations would create a
more stable economic environment in which greater transparency and predictability would be
conducive to progressive liberalization of world trade. With this belief, the country
became the 59th founding member of the WTO on 28 December 1994.
The legal status of the UR agreements are similar to
other international agreements which Thailand had signed. Prior to signing an
international agreement, it must be ensured that the agreement is consistent with its
domestic law. In order to ratify the WTO agreements, Thailand enacted the Protection of
the WTO's Operations Act and amended the Customs Tariff Regulation B.E. 2531.
To implement its commitments made under the
Agriculture Agreement, Thailand has to reduce an average of 24 per cent of tariffs on
agricultural products. It will also eliminate non-tariff barriers for 23 agricultural
products and convert these NTBs into tariff measures in accordance with the tariffication
process. Thailand has also committed to reduce almost 4,000 items or 70 per cent of tariff
concessions on industrial and fisheries products, resulting in the average reduction of 28
per cent. In services sector, Thailand has submitted a schedule of market access covering
95 activities and 10 major sectors.
Thailand, however, realizes that the real success of
the UR negotiations does not depend solely on the existence of effective disciplines and
rules governing the world trade system. All WTO members must honour their commitments and
be sincere in implementing their obligations. Back to top
Footnote: 1ASEAN members: Brunei, Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam