Vietnam exports to EU threaten Thai profits

Thai manufacturers and exporters have been warned to improve their competitiveness in the European market as prospective EU buyers may shift to cheaper goods from Vietnam after the EU-Vietnam free-trade agreement (FTA) became effective in August 2020.

The director-general of the Trade Negotiations Department, Auramon Supthaweethum, said EU buyers may consider importing products from Vietnam instead of Thailand if they find cheaper goods there.

“The department is monitoring a group of key products that may be hard hit by the EU-Vietnam FTA that scraps duties on 99% of all goods traded between the two sides,” she said.

The EU imports a relatively large amount of pasta, rice, processed fish, canned squid, bicycle tyres, durian and vegetable and fruit juices from Thailand.

To retain a competitive edge for Thai goods in the EU, Thai entrepreneurs need to speed up differentiating their products, focusing more on quality development and standards upgrades as well as optimising export privileges from existing FTAs between Thailand and key partners, including the Regional Comprehensive Economic Partnership [RCEP],” according to Mrs Auramon.

Thailand has 13 FTAs in place, including one with New Zealand and the Asean-Hong Kong FTA, under which import tariffs on the majority of products from Thailand were waived before the pact.

The long-awaited RCEP was finally signed on Nov 15 during a virtual meeting between leaders of the 10 Asean member states and five dialogue partners: China, Japan, South Korea, Australia and New Zealand.

The culmination of eight years of negotiations, the RCEP is the world’s largest free-trade agreement and the first that includes Japan, South Korea and China.

The agreement will affect almost half of the world’s population, with the population of the 15 countries topping 3.6 billion people last year, and a combined GDP of more than US$28.5 trillion, 32.7% of the global economy.

The EU is Thailand’s fourth-largest trading partner in the world.

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