ESF Priorities for the EU-Thailand FTA negotiations

EU Bilateral trade relations with Thailand
ESF contributed to the Questionnaire issued by the Directorate General for Trade in May 2013.
This Position Paper reiterate many aspects of that contribution, as not much has changed in
Thailand for European services providers since. The negotiations at that time started well and
negotiators had 4 rounds of talks, where services trade was discussed. On 22 May 2014
however, the Royal Thai Armed Forces, led by General Prayut Chan-o-cha, Commander of the
Royal Thai Army (RTA), launched a coup d’état against the caretaker government of Thailand,
following six months of political crisis. On 23 June 2014, the European Council decided to
suspend all official talks with Thailand.

After assessing progressive improvements on the front of human rights and democratic rights,
that lead to elections in March 2019, at a meeting in Luxembourg on Monday 14th October
2019, EU Foreign Affairs ministers gave to the European Commission the green light to resume
negotiations on a trade deal with Thailand. “The Council also stresses the importance of taking
steps towards the resumption of negotiations on an ambitious and comprehensive Free Trade
Agreement,” the Council announced in a Press Statement. ESF took note that the EU and
Thailand have signed a Partnership and Cooperation Agreement – the ‘umbrella’ political
agreement that is generally complemented by a trade pact – on 14th December 2022 in
Brussels on the side of the EU-ASEAN Summit. The Agreement was initialled on 2 September
2022 by the chief negotiators of the European Union and Thailand. The PCA will enter into
force once it has been ratified by the EU Member States and Thailand. The Agreement foresees
the provisional application upon completion of the necessary procedures by both parties.
ESF welcomes the announcement on 25th January 2023 that EU and Thailand, after an eightyear political impasse, will “start consultations with a view to relaunching the EU-Thailand FTA
negotiations as soon as possible”. The announcement was made after a meeting in Brussels of
Thailand’s Deputy Prime Minister and Minister of Commerce, Jurin Laksanawisit with European
Commission Executive Vice president and Trade Commissioner Valdis Dombrovskis.
It is in this context that the European Services Forum is adopting this new Position Paper.

Thailand’ economy in figures
Thailand is the 22nd largest economy in the world and generated a GDP of €1,220 trillion1 in 2021. The population reached 71.6 million of inhabitants2 in 2021. The World Bank Report on
“Doing Business”3 is ranking Thailand on the ease of doing business as number 21 out of 190
in 2020, showing that the country is a real free market economy in the world but still have
room for improvement.
Thailand is the third largest market in Southeast Asia and growing. There is a large untapped
potential in this country in many services sectors, notably for the logistic services providers as
transit hub, particularly for goods destined for/through Myanmar.
With bilateral trade in goods amounting to €35.52 billion in 2021, the EU is Thailand’s fourth
largest trade partner (after China, Japan and the US), accounting for 7.5% of the country’s total
trade. EU exports reached €13.32 billion, while imports amounted to €22.2 billion, making a
deficit of -€8.88 billion. Thailand is the EU’s 26th largest trading partner worldwide for trade in
goods4. When considering trade in services, it first needs to be highlighted that Thailand’s
economic share in services accounts only for 55.6% of the country’s GDP and the sector only
employs 2 out of 4 jobs5. The services sector contribution to employment in Thailand is
significantly lower than those of advanced economies. The various few FTA that Thailand has
signed with other trading partners have not undertaken serious liberalisation in trade in
services in Thailand, except may be with Australia. ESF strongly believes that the EU-Thailand
FTA is a great opportunity to improve this situation of the services sectors in Thailand for the
benefit of both parties.

In 2021, imports of services from Thailand to the EU was €2.5 billion while exports from the EU
to Thailand amounted to €5.65 billion, which makes an EU surplus of +€3.14 billion. Thailand
is the EU’s 24th largest trading partner worldwide for trade in services. From 2009 to 2019,
Thailand used to have a surplus with the EU on trade in services, but the Covid pandemic has
dramatically changed the situation with less Thai export of tourism services. The near future
will see whether the balance will come back to its previous situation. Trade in services
represents only 18.6% of total trade between both partners, which is rather low compared to
other countries of similar economic development. In 2021, Services represent only 10% of total
Thailand exports to the EU, a very low level compared to the world average. 29.8% of EU total
exports are services. However, European services businesses still do encounter many
difficulties (when exporting or investing in Thailand) to access the market due to the numerous
barriers. Travel services represented 66% of Thailand exports of services to the EU in 2018,
accounting for € 4.3 billion (17% of total exports – goods & services), which demonstrates that
Thailand’s trade with the EU is very much dependant on tourism. The Covid19 pandemic with
the massive reduction of travel have had an enormous impact on this volume in 2020 and 2021,
going down to 23% (€575 million). In 2021, the biggest services sector of exports by the EU to
Thailand is “telecommunications & IT services” with 37.5% of exports, followed by transport
and “other business services” (see ESF statistics attached and here).

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