Thailand to enhance trade ties with EU to reduce US dependency amid rivalry with China

In an effort to outdo its reliance on the United States and China for trade and commerce, Thailand is looking to boost up investments with the European Union, the Southeast Asian nation’s fourth-largest trading partner. To revive trade with the EU and strengthen the economic relations, Thailand is expected to strike a free trade agreement with the European Union in the coming days, economists told the European press. Furthermore, they stated, that the European investors are a key player and have a humongous role in enhancing the Thai economy especially around the time of the novel coronavirus when Thailand is striving towards trade recovery. 

Thailand's Commerce Minister Jurin Laksanawisit also met Pirkka Tapiola, the EU ambassador to Thailand last month to discuss a joint understanding which will serve as the framework for the FTA talks. "The government and the Commerce Ministry are serious to pursue FTA talks with the EU, while the EU itself aims that Thailand should be the third country in ASEAN the bloc will sign the pact with after Vietnam and Singapore," Jurin had told the press. Auramon Supthaweethum, director-general of the Trade Negotiations Department for Thailand explained that the joint understanding document covers various areas in commerce such as the trade in goods, trade in services, and investments,  intellectual property, government procurement, and e-commerce.

“European Union investment accounted for 8.2 percent of all overseas investment in Thailand,” EU reports, adding that the US accounts for just 3.8 percent while China’s trade investments stand at  15.4 percent.

Trade between the EU and Thailand is estimated to be valued at 38 billion euros ($42 billion) annually. In 2020, due to the pandemic, the bilateral trade was worth close to €29 billion ($35 billion) despite the lockdowns and businesses majorly shuttered. The bloc and Thailand have been working towards appropriate steps towards broadening the trade engagement by signing a Partnership and Co-operation Agreement (PCA). 

Southeast Asia’s second-largest economy plans resumption of negotiations on its ambitious and comprehensive Free Trade Agreement (FTA) with the European Union. "There are signs that things are picking up again between the two as both look for opportunities to increase trade and investment in an effort to diversify from over-reliance on China as a market," Trinh Nguyen, a senior economist for the Asia-Pacific region at Natixis Investment Managers told European broadcaster DW. The southeast Asian nation has been trading an estimated 22.9 billion worth of goods and services to the EU, which also includes transport equipment and machinery, according to reports. Amid the US-China strategic rivalry, Thailand has been boosting investments in the EU while the EU's total investment stock in Thailand was worth €19.6 billion by 2019, as per a European Commission report. 

Thai-EU trade pact to be tabled in cabinet in September

On July 17, Thai Commerce Minister Jurin Laksanawisit once again proposed the framework for a free trade agreement. The Thai-EU trade pact is due to be tabled before the cabinet in September. The negotiations for the FTA began in March 2013 but have since been stalled after the 2014 military coup in Bangkok. In 2020, both the EU and Thailand announced that they would be moving the talks forward as the bloc ratified free trade deal with Singapore and Vietnam. Director-general of Thailand's Trade Negotiations Department, Auramon Supthaweethum stated that the EU expects to begin talks with the Thai counterparts this year and the deal shall be finalized within two or three years.