Is Thailand's trade safe under Trump?

If Trump hits China with 45% tariff, Thai exports may gain but exports to China likely to fall & watch out for new Non-Tariff Barriers to Trade from the US.

INTERNATIONAL TRADE, PROTECTIONISM & EXPORTS

Is Thailand's trade safe under Trump?

1/03/2017
Phusadee Arunmas

Thai exports are expected grow this year despite the protectionist policies of US President Donald Trump.

This is according to the latest study of the University of the Thai Chamber of Commerce (UTCC) the results of which were presented by Aat Pisanwanich, director of the Center for International Trade Studies at the UTCC. 

CHINA'S PUNISHMENT, THAILAND'S REWARD, MAYBE 

Thailand is likely to receive 17.24 billion baht from higher direct exports to the US market if Mr Trump imposes a punitive 45% tariff on imports from China to retaliate against China's currency weakening policy to make exports cheaper and more competitive.

The study predicted greater exports of electrical appliances, machinery, furniture and knitting apparel. It did not take into account oil prices and foreign exchange factors. Mr Aat claimed that Thailand could reap even higher export value if the two factors were included.

NEGATIVE EFFECT: THAI SHIPMENTS TO CHINA

Thailand might feel an indirect negative impact from the US's punitive 45% tariff on imports from China, as the move is estimated to lower China's exports to the US by 1.7 trillion baht or 11.4%, affecting China's GDP growth by 1.8%.

The university estimated Thai shipments to China, as a result, to drop by 4.9% or 39.25 billion baht, mainly for lumber, chemicals for wood furniture, rubber sheet and blocks, plastic pellets and automotive parts.

THAI & CHINESE EXPORT TRADE WITH THE U.S.

Imports from China make up the largest share in the US market, some 21.1%, leading the US trade deficit with China to more than quadruple to US$483 billion between 2001 and 2015.

The US is Thailand's third-largest trading partner, after China and Japan.

Two-way trade between Thailand and the US amounted to $36.5 billion (1.28 trillion baht) in 2016, $24.5 billion of which was from Thai exports.

Thailand enjoyed a $12 billion trade surplus with the US last year.

Key export products included machinery, electrical appliances, electronics and parts, rubber products and gems and jewellery.

THAI EXPORTS TO FALL IF CHINESE CURRENCY INCREASES IN VALUE

Thai exports are expected to be hard hit by Chinese Yuan appreciation (increase in value) because of Mr Trump's foreign exchange policy.

The study found Thailand's export shipments would drop by 7.52 billion baht if the Chinese yuan is 5% higher, with the figures to drop by 10.5 billion baht if the yuan 10% higher.

Thai exports are estimated to fall by 13.8 billion baht if the yuan is 15% higher.

END OF TPP TRADE PACT ALSO TO HELP THAILAND'S COMPETITIVENESS

The US withdrawal from the Trans-Pacific Partnership (TPP) could also help restore Thailand's export competitiveness and lure back foreign investment.

The US pullout from the TPP offers a safe haven for many Thai export items such as automobiles and auto parts, auto tyres, air conditioners, televisions, gems and jewellery, and processed chicken and seafood.

Without the TPP, key competitors like Vietnam and Malaysia will no longer have advantages over Thailand, said Mr Aat.

He said it is imperative for Thailand to step up talks on the Regional Comprehensive Economic Partnership and a bilateral free trade agreement (FTA) between Thailand and the US.

PREPARE FOR HIGHER NON-TARIFF BARRIERS FROM THE US

Thailand should prepare for anticipated higher non-tariff barriers to trade (BTBs) such as intellectual property (IP), sanitary and phytosanitary standards (SPS), and environmental and labour measures, said Mr Aat.

"Thai manufacturers need to develop products that meet the safety standard certificates of the US Food and Drug Administration (FDA) and they need to closely monitor the exchange rate," he said.

"Because of Mr Trump's trade policies, Thai and Asean currencies are likely to appreciate and also display higher volatility."

http://www.bangkokpost.com/business/news/1206689/utcc-downplays-trump-trade-tactics

https://en.wikipedia.org/wiki/Non-tariff_barriers_to_trade

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