Thailand and Japan have agreed to forge a free trade agreement and expect to sign the deal next April unless disagreements arise over details, the head of the Thai negotiation team said yesterday.
The agreement aims to reduce tariffs on US$35 billion worth of trade between the two countries. Japan is Thailand's single biggest trading partner.
"If all goes well as planned, we hope to sign the deal in April. However, [even in that case] it would take a few months for the pact to become effective, possibly around September, as Japan needs the approval of its parliament," said Pisan Manavapat, chief negotiator and deputy permanent secretary of the Foreign Ministry.
Under the proposed agreement, Thailand will reduce tariffs on steel products imported from Japan over the next 8 to 10 years, in order to give time to Thai steel manufacturers to prepare for the competition.
"There will be enough time for our steel players to adjust themselves before we open our market," Pisan said.
The two sides have agreed in principle to open each other's market to agricultural products, he said, but declined to elaborate.
Thailand also has agreed to reduce import tariffs on cars with engines of 3,000 cubic centimeters or more to 60 percent from the current 80 percent by 2009, Pisan said. Tariffs on imports of automobile parts deemed sensitive by the Thai authorities will be eliminated by 2013, while tariffs on imports of other parts will be eliminated by 2011, he said.
If Thailand finds that it may come out at a disadvantage, the two parties may need to re-open talks and the signing could be delayed.
Thai Prime Minister Thaksin Shinawatra said that Thailand must ensure the agreement with Japan does not hurt its automotive industry.
"We want to be the Detroit of Asia. We have to be confident that this [agreement] will not destroy our goal," he said.
While Thailand does not have its own car companies, it is a major parts production and assembly base for the world's big auto companies, including Toyota Motor Corp, Honda Motor Co and General Motors Corp.
Thailand is also the largest receiver of cumulative investment by Japanese companies in Southeast Asia, said Hideji Sugiyama, Japan's Vice Minister of Economy, Trade and Industry, said
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