Trade agreements that address global warming vital for Thai exports
Thailand’s private sector is urging government to urgently address two major issues – global warming and trade agreements – or face being left out in the cold.
The Commerce Ministry recently held a meeting to assess the situation and develop a plan to boost exports in the second half of 2023 in collaboration with the private sector.
The meeting came up with a summary plan for seven regions and a total of 350 activities, which are expected to generate more than US$550 million, or approximately 19.4 billion baht, in export revenue.
The Ministry will lead efforts to open new markets, maintain existing markets, and revive old markets by accelerating the formation of trade representative groups to expand market potential, promoting cross-border e-commerce, facilitating both offline and online business negotiations, and boosting exports of BCG (Bio-Circular-Green Economy) and innovative products.
Other strategies include promoting high-value service businesses, especially digital content, HORECA (Hotels Restaurants & Catering), “Thai Select” restaurants, and penetrating secondary city markets, particularly in Asean, the US and Europe.
The Ministry and the private sector estimate that exports will expand by 1–2% in 2023.
From the perspective of workers, setting high targets is seen as a positive development, as 2023 marks the starting point for sustainable trade transformation. This starts with the CBAM (Carbon Border Adjustment Mechanism) measures by the European Union (EU), which require importers to report greenhouse gas emissions to the CBAM Authorised Declarant every quarter, starting from October 1 this year, between 2023 and 2025.
The US meanwhile has proposed the Clean Competition Act (CCA) to ensure fair competition by imposing import taxes on goods with high carbon emissions, targeting industries such as fossil fuels, petrochemicals, fertilisers, hydrogen, adipic acid, cement, steel, aluminium, glass, paper, and ethanol. The law is set to be enforced in 2024.
Other countries too are planning similar steps to address global warming through trade regulations.
Thailand, which derives 70% of its GDP from exports, faces the question of preparedness if all countries establish trade regulations to reduce global warming.
Chaichan Chareonsuk, Chairman of the Thai National Shipper's Council (TNSC), said that the private sector is ready to collaborate with the government in promoting trade measures and businesses that address the challenges of climate change.
“These factors are becoming new trade conditions, and if Thailand is not prepared, the new regulations may become a trade barrier for the country,” said Chaichan.
Although Thailand stands to benefit from the reshaping of global supply chains due to its potential in production and responsive availability of raw materials, which can accommodate the global supply chain restructuring, there are certain industries that will reap the advantages, such as food and rubber. These industries are experiencing a spillover effect from the "China Plus One" policy, which aims to reduce reliance on the Chinese market alone.
Chaichan added that amidst the unpredictable nature of the global trade landscape, Thailand, as a player in this game, must strive to fully understand the situation to adapt and effectively utilise the benefits of the new policies, rather than allowing them to become trade obstacles.
"I encourage all parties to embrace and overcome the challenges posed by this transformative change," he said.
