US-Thailand Free Trade Agreement Under Negotiation

The United States and Thailand intend negotiating a free trade agreement, both countries announced at APEC meeting. First round of discussions between the US and Thailand could take place by mid-2004.

Thailand and Australia also completed another FTA at the same time while Bangkok will discuss a similar agreement with New Zealand and Canada.

Although such an agreement could stimulate sales of US textiles to Thailand, it would certainly boost Thai apparel exports to the United States, depending on rules of origin negotiated by both countries.

George Bush made it clear that he wanted rewarding Thailand for its support in the fight against international terrorism. This is the second FTA negotiated with an Asian nation after a deal was concluded with Singapore.

After Singapore, Australia and Central America

The United States and Australia are also negotiating a free trade agreement. Discussions could be completed in year 2004. In addition to the FTA with Australia, Washington is currently discussing a similar agreement with Central America.

The recent failure of WTO talks in Cancun will result in a series of bilateral free trade agreements being separately negotiated between member countries, observers warned.

US accounting for 53% of apparel exports

The US market accounted for 53% of Thailand's total apparel exports in the first half of 2003, according to Thai official data. Shipments to the US were up nearly 10% to US$762 million in the same period after falling 4.5% in 2002 to US$1.65 billion.

After still rising 6.35% in July, US apparel imports from Thailand declined nearly 19% in August in volume terms.

Thailand was the US 14th apparel supplier in August before Pakistan, Guatemala or even Cambodia. The low-cost country was able shifting to value-added products in the past years after labor costs substantially increased. Thailand is a major supplier of children’s wear, including baby garments.

Local content limited to 30%

Thailand and Australia just completed a free trade agreement after negotiators finally agreed on textile rules of origin. Australia accepted limiting to 30% the local content of apparel from Thailand, instead of the 50% local content Canberra was requiring until now.

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