By Arno Maierbrugger/Gulf Times Correspondent/Bangkok
Thailand is increasingly seeking more intense business ties with Middle Eastern countries. After recently expressing hope that it would be able to revive exports to Iran after sanctions against the nation are being lifted, Bangkok has now initiated negotiations with Islamabad about a free-trade agreement between Thailand and Pakistan that could come into effect as early as in 2017.
“A Pakistani-Thai free trade agreement will be beneficial to both countries and will double our bilateral trade and investment to $2bn in due course,” Thailand’s Commerce Minister General Chatchai Sarikulya said at a business meeting in Islamabad on August 17, adding that such an agreement would also reduce “over-reliance on the traditional export markets” of both nations.
Pakistan’s Commerce Minister Khurram Dastgir said that negotiations on such a free-trade agreement were part of Pakistan’s strategy “to deepen trade and investment links with Southeast Asian economies which are among the fastest growing in the world.”
Initially, the free-trade agreement would cover trade in goods and subsequently trade in services, Dastgir explained. Thailand would export more electrical and electronic appliances, machinery, automobiles and parts, chemical products and plastics, as well as rubber products to Pakistan, which would, in turn, stepping up export of crude and refined oil, textiles and garments, leather products and other items such as surgical instruments and sports goods, as well as fresh seafood and various animal products to Thailand.
In 2014, bilateral trade between the two countries stood at $1.02bn, which makes Pakistan Thailand’s second-largest trading partner in South Asia after India. Thailand registered a trade surplus of $736mn with Pakistan, with similar surpluses enjoyed since 2010.
For Thailand, a free-trade agreement with Pakistan, being the sixth most populous country in the world, would open up a market of 190mn people. Moreover, it would also function as a gateway to South Asia, particularly to the South Asian Association for Regional Cooperation where Pakistan as a founding member is accompanied by seven others nations, which are India, Nepal, Sri Lanka, Maldives, Bangladesh, Bhutan and Afghanistan. This group counts a total population of close to 1.6bn people.
In fact, the upcoming free-trade agreement was first proposed during a visit of former Thai Prime Minister Yingluck Shinawatra which she undertook in August 2013 in the first such high-ranking visit in a decade and where she pushed for the establishment a joint trade committee to strengthen economic cooperation, saying that she would like to see bilateral trade volume reach $2bn by 2018. Besides that, both countries in the past have also shown interest in defence cooperation and conducted high level meetings on the issue.
For Pakistan, a free-trade agreement with Thailand would also allow easier trade with other member countries of the Association of Southeast Asian Nations (Asean), which are planning to enter an economic union, the Asean Economic Community, and largely abolish custom duties by the end of 2015. The Pakistani side remarked that choosing Thailand as an export gateway to Asean was for its strategic location in the region and its developed logistics infrastructure. That way, Pakistan could get the opportunity to trade with a region totalling 635mn people and a combined GDP of $3.6tn.
