Vietnam’s new trade deal with the EU is threatening Thailand’s trade and investment. The European Union-Vietnam Free Trade Agreement and the EU-Vietnam Investment Protection Agreement were signed on June 30 in Hanoi. Thailand has no free trade agreement with the EU so all Thai export products are subject to EU tariffs.
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A spokesperson from the Trade Policy and Strategy Office says that the newly signed FTA is the most ambitious and comprehensive deal that the EU has signed with a developing country. In the new FTA there is a reduction of customs duties at both ends – Vietnam’s tariffs will decline for 65% of EU products, then for the remainder of products within 10 years.
Vietnam already has lower wages than Thailand.
Thai exports of cars, computers and electric circuits to the EU are now under threat from the new Vietnam-EU trade and investment deal.
Under the Investment Protection Agreement, the EU provides assistance to the Vietnamese government and companies to develop investment, law enforcement and transparency to attract new investment into the country.
The Thai Trade Policy and Strategy Office believes that many European car makers will likely move their manufacturing facilities to Vietnam from Thailand because of the removal of tariffs. The office is recommending that Thailand’s industry will have to improve efficiency and speed up production of new-generation vehicles. The Office is warning that computers, related components and electric circuits may also suffer under the new arrangements.
The two new agreements could also affect clothing, textiles, jewellery, jewellery accessories, rice and processed seafood.
But the Office says’ they’re optimistic that the EU will engage in similar negotiations with Thailand because the bloc wants access to Thailand’s market’s medicines, cars and alcoholic beverages, according to the Bangkok Post.