The Role of Trade Facilitation and The Quantitative Assessment of Free Trade Agreement between Thailand and GCC
Keywords:
Trade Facilitation, Free Trade Agreement, Middle East countries, Trade Negotiation, LogisticsAbstract
This study considers trade facilitation in GCC and the possible welfare gains from trade agreement with GCC countries, comparing between the cases when there is an improvement in trade facilitation, and when there is no such improvement.
The problems regarding trade facilitation in GCC consist of the complexity of custom procedures, mainly from the process of legalizing export documents, the differences of GCC food standards from any other international standards, and the trade agency law and state enterprises that bring about monopoly.
A quantitative evaluation of impacts from the FTA and trade facilitation improvement with the GCC countries will be conducted by the Global Trade Analysis Project (GTAP) model, augmented by both direct and indirect costs of trading transaction. The simulation results indicate that tariff reduction scheme by itself provides only limited gains to Thailand. Benefits from the FTA will be more extensive if trade facilitation improvements are done well along with the tariff reduction. The marginal effects from the trade facilitation improvement proved to be significant.
The study also shows that priority groups on the list for tariff reduction should be placed on automobile and food sectors. These groups of product will play the most significant role on the Thai economy from the FTA with GCC. Moreover, improvement in trade facilitation that incurs direct cost should be focused on jewelry sector; while problems in exported food products related to the indirect cost which mainly induced by time constraints.
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