The Ecomic Impact of the Thailand-Australia Free Trade Agreement (TAFTA) and the Thailand-New Zealand Closer Economic Partnership (TNZCEP)

Abstract

This paper studies the effects of the Thailand-Australia Free Trade Agreement (TAFTA) and the Thailand-New Zealand Closer Economic Partnership (TNZCEP) on the Thai economy. Despite a number of studies on this issue, the literature tends to focus on the effects of reduction in duty but ignore those of reduction in trade-in-services barriers. This paper adds to the literature by including the reduction in service barriers into the analysis. The following key results emerge. Both TAFTA and TNZCEP benefit Thailand as a whole regardless of the degree of openness to trade in services. As regards change in sectoral output, sectors negatively affected by the agreements include milk and dairy products and agriculture. Thai exporters in business service and transportation tend to benefit the most as they gain highest percentage changes in exports to the two trading partners. By contrast, producers in communication, utilities, and meat and poultry, will experience the greatest pressure arising from higher import from the trading partners