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On 16 September the second round of negotiations for an EU – Thailand Free Trade Agreement got underway in Chiang Mai.
The UK has long supported the opening up of markets worldwide and strongly supports an ambitious agreement between Thailand and the EU, which is essential if we are to maximise the benefits from our trading and investment relationship to both sides.
As a country that has a proud and successful history of trading and benefiting from investment, the UK offers a good case study for how, in practice, trade and investment drive growth. We know that on average, an increase in trade volumes of 10% will raise incomes by 5%. Countries which miss out on the benefits of global trade miss out on opportunities to profit from international expertise, low cost raw materials and much needed technology. The UK recognises that trade is not without its costs but the balance of evidence shows that trade is good for growth. There are adjustment costs when less productive firms decline, but these are more than outweighed by the benefits from expansion elsewhere.
With 28 countries and over 500 million consumers, the EU market provides significant opportunities for Thai firms who are looking to export. The UK alone is the world’s sixth largest importer of goods and services and around two-thirds of EU imports are inputs to production. The UK is one of the most open economies in the world and we support further opening up of the EU market to Thai firms as part of an ambitious Free Trade Agreement. In the UK, our openness to imports has helped increase competitiveness, spurring innovation and efficiency while bringing down costs to consumers. Ranking seventh in the world overall in the World Bank’s latest “Ease of Doing Business” report, research has also found that UK firms engaging in international markets improve their skills, knowledge and management practices and are less likely to fail.
The UK-Thailand trade and investment relationship is becoming increasingly important. UK goods exports to Thailand have more than tripled over the last five years, reaching THB 96 billion in 2012. Thailand’s export of goods to the UK has similarly increased over this period, reaching THB 117 billion in 2012. Further opening up of Thai markets will benefit Thai producers and consumers across a wide range of sectors, including agriculture, manufacturing and healthcare. And given the imminent loss of Thailand’s existing preferential access to EU markets under the EU’s “Generalised System of Preferences” from January 2015, an EU-Thailand Free Trade Agreement could provide Thailand with permanent preferential access to European markets and allow for improved export competitiveness with Thailand’s neighbours in ASEAN.
The benefits of free trade go beyond commercial. The UK is committed to helping countries take advantage of the opportunities presented by international trade as an important tool for stimulating growth, raising incomes and creating jobs. Freer trade can also improve food security and help countries to adapt to climate change.
On healthcare, the UK fully supports Thailand’s ambitions to provide socially inclusive affordable healthcare to all of its population. I believe that a free trade agreement with the EU will help Thailand achieve this ambition by providing incentives for Thai and EU organisations to invest in research and development of new medicines for diseases that directly affect Thailand’s citizens. The UK takes its international responsibilities to developing countries in need of vital life-saving and life changing medicines very seriously. The UK supports the provision of medicines in Thailand through a number of global partnerships, including the Global Fund to fight Aids, Tuberculosis and Malaria, which increases access to prevention, diagnostics and testing for these critical diseases.
Thailand, with an increasingly developed and sophisticated workforce should now look to how it can become a global partner in health research and development. This is something that the UK is keen to support, through the work of our leading healthcare companies, and through government to government collaboration between our Public Health ministries. We are committed to engaging with a full range of stakeholders as part of the UK’s approach to trade and investment, and I very much welcome contact with civil society to hear their views on how we can incentivise private sector investment in Thailand without undermining access to essential medicines.
Governments also need to create the right incentives for firms to invest, not just in the healthcare sector but across the Thai economy. Private investment by both foreign and domestic firms contributes to economic growth. The UK has benefitted significantly from inward investment, including from Thailand, and we are keen to see more Thai companies come and invest in the UK. UK companies are keen to support Thailand’s ambitions to become a leading hub for high value investment within the Asean Economic Community (AEC), driving up economic growth and increasing choice for Thai consumers, ensuring Thailand does not get left behind in the AEC.
We know that firms’ willingness to invest in a country depends on the business environment and how the laws, regulations and infrastructure support or limit business activities. As the importance of the services sector to the Thai economy grows, it is clear that Thailand needs an open, well-regulated services sector that encourages competition and innovation. Reform of the Foreign Business Act, enabling greater market access for foreign service sector providers, would help accelerate this transition and bring more high-value British and other overseas investment into Thailand.
One particular issue of importance that many UK firms looking to invest in Thailand raise with us is concern over the protection of their intellectual property rights (IPR). We know that protection of intellectual property rights, including patents, is particularly important for the development of knowledge intensive business, and will be increasingly relevant as the Thai economy seeks to gain further strengths in these areas.
Thailand’s ongoing negotiation of free trade agreements with a number of countries and trading blocs, including the EU, provide a great opportunity to make progress towards overcoming a number of these barriers and help further accelerate growth and development in Thailand. I hope Thailand will seize the opportunity.