Thailand
Thailand: UTCC downplays Trump trade tactics
Thai exports are expected grow this year despite the protectionist policies of US President Donald Trump, according to the latest study of the University of the Thai Chamber of Commerce (UTCC).
Aat Pisanwanich, director of the Center for International Trade Studies at the UTCC, said Thailand is likely to fetch 17.24 billion baht from higher direct exports to the US market if Mr Trump imposes a punitive 45% tariff on imports from China to retaliate against the latter’s currency-weakening policy.
The study predicted greater exports of electrical appliances, machinery, furniture and knitting apparel. It did not take into account oil prices and foreign exchange factors. Mr Aat said Thailand could reap higher export value if the two factors were included. But he said Thailand might feel an indirect negative impact from the US’s punitive 45% tariff on imports from China, as the move is estimated to lower China’s exports to the US by 1.7 trillion baht or 11.4%, affecting China’s GDP growth by 1.8%.
The university estimated Thai shipments to China, as a result, to drop by 4.9% or 39.25 billion baht, mainly for lumber, chemicals for wood furniture, rubber sheet and blocks, plastic pellets and automotive parts.
Imports from China make up the largest share in the US market, some 21.1%, leading the US trade deficit with China to more than quadruple to US$483 billion between 2001 and 2015.
The US is Thailand’s third-largest trading partner, after China and Japan. Two-way trade between Thailand and the US amounted to $36.5 billion (1.28 trillion baht) in 2016, $24.5 billion of which was from Thai exports. Thailand enjoyed a copy2 billion trade surplus with the US last year.
Key export products included machinery, electrical appliances, electronics and parts, rubber products and gems and jewellery.
Mr Aat said Thai exports are expected to be hard hit by yuan appreciation because of Mr Trump’s foreign exchange policy.
The study found Thailand’s shipments would drop by 7.52 billion baht if the Chinese yuan is 5% higher, with the figures to drop by 10.5 billion baht if the yuan 10% higher.
Thai exports are estimated to fall by 13.8 billion baht if the yuan is 15% higher.
He said the US withdrawal from the Trans-Pacific Partnership (TPP) could also help restore Thailand’s export competitiveness and lure back foreign investment.
The US pullout from the TPP offers a safe haven for many Thai export items such as automobiles and auto parts, auto tyres, air conditioners, televisions, gems and jewellery, and processed chicken and seafood. Without the TPP, key competitors like Vietnam and Malaysia will no longer have advantages over Thailand, said Mr Aat.
He said it is imperative for Thailand to step up talks on the Regional Comprehensive Economic Partnership and a bilateral free trade agreement between Thailand and the US.
Thailand should prepare for anticipated higher non-tariff barriers such as intellectual property, sanitary and phytosanitary standards (SPS), and environmental and labour measures, said Mr Aat.
“Thai manufacturers need to develop products that meet the safety standard certificates of the US Food and Drug Administration and they need to closely monitor the exchange rate,” he said. “Because of Mr Trump’s trade policies, Thai and Asean currencies are likely to appreciate and also display higher volatility.”
Source: http://www.bangkokpost.com/business/news/1206689/utcc-downplays-trump-trade-tactics