Commerce Ministry advises Thailand to diversify markets to cope with a world divided into four trade blocs and the US using tariffs under Section 301.
The Ministry of Commerce revealed that the world is divided into four trade blocs, facing challenges from the US using tariffs under Section 301, forced labor cases, and overcapacity. Thailand advises businesses to diversify risk, expand markets, and reduce reliance on the US market, while also pursuing new markets through three FTAs scheduled for 2027.
11 July 2569 – Dr. Kirida Paochit, Assistant Minister of Commerce. Narrated in The Advanced Economic Capacity Development Program (AECP) 2569, "Opportunities and Survival in a Volatile Economic Era Amidst Global Geopolitical Conflicts," focuses on "Trade and Investment Strategies in the Context of Global Geopolitical Conflicts." Organized by the Economic Journalists Association in collaboration with Bangkok Bank Public Company Limited and the University of the Thai Chamber of Commerce, the event stated that the current geopolitical situation, including conflicts and political relations between countries, has resulted in a clear economic polarization of the world. It can be argued that globalization as it was in the past no longer exists. The world is divided into four groups: the US group, the China group, the European group, and a neutral group like Thailand. This leads to trade being increasingly confined within each of these groups.
This change directly impacts the supply chain, requiring it to adapt. Therefore, Thai entrepreneurs must understand and select the target groups to participate in in order to find trade opportunities.
"Because we are relatively neutral, we can target each group. The Ministry of Commerce is ready to act as a gateway to enable Thai businesses to access all trade sectors."
However, Thailand is currently facing challenges from the United States implementing new tariff measures under Section 301, a trade law used by the US to accuse and punish trading partners by imposing import tariffs. Thailand is currently facing allegations in two cases:
1. Forced Labor Cases The United States has accused Thailand and 60 other countries of failing to implement measures to prevent the import of goods produced under forced labor. Initially, the US announced it would impose import tariffs of 12.5% on Thailand and 45 other countries, while another 14 countries would be subject to a 10% tariff. The matter is currently in the public hearing phase, and a final decision is expected by July 24, 2569.
2. Cases involving excess production capacity. The report accuses 16 countries, including Thailand, of excessive government investment, resulting in surplus production capacity beyond demand.
Thailand clarified to the United States that it is drafting legislation to prevent the import of goods produced under forced labor, which is expected to be submitted to Congress in 2027. It also affirmed that Thailand does not subsidize investment to the point of over-investment and does not have the alleged low or excess production capacity. As for the second case, it remains to be seen as the United States has not yet announced the tariff rates. If both cases are decided, the tariffs will be imposed on top of each other.
Dr. Kirida suggested that Thailand needs to diversify its trade risks as a way to cope with the situation. This involves reducing reliance on the US export market, which currently accounts for 21% or one-fifth of total exports, and reducing imports from China, which currently account for 25% or one-quarter of total imports. Simultaneously, the country will aggressively pursue new markets such as Africa and Latin America, leveraging existing free trade agreements (FTAs) with 18 countries and the planned implementation of three more by 2027.
- The Thai-EFTA agreement, with the European Free Trade Association (EFTA) group of countries including Norway, Liechtenstein, Finland, and Switzerland, will reduce import tariffs on Thai goods to near 0%, increasing export opportunities.
- The Thai-Bhutan trade agreement is expected to come into effect around January 2570. Bhutan possesses significant natural resources and minerals essential for Thai production.
- Thailand-Sri Lanka: This creates opportunities for Thai automotive parts exporters, as Sri Lanka currently has a high demand for these products but faces very high import tariffs. An FTA would help reduce these obstacles.
Furthermore, it was found that businesses receiving investment promotion from the Board of Investment (BOI) in Thailand are shifting towards new-generation industries. The top industry is Data Centers (approximately 20-30 facilities), followed by electronics/electrical appliances for the AI industry, utilities, electric vehicles (EVs), and biotechnology. These industries have a high level of local resource and raw material utilization, which will benefit Thai people.
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