THIRD-PARTY BENEFIT
Exports projected for slight uptick
Thailand is forecast to gain more than it loses from the US-China trade spat, with exports likely to increase.
Thailand is forecast to gain more than it loses from the US-China trade spat, with exports estimated to increase by 8.53-21.34 billion baht or 0.06-0.16% of GDP.
The latest study by the University of the Thai Chamber of Commerce (UTCC) found greater Thai shipments to the two countries are expected as a result of lower shipments between the two economies in light of bilateral import tariff hikes.
Aat Pisanwanich, the director of the UTCC’s Center for International Trade Studies, said the trade standoff between the US and China will increase imports of Thai products to replace goods that are affected by the trade dispute.
On March 8, 2018, US President Donald Trump issued two proclamations imposing tariffs on imports of certain steel and aluminium products, effective March 23.
The decision was made in response to a US Department of Commerce report on the impact of imported steel and aluminium on US national security. It imposed a 25% tariff on certain imported steel products and a 10% tariff on certain imported aluminium products.
In retaliation, on April 2 Beijing imposed tariffs of up to 25% on 128 American products, including pork, fruit, nuts and wine.
On April 4, China announced the imposition of tariffs of up to 25% on 106 US products including soybeans, cars, chemicals and other goods, in a move stoking fears the confrontation could escalate to an all-out trade war.
Mr Aat said Thailand is expected to export more machinery, electrical products, electronics, steel and steel products, rubber products, and cars and parts to the US, taking the place of lower shipments from China. Higher shipments to the US market are estimated at 5.19-12.99 billion baht.
Thailand is likewise projected to ship more products to the Chinese market, particularly wheat and corn, cars and parts, plastic, and aluminium worth 3.34-8.35 billion baht.
But the study found in terms of the supply chain, Thailand is expected to see exports drop to China and the US by a combined 466 million to 1.16 billion baht, or 0.003-0.009% of GDP.
US imports of Thai raw materials make up only 0.1% of its total production, while Thai raw materials account for only 0.2% of the mainland’s total production.
Mr Aat said an indirect consequence is Thailand is expected to become a dumping ground for US and Chinese products affected by higher tariffs in the two countries, adding an estimated 6.0515.12 billion baht worth of such products, including machinery, electrical appliances, electronics, aluminium, steel and steel products.
He suggested Thailand ramp up its production chain with the US and China, while also revving up trade cooperation, particularly through free trade agreements with the US and the Regional Comprehensive Economic Partnership (RCEP).
The RCEP was launched in November 2012 with the aim of establishing deeper economic cooperation among the 10 Asean members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and the six dialogue partners of Asean (China, Japan, South Korea, Australia, India and New Zealand).
The member countries represent 29% of global trade and have a combined population of 3.35 billion.
Thailand Development Research Institute earlier estimated that joining RCEP would boost Thailand’s GDP growth by 4.03 percentage points, with local vegetables, processed fruits and food, and electronic appliances benefiting from the deal.