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Assessing Effect of FTA on Trade and Investment in Thailand
Posted on 04.07.2021

     This report examines the impact on trade and investment of signed FTAs (i.e. ex post studies), using Thailand as a case study with a hope that empirical evidence found here is utilized in FTA making in the future. The key finding is FTA preferential schemes have been limitedly used. The average utilization rate was 39.5 and 25.9 per cent of total export and import with FTA partners, respectively. They were highly concentrated with a handful product items dominated by vehicles and electrical appliances. External trades of healthrelated products such as liquor, cigarette, medicine, and medical equipment, have not been affected by the signed FTAs noticeably. This finding is consistent with gravity equation analysis. In particular, the signed FTAs have played a trade facilitating role on the existing bilateral trade with FTA partners instead of opening newly markets. There has not been a systematic relationship between the signed FTAs and foreign direct investment inflows to Thailand. The key policy implication is the impact of the signed FTAs on trade and investment has been limited. It must be cautious to claim the benefit of FTAs from the ex ante studies that are grossly over-estimated.

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