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ASEAN-CHINA ECONOMIC COOPERATION UNDER

THE ASEAN-CHINA FREE TRADE AGREEMENT

(ACFTA): THE CASE STUDY OF THAILAND

BY

MISS KANSINEE SOMJAI

A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF

THE REQUIREMENTS FOR THE DEGREE OF MASTER OF

ARTS IN INTERNATIONAL RELATIONS

FACULTY OF POLITICAL SCIENCE

THAMMASAT UNIVERSITY

ACADEMIC YEAR 2016

COPYRIGHT OF THAMMASAT UNIVERSITY

Ref. code: 25595403040131WTU

ASEAN-CHINA ECONOMIC COOPERATION UNDER

THE ASEAN-CHINA FREE TRADE AGREEMENT

(ACFTA): THE CASE STUDY OF THAILAND

BY

MISS KANSINEE SOMJAI

A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE DEGREE OF MASTER OF

ARTS IN INTERNATIONAL RELATIONS

FACULTY OF POLITICAL SCIENCE

THAMMASAT UNIVERSITY

ACADEMIC YEAR 2016

COPYRIGHT OF THAMMASAT UNIVERSITY

THAMMASAT UNIVERSITY

FACULTY OF POLITICAL SCIENCE

THESIS

BY

MISS KANSINEE SOMJAI

ENTITLED

ASEAN-CHINA ECONOMIC COOPERATION UNDER THE ASEAN-CHINA

FREE TRADE AGREEMENT (ACFTA): THE CASE STUDY OF THAI-LAND

Chairman

was approved as partial fulfillment of the requirements for

the degree of Master of Arts in International Relations

August 19, 2017 on ...................................... .

(Asst. Prof. M.L. Pinitbhand Paribatra, Ph.D.)

Member and Advisor

(Assoc. Prof. Attakrit Patchimnun, Ph.D.)

Member

(Asst. Prof. Pichit Ratchatapibhunphob, Ph.D.)

Dean

(Assoc. Prof. Supasawad Chardchawam, Ph.D.)

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Thesis Title ASEAN-CHINA ECONOMIC COOPERATION

UNDER THE ASEAN-CHINA FREE TRADE

AGREEMENT: THE CASE STUDY OF

THAILAND

Author Miss Kansinee Somjai

Degree Master of Arts

Major Field/Faculty/University International Relations

Faculty of Political Science

Thammasat University

Thesis Advisor Assoc. Prof. Attakrit Patchimnan, Ph.D.

Academic Years 2016

ABSTRACT

Since the Asian Financial Crisis in the year 1997, there has been increasing

cooperation within the region. At the same time, a rising China has been spreading its

influence to Southeast Asia, especially towards member countries of the Association of

Southeast Asian Nations (ASEAN), in various aspects including political, economic

and socio-cultural. Economic cooperation between ASEAN and China has rapidly

developed since the year 2001, when a free trade area known as the ASEAN-China Free

Trade Agreement (ACFTA) was established. After the full implementation of ACFTA

in all ten ASEAN member countries in January 2010, the volume of trade has been

growing rapidly compared to past levels. China has become a very important trade

partner to ASEAN nations, and for example has replaced Japan to become the largest

export partner of Thailand. This research explores the driving forces behind ACFTA,

from its beginning in 2001 to the year 2015. In addition, the research informs

elaboration on the key causes of China and Thailand’s economic cooperation under

ACFTA and examines opportunities and challenges under this free trade agreement.

Keywords: Regionalism, Free trade agreement, ASEAN, China, Thailand

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ACKNOWLEDGEMENTS

Firstly, I would like take this opportunity to express my heartfelt gratitude

to my mother for her continuous financial support and encouragement from the

beginning of my application to the MIR Program.

Next, I would like to express my sincere appreciation to Associate

Professor Dr. Attakrit Patchimnan, for his kind acceptance of being my thesis advisor;

Assistant Professor De. M.L.Pinitbhand Paribatra, chairman of the thesis committee,

and Assistant Professor Dr. Pichit Ratchatapibhunphob, member of the thesis

committee for their kind support. I also would like to further share my appreciation to

Assistant Professor Dr. Attasit Pankaew for his useful guidance and Dr. Somphob

Manarangsan for his insightful discussion and comments regarding my research.

In addition, I would like to thank Mr. Ridronachai Warungkarasami for his

continuous encouragement, Mr. Jeremy Wellard for his patience on proofreading, and

all member staff of the MIR program, Thammasart University for their guidance and

facilitation throughout the completion of my thesis.

Lastly, I wish to thank myself for making the graduation of MIR program

possible and happen.

Miss Kansinee Somjai

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TABLE OF CONTENTS

Page

ABSTRACT (1)

ACKNOWLEDGEMENTS (2)

LIST OF TABLES (5)

LIST OF FIGURES (6)

LIST OF ABBREVIATIONS (7)

CHAPTER 1 INTRODUCTION 1

1.1 The background of Thailand’s political economy 1

1.1.1 Politics 1

1.1.2 Economy 3

1.1.2.1 Asian Financial Crisis 5

1.2 The Background of China 6

1.3 The Background of Association of Southeast Asian Nations (ASEAN) 8

1.3.1 ASEAN-China Relations 13

1.4 Significant of the issue 16

1.5 Research Objectives 19

CHAPTER 2 REVIEW OF LITERATURE 20

2.1 China and its economic influence 20

2.2 ASEAN-China Economic Relations 21

2.3 The China – Thailand Relationship 27

2.3.1 Early Harvest Program 30

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CHAPTER 3 RESEARCH METHODOLOGY 32

3.1 Research questions 32

3.2 Research hypothesis 32

3.3 Theoretical reviews 32

3.3.1 Neoliberalism 33

3.3.2 Regionalism 34

3.4 Scope 36

3.5 Qualitative Analysis 37

CHAPTER 4 RESULTS AND DISCUSSION 38

CHAPTER 5 CONCLUSIONS AND RECOMMENDATIONS 59

REFERENCES 63

APPENDICES

APPENDIX A List of Prime Minister of Thailand 72

APPENDIX B List of President of China 75

APPENDIX C Early Harvest Program 76

BIOGRAPHY 91

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LIST OF TABLES

Tables Page

1.1 Timeline of ASEAN China Free Trade Agreement 16

4.1 Thailand’s Gross Domestic Product (GDP) and its annual growth 41

4.2 Thailand’s Import Value to Selected Trade Partners between 1995 -2015 47

4.3 Thailand’s Exports to Selected Trade Partners in 1995 -2015 49

4.4 Thailand’s Foreign Direct Investment 52

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LIST OF FIGURES

Figures Page

1.1 Thailand’s Gross Domestic Product (1995 -2015) 4

1.2 China's Gross Domestic Product (1960-2015) 7

1.3 Map of Southeast Asia and China 9

4.1 Thailand’s Import – Export Statistics, 1995-2015 42

4.2 Thailand’s trade with China during the years 1995-2015 44

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LIST OF ABBREVIATIONS

Symbols/Abbreviations Terms

AFTA ASEAN Free Trade Agreement

ACFTA

ASEAN

ASEAN China Free Trade Agreement

Association of Southeast Asian Nations

EHP Early Harvest Program

FTA

GDP

Free Trade Agreement

Gross Domestic Product

IMF

NESDB

PAD

International Monetary Fund

National Economic and Social

Development Board

People's Alliance for Democracy

UDD United Front of Democracy Against

Dictatorship

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CHAPTER 1

INTRODUCTION

This first chapter aims to introduce and provide background to the various

actors related to this research. This chapter will provide background to Thailand’s

political economy, discuss the importance of the regional economic incident known as

the Asian Financial Crisis, provide background to China’s regional role and give an

overview of the Association of Southeast Asian Nations (ASEAN). This chapter will

also cover the significant of key issues, in order to elaborate on the importance of this

research and its objectives.

1.1 Background to Thailand’s Political Economy

Thailand is located on the mainland of Southeast Asia and covers an area

of 514,000 square kilometers. Thailand’s borders connect to Myanmar, Laos,

Cambodia and Malaysia and the Southern part of Thailand has its coastline on the Gulf

of Thailand and the Andaman Sea. Thailand’s geography is categorized into four sub-

regions: the northern region, the northeast region, the central region and the southern

region. Historically, Thailand is the only country in Southeast Asia which has never

been colonized by a Western power. Thailand’s Head of State is its King and its Head

of Government is the Prime Minister. According to the World Bank (2016a), Thailand’s

current population is over 67 million people. Overall, Thailand has good diplomatic

relationship with the world’s most powerful countries, including both China and the

United States.

1.1.1 Politics

The Thai political system changed from an absolute monarchy to a

constitutional monarchy in the year 1932. The first Thai Prime Minister was Phraya

Manopakorn Nititada, who established the first official constitution on 10th December

1932. However, Phraya Manopakorn Nititada was deposed by Phraya

Phahonphonphayuhasena in the first of many military coups in June 1933. He later

became the second Thailand’s prime minister in 1933.

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From the beginning of the constitutional monarchy in 1932 until 2015,

Thailand had 29 Prime Ministers. Thailand has had a total of nineteen charters and

constitutions, which makes it one of the countries with the most constitutional changes

in the world. Moreover, Thailand had a total of thirteen military coups between the first

coup in 1933 and the year 2015, making it the country with the most coups d’état in the

world. It has been said that the monarchy and the military both have important role to

play in shaping Thai politics. Most Thai Prime Ministers were previously from the

military, particularly those who had long terms in government, such as the 3rd prime

minister, Plaek Phibunsongkhram, the 10th prime minister, Thanom Kittikachorn, and

the 16th prime minister, Prem Tinsulanonda.

In 2001, Thaksin Shinawatra was elected to be the 23rd Prime Minister of

Thailand. He changed Thai traditional policies to more populist approaches, known as

Thaksinomics. Thaksinomics were economic policies aimed at supporting rural people

and the lower income populations which make up the majority of the Thai population.

Examples of popular policy are the 30 Baht universal healthcare program, the One

Tambon One Product (OTOP) program, and the four-year debt moratorium for farmers.

Thaksin Shinawatra’s government developed Thailand’s security cooperation with the

United States, while at the same time he also developed trade relations with China. In

2005, there was a huge public protest against Prime Minister Thaksin, named the

People's Alliance for Democracy (PAD). It was the beginning of Thailand’s current

political turmoil. The PAD was led by Chamlong Srimuang and Sondhi Limthongkul

and the yellow shirt was used to represent supporters of the PAD. In September 2016,

the Thai military deposed Thaksin Shinawatra’s government during an official visit to

the United Stated. Opposing the PAD was a group supporting Thaksin, named the

United Front of Democracy Against Dictatorship (UDD). The UDD was represented

by their red shirts and led by Jatuporn Prompan, Nattawut Saikua, Veera Musikapong,

Charan Ditthapichai, and Weng Tojirakarn. The clashes between the yellow shirts and

the red shirts caused political turmoil in Thailand for years. In 2008, the PAD gathered

again to pressure the new Prime Minister, Samak Sundaravej, to resign by blocking the

airport, major roads and highways. The demonstrations continued into his replacement

Somchai Wongsawat’s government, as both of these Prime Ministers were accused of

being proxies for Thaksin. When Abhisit Vejjajiva became Thailand’s 27th prime

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minister in December 2008, the UDD protested and called on him to resign. In 2009, a

UDD demonstration caused the fourth East Asia Summit in Pattaya to be cancelled. In

2010, 27 buildings were set ablaze in areas of central Bangkok and a military

crackdown on the UDD leaders began. In 2011, Yingluck Shinawatra, former Prime

Minister Thaksin’s younger sister, was elected to be the 28th prime minister of

Thailand. In 2014, another demonstration was led by Suthep Thaugsuban with the aim

to pressure for the resignation of Prime Minister Yingluck Shinnawatra. This

demonstration led to the military coup that deposeded Yingluck Shinawatra’s

government, installing Prayut Chan-o-cha as the 29th Prime Minister of Thailand.

1.1.2 Economy

47 percent of Thailand’s total population is aged between 25-54 years old

and one third of the Thai population lives in the northeast region. Thailand’s labor force

is around 38.70 million people. The United Nations in Thailand (2016) showed that

Thailand has reduced the percentage of the population living in poverty from 27 percent

in 1990 to 9.8 percent in 2002. Information from Department of International Economic

Affairs, Ministry of Foreign Affairs of Thailand (2016) shows that Thailand has an

unemployment rate of less than one percent. The sources of Thailand’s gross domestic

product (GDP) are mainly from agriculture, manufacturing, wholesale and retail trade,

and services.

In the past the Thai economy was based mainly on agriculture and it was

known as “rice economy”, because rice was the main output. In 1960, agriculture made

up 32 percent of Thailand’s GDP, while manufacturing comprised only 14 percent.

Thailand changed its industrial policy in the mid-1980s, from import-substitution

industrialization to export-oriented industrialization and the Thai economy developed

into an industrial economy. According to the Office of the National Economic and

Social Development Board’s (NESDB) statistics, manufacturing’s share of Thailand’s

GDP has increased since 1981. In 1981, manufacturing contributed 172,143 million

Baht, whereas agriculture added 162,390 million Baht to Thailand’s GDP.

In later years, the Thai economy became more trade oriented and Thailand

is currently highly dependent on trade. Trade in goods and services now makes up about

74 percent of Thailand’s total GDP, with the services sector being about 45 percent.

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The service sector refers to tourism, which forms the largest part of this sector, retail,

transportation, and banking or financial services.

Although it has been over half a century since Thailand transformed its

economy from an agricultural base to an industrial base, the agricultural sector remains

important for Thai household income and livelihoods, with more households involved

even as the overall proportion has decreased (Pupphavesa, 2008). Currently, total Thai

production is mainly from the manufacturing and industrial sector which share 42

percent and the agricultural sector, which shares about 58 percent. The average annual

growth rate of Thailand’s GDP was 8.2 percent and 4.7 percent during the periods 1960

– 2000 and 2000 – 2015 respectively.

Figure 1.1 Thailand’s Gross Domestic Product (1995 -2015). Adapted from World development

indicators (n.d.). Retrieved from World Bank Group website: http://data.worldbank.org/

indicator/NY.GDP. MKTP.CD

Figure 1.1 shows that although Thailand has had a good average annual

growth rate, Thailand’s GDP decreased in 1997, 1998 and 2009. This was because

Thailand experienced both domestic political instability and the effects of international

economic crises, such as Asian Financial Crisis in mid-1997 and the Global Financial

Crisis in 2008.

0

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1.1.2.1 The Asian Financial Crisis

In the early 1990s, Asia experienced high economic growth, especially

Indonesia, Malaysia, South Korea, the Philippines and Thailand. In mid-1997 however,

an important economic incident called the Tom Yum Goong Crisis or East Asian

Financial crisis occurred. The crisis originated in Thailand and three countries were

heavily affected; Indonesia, South Korea and Thailand. According to Radelet S., and

Sachs J. (1998) insider dealing, corruption, and weak corporate governance caused

inefficient investment spending and instability in banking systems. Before the crisis

occurred, there were signs such as the overvaluation of the Thai Baht and the high

inflows of foreign investment to the region. Annual capital inflow to Thailand average

over 10 percent of GDP in the early 1990s and reached 13 percent of GDP in 1995.

Domestic bank lending in Thailand expanded rapidly after the launch of Bangkok

International Banking Facilities (BIBF) and reached over 28 percent by 1995. Some

analysts consider that the high economic growth in the early 1990s caused an imbalance

between macroeconomic and microeconomic systems.

This economic crisis affected the stability of East Asian capitalism and

financial markets. However, there were several international responses to this financial

crisis. The international response was officially led by the International Monetary Fund

(IMF). The IMF and Thailand signed an emergency lending agreement in August 1997,

Indonesia signed an emergency lending agreement in November 1997 and Korea signed

in December 1997.

There was also a regional response to the crisis. Countries in East Asia

developed a regional economic cooperation approach under the ASEAN Plus Three

(ASEAN+3) Finance Ministers’ framework. The first meeting of this group took place

in 1999 in Manila, Philippines, with participation from the ten ASEAN countries plus

China, Japan, and South Korea. It was decided that stronger financial institutions were

needed and in 2000, the Chiang Mai Initiative was established as a regional financing

arrangement and bilateral swap arrangement (BSA).

Economic growth in Thailand has been a key driver of poverty

reduction, and Thailand’s poverty rate has declined from 67% in 1986 to 11% in 2014

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(World Bank, 2016b). Thailand has a strong relationship with many of the world’s most

powerful countries such as China, Japan and the United States, who are important

strategic partners of Thailand. In addition, Thailand has actively engaged in regional

and sub-regional cooperation such as Association of South-East Asian Nations

(ASEAN), Asia-Pacific Economic Cooperation (APEC), Greater Mekong Sub-region

(GMS) and the Mekong-Ganga Cooperation (MGC). In 2011, Thailand was classified

by the World Bank as an upper-middle-income country and it is ranked 26th out of 189

countries on the comfortable business environment.

1.2 Background to The People’s Republic of China

The People’s Republic of China (hereinafter refer as “China”) is located in

the eastern part of Asia, as shown in Figure 1.3. Its geography covers an area of 9.6

million square kilometers, making it the third largest country in the world, after Canada

and Russia. China has coast lines on The Yellow Sea, East China Sea, and South China

Sea, which connects directly with the Pacific Ocean. According to World Bank Statistic

(World Bank, 2015), China’s population has reached over 1.3 billion people, making it

the most populous country in the world.

China is a centralized unitary state which is completely managed by the

Chinese Communist Party. China’s national administration is authoritative in its

structure and ideology. The Chinese Communist Party (CCP) is the only political party

in China and there are eight other registered smaller parties, all under the control of the

CCP. Mao Zedong was the first to hold the office of State Chairman, in 1955. Liu

Shaoqi became the second Chairman in 1959, followed by the third chairman named Li

Xiannian in 1983. The title of the office changed to President, with the fourth President

named Yang Shangkun, the fifth President named Jiang Zem, and the sixth President

named Hu Jintaoin in 1988, 1993, and 2003 respectively. The current Chinese President

is Xi Jinping who became the seventh President in 2013.

In 1978, China started reforming its economy and applied an open door

policy in 1986, aimed to attract foreign investment in order to develop a market

economy and private sector. In doing so it transformed from a centrally-planned to a

market-based economy. Since this time, China’s economy and society has been

developing rapidly and this has caused the phenomenon of “rising China”, as seen in

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Figure 1.2 on China’s Gross Domestic Product (1960-2015). China’s GDP growth has

averaged nearly 10 percent a year over the period 1996-present. China’s GDP grew 9.3

percent in 2011, 7.8 percent in 2012, 7.7 percent in 2013, 7.3 percent in 2014 and 6.9

percent in 2015.

Figure 1.2 China's Gross Domestic Product (1960-2015). Adapted from World development

Indicators. (n.d.). Retrieved from World Bank Group website: http://data.worldbank.org/

indicator/NY.GDP. MKTP.CD

China is currently a developing country and in 2001 joined the World Trade

Organization. China played an important role during the Asian financial crisis in mid-

1997 by contributing money to the IMF. During the financial crisis of 2008, China

survived its economic recession by pledging 4 trillion yuan, about USD 580 billion, to

stimulate its economy. China has also been the largest contributor to global economic

growth since the global financial crisis of 2008.

China's agricultural sector contributes only 9 percent towards China’s GDP.

The main source of GDP is from manufacturing low-cost exports of machinery and

equipment. China also has state-owned companies that control its fuel exports, Petro

China, Sinopec and China National Offshore Oil Corporation. One-fourth of China's

economy is based in real estate-related companies, especially railways, construction

0

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and other infrastructure. China has also developed its exports in electrical equipment

and other types of machinery, including computers, data processing equipment, optical

and medical equipment, apparel, fabric and textiles. Moreover, from 2013 to 2015

China has become the world's largest exporter of steel and it exported $2 trillion of its

production in 2016.

At the same time, China is the world's third largest importer. China imports

raw commodities, aluminum and copper from important trade partners including the

United Stated, Hong Kong, Japan and South Korea. In addition, China has increased its

economic cooperation with Southeast Asian nations, many Latin American countries

as well as African nations. Currently, China is the world’s second largest economy and

is increasing its role in the global economy.

In 2015, China achieved all its Millennium Development Goals (MDGs),

including raising more than 800 million people out of poverty. There are currently 55

million people who remain facing poverty in rural areas.

1.3 Background to the Association of Southeast Asian Nations (ASEAN)

The Association of Southeast Asia Nations (hereafter refers as “ASEAN”)

is one of the most successful inter-governmental organizations in the developing world

today. ASEAN has brought together countries in the region under its motto of “One

Vision, One Community”. ASEAN is the gathering of ten countries in Southeast Asia;

Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao

People’s Democratic Republic, Malaysia, the Union of Myanmar, the Republic of the

Philippines, the Republic of Singapore, the Kingdom of Thailand and the Socialist

Republic of Viet Nam (hereafter refers as Brunei Darussalam, Cambodia, Indonesia,

Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam

respectively). These ten member countries of ASEAN cover both mainland and island

zones totaling approximately 4,480,000 square kilometers (see Figure 1.1).

During the cold war period, before the establishment of ASEAN, countries

in Southeast Asia faced political instability and the threat of domestic insurgency from

local and communist groups. ASEAN was established when Ministers of its five

founding countries, Indonesia, Malaysia, the Philippines, Singapore, and Thailand,

agreed to sign the Bangkok Declaration on 8 August 1967 at Saranrom Palace in

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Bangkok, Thailand. Originally, the driving force behind ASEAN’s establishment was

mainly political co-operation, although the written purpose of the ASEAN declaration

- or Bangkok declaration - stressed economic growth, social progress and cultural

development in the region and promoting regional peace and stability together.

According to Thanat Khoman, former Foreign Minister of Thailand (1992), the most

important reason for ASEAN’s conception was for these countries to join together to

strengthen their positions and protect themselves from the political influence of

powerful outsiders.

Figure 1.3 Map of Southeast Asia and China. Retrieved from ASEAN Up

website: http://aseanup.com/asean-association-of-south-east-asian-nations/

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In November 1971, five Ministers of ASEAN’s founding member countries

signed the declaration named the Zone of Peace, Freedom and Neutrality (ZOPFAN)

in Kuala Lumpur, Malaysia. This was also known as the Kuala Lumpur Declaration

and its purpose was for political gains through building national and regional resilience.

In February 1976, the first ASEAN summit was held in Bali and the participating

leaders together agreed to sign a set of fundamental principles called the Treaty of

Amity and Cooperation (TAC). This treaty includes the important and unique principle

of non-interference, through which member countries would be free from external

interference in their domestic affairs by other member countries. The TAC also ensures

mutual respect for the independence, sovereignty, equality, territorial integrity, and

national identity of all ASEAN members. In addition, it also includes mechanisms for

the settlement of differences or disputes through peaceful means and effective

cooperation among member countries. In 1984, Brunei Darussalam joined ASEAN. In

1987, at the third ASEAN summit in Manila, ASEAN leaders signed a protocol

amending the TAC in order to enable non-member countries to consent to this treaty.

In the 1992 summit in Singapore, leaders agreed to move forward their political and

economic cooperation and promote external dialogues. The ASEAN Regional Forum

(ARF) was adopted in 1994. This forum focuses on multilateral security and includes

not only member countries, but also the major countries from East Asia. In 1995,

Vietnam officially joined ASEAN. And in December of the same year, at the ASEAN

summit in Bangkok, leaders together signed the Treaty on the Southeast Asia Nuclear

Weapon-Free Zone (SEANWFZ) which came into force in March 1997. Both Lao PDR

and Myanmar officially joined ASEAN in 1997 and the final ASEAN member country

to join was Cambodia, in 1999.

ASEAN proclaimed itself as representing “the collective will of the nations

of Southeast Asia to bind themselves together in friendship and cooperation and,

through joint efforts and sacrifices, secure for their peoples and for posterity the

blessings of peace, freedom and prosperity”. At the 9th ASEAN Summit in 2003, the

ASEAN community was discussed and initiated. At the 12th ASEAN Summit in

January 2007, ASEAN leaders strongly committed to establishing the community by

2015. The ASEAN community includes three main pillars: ASEAN Political-Security

Community (APSC), ASEAN Economic Community (AEC), and ASEAN Socio-

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cultural Community (ASC). In the following year, the ASEAN Charter was declared.

This charter provides legal status and an institutional framework which aims to organize

ASEAN norms, rules and values; sets clear targets for ASEAN; and presents

accountability and compliance. ASEAN became the official ASEAN Community by

the end of 2015, a demonstrable success in transforming regional rivals into neighbors,

highlighting ASEAN’s important role in peace, security and stability in the region.

In economic terms, ASEAN represents diverse markets and varying

economic developments and together represents the third largest economy in Asia, after

Japan and China. Among the three pillars, economic aspects seems to be the dominant

driver and the ASEAN Economic Community (AEC) is the most widely promoted of

the three communities of ASEAN. The largest economy in ASEAN is Indonesia and

Thailand’s economy ranks as the second largest. The lowest GDP growth rate seen in

ASEAN is Brunei, while Thailand has recorded the second lowest GDP grow rate of

the region. In terms of ASEAN’s economic history, after the failure of the preferential

trade agreement in 1977, ASEAN strengthened its internal economic cooperation

through the ASEAN Free Trade Area (AFTA), founded in 1992. In addition to AFTA,

ASEAN has also signed many free trade agreements with other external partners. Surin

Pitsuwan, former ASEAN Secretary General (2011), stated that ASEAN is driven and

guided by the principles of open market economy, and adherence to multilateral rules

and a rules-based system, thus creating an integrated regional economy that gives rise

to more trade and an investment friendly environment. AFTA was also motivated by

the external pressure of IMF and the World Bank in order to speed up trade

liberalization and the formation of several trade blocs. AFTA aimed to reduce tariffs,

non-tariff barriers, quantitative restrictions and other cross-border measures among

ASEAN countries. It was the first significant progress of economic cooperation and it

was the foundation of AEC. By 2015, the ASEAN Community aimed to create four

important components: a single market and production base, a highly competitive

economic region, a region of equitable economic development, and a region fully

integrated into the global economy. Importantly, the process of the ASEAN community

not only strengthens its own relationships, but also provides an opportunity for ASEAN

to attract FDI inflow and internal direct investment flows into ASEAN. ASEAN has

therefore become a prime investment destination (Minh, 2015). The largest foreign

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direct investors, excluding ASEAN and the EU, are Japan, the United States and China.

In 2015, Japan’s share was 14.5 percent of total net inflow of foreign direct investment

(FDI), while the United States and China shared 10.2 and 6.8 percent of total net inflow

of FDI respectively and South Korea contributed 4.7 percent.

In socio-cultural terms, the ASEAN region is very diverse in its customs,

traditions, religions and beliefs. Depending on the history of each member country of

ASEAN, their cultures have seen influences from Indian, Chinese, Portuguese, Spanish,

American, and indigenous Malay groups. In terms of religions in ASEAN, Islam and

Buddhism are widely practiced in the mainland of Southeast Asia, while Roman

Catholicism is largely practiced, especially in the Philippines. Each ASEAN country

has its own official languages and a wide-ranging list of dialects. Bahasa language is

the most commonly spoken in ASEAN, as it is used in Indonesia and Malaysia.

However, English is the official business language among ASEAN member countries.

In terms of population, ASEAN’s population reached over 360 million people in 2015,

making it larger than the European Union (EU). From a global perspective, ASEAN

accounted for 8.5 percent of the world’s total population in 2015. Indonesia has the

largest population in ASEAN with over 200 million and the second is the Philippines

with its population over 90 million. Thailand, with 67,959,359 people, accounts for

10.7 percent of the region’s total population.

Over the years, ASEAN has expanded its relationships with external

partners, including countries such as Australia, Canada, China, India, Japan, New

Zealand, Russia, South Korea, the United States, other regional institutions, and

international organizations. Cooperation areas include trade, investment, human

resource development, science and technology, education, drug trafficking and anti-

terrorism. Currently, China, Japan, the United States, South Korea, and the European

Union (EU) are the five largest partners of ASEAN. ASEAN has established a number

of dialogue relations with other countries and partners. In 1974, the ASEAN-Australia

Dialogue Relations was established, the first dialogue with an external partner outside

of the region. In 1975, ASEAN-New Zealand Dialogue Relations was established. In

1977, several dialogue relations were established, including ASEAN-Canada Dialogue

Relations, ASEAN-EU Dialogue Relations, ASEAN-Japan Dialogue Relations,

ASEAN-UNDP Dialogue relations, and ASEAN-US Dialogue Relations. In 1991,

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ASEAN-Republic of Korea Dialogue Relations were established. In 1995, ASEAN-

India Dialogue Relations, and in 1996, ASEAN-China Dialogue Relations and

ASEAN-Russia Dialogue Relations were established. In 2003, China, Japan, India and

South Korea agreed to sign formally onto the TAC and in 2005, Australia and New

Zealand also signed. In addition, there is an important cooperation agreement between

ASEAN and its powerful neighbors in Northeast Asia called ASEAN Plus Three

(ASEAN+3 or APT). This cooperation, which was proposed at the ASEAN summit in

Kuala Lumpur, Malaysia in 1997, is recognized as the leading regional cooperation in

East Asia region and includes the ten ASEAN member countries, plus China, Japan and

South Korea. It aims to ensure regional cooperation in various areas, most notably

economic, security, culture and development strategy.

1.3.1 ASEAN-China Relations

China is one of the most important external partners of ASEAN and is a

member of the APT. Since China began its economic transformation in 1979, its rapid

economic development has had enormous implications, both positive and negative, for

the rest of the world, especially its neighbors in ASEAN. Each ASEAN member state

has different point of views regarding China, because of its own different historical

background and its diplomatic relations with China. China first officially met with

ASEAN in 1991, with the delegation led by H.E. Qian Qichen, the Chinese Foreign

Minister at the time. He attended the 24th ASEAN Ministerial Meeting in July 1991 as

a guest of the Malaysian government. Formal dialogue relations were established

between ASEAN and China in July 1996, after those with Japan in March 1977 and

South Korea in July 1991. The relationship between ASEAN and China is notably

different to others, as economic issues figure far more prominently in relations.

However, at the same time, security issues like the South China Sea can be

overshadowing.

In the past, relations between ASEAN and China were strained due to

politics and communism. Malaysia and Indonesia were the most wary and sensitive

about Chinese influence in regional and domestic politics, while Thailand and

Singapore were most concerned about Vietnam (Ba, 2012). Malaysia was the first of

these countries to normalize its relations with China in 1974, followed by Thailand in

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1975. During the 1990s ASEAN had increasing concerns related to China’s increased

budget expenditure on national defense and its activities in the South China Sea. This

was especially true for those countries who were involved in the disputes in the South

China Sea. However, China signed the Treaty of Amity and Cooperation in 2003

although the United States had not. China also committed itself to the code of conduct

for South China Sea disputes. The policy of China towards the Southeast Asia has been

influenced by the policy of the United States towards South East Asia. According to

the ASEAN Secretariat (2004), the ASEAN-China Senior Officials Meeting on the

Implementation of the Declaration on the Conduct of Parties in the South China Sea

states that both parties have taken another important step to ensuring peace in the

disputed areas by setting up a joint working group for broad cooperation activities. The

objective of this working group is to help put into place concrete cooperation activities,

in order to provide an effective system based on the Declaration on the Conduct of

Parties in the South China Sea for the 10 members of ASEAN and China. There are

many areas for cooperation, including marine environmental protection, marine

scientific research, safety of navigation and communication at sea, search and rescue

operation, and combating transnational crime. Moreover, Marty Natalegawa, the

Indonesian Foreign Minister, said at the ASEAN Informal Meeting on the sidelines of

the UN General Assembly in New York that “We’re creating a momentum for progress

regarding the South China Sea issue. This is the first time that the ASEAN ministers

have received the draft of code of conduct” (Ririhena, 2012). According to Cossa

(1998), “a China/ASEAN confrontation in the South China Sea will provide additional

ammunition for those in the U.S. already so inclined to argue more convincingly for a

U.S. containment strategy against China”. You Ji notes that it would also make it easy

for a "`China threat' mentality to permeate into the minds of ASEAN leaders. The

ASEAN states could feel compelled to institute a China ‘containment policy’ or sign

up to one being instituted by the U.S. and others in the wake of PRC aggression.” In

this sense, China’s proactive efforts to deepen its relations with ASEAN are aimed at

buffering the nation and mitigating U.S. influence in the region, underscoring again that

such links have strategic, as well as economic, and value.

For ASEAN–China economic relations, China’s foreign policy of “look

south” emphasizes the economic cooperation between ASEAN and China. During the

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Asian financial crisis in 1997, which effected ASEAN on multiple levels, China did not

devalue its currency and contributed US$1 billion to the IMF rescue plan. This financial

crisis also offered China important opportunities to demonstrate regional leadership and

its commitment to Southeast Asia and President Jiang Zemin (“Pro-active policies,”

1997) stated that “China will forever be a good neighbor, a good partner and good friend

with ASEAN countries.” In the early 2000s, China proposed a free trade agreement to

ASEAN called the ASEAN-China Free Trade Agreement (ACFTA). Actually, China

was not the only country to propose an external partnership to ASEAN, Japan also did

similarly and China, Japan and South Korea also started discussions about an

ASEAN+3 free trade agreement (ASEAN+3 FTA). With slow progress on the

ASEAN+3 FTA, China individually decided to negotiate bilateral free trade agreement

with ASEAN. At a 2001 meeting in Brunei, China and ASEAN formally announced

their intention to start talks on establishing a free-trade zone within the next ten years.

The China-ASEAN Framework Agreement of Comprehensive Economic Cooperation

was signed in November 2002. A trade in goods agreement was signed in November

2004 at the 10th China-ASEAN Summit, a trade in Service agreement was signed in

January 2007 and an investment agreement was signed in August 2009. Full

implementation of the ACFTA started on 1 January 2010 for six ASEAN countries,

Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore and Thailand. The

CLMV countries, Cambodia, Laos, Myanmar and Vietnam, fully implemented the

ACFTA on 1 January 2015. The ACFTA is recognized as the third largest free trade

area in the world, after the European Union (EU) and the Northern American Free Trade

Agreement (NAFTA). China continues to be ASEAN’s largest trading partner as of

2009, while ASEAN has been China’s third largest trading partner since 2010.

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Table 1.1 Timeline of ASEAN China Free Trade Agreement

Year Activities

2000 Proposal for a free trade agreement made by the leader of China in

December

2001 ASEAN and China discuss a bilateral free trade agreement

2002 ASEAN-China Framework Agreement of Comprehensive Economic

Cooperation was signed in November.

2003 The early harvest program was initiated and came into effect

2004 Trade in goods agreement was signed in November

2007 Trade in service agreement was signed in January

2010

The full implementation of ACFTA started for six ASEAN member

countries; Brunei Darussalam, Indonesia, Malaysia, the Philippines,

Singapore, and Thailand

2015 The full implementation of ACFTA started for Cambodia, Laos,

Myanmar, and Vietnam

Note: Adapted from ASEAN-China Free Trade Area. (2016, May 30). Retrieved from

ASEAN-China Free Trade Area official website: http://www.asean-cn.org/index.php?m=

content&c=index&a=show&catid=267&id=84

1.4 Significance of the Issue

The international strategic landscape has changed significantly since the

early 1970s. Globalization has led countries to become more competitive, especially in

economic areas which have become more dominant elements shaping the world

compared to politics. Many countries in East Asia have experienced developments and

successes at the individual level and in regional integration. Some have said that this

century would be the returning Asian century and Asian economies would become

increasingly dominant in the future world. Asia becomes more important to the world

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and global economic stability. According to Nair (2012), Asia nowadays has become

one of the most talked-about issues among Western people, because they fear that Asia

will become the engine of global economic growth and that its two largest countries,

China and India, will come to dominate the world in more ways than one. East Asia

region includes two sub-regions, Northeast Asia and Southeast Asia. The key features

of Northeast Asia’s growth are the rise of China, the economic development of Japan

and the economic growth of South Korea. Importantly, these three countries are

recognized as the most powerful countries for intra-trade and sources of investment for

Southeast Asia and other developing countries. At the same time, the highlight in

Southeast Asia is the development of the ASEAN community and the individually

developments of its member countries. Therefore, this research will draw attention to

the rise of China and Southeast Asian regional integration as ASEAN.

In July 1997, the Thai government declared it would begin to devalue the

Thai Baht, which started a financial crisis called the Tomyumkung Crisis, also as known

as the Asian financial crisis. This financial crisis caused the slowdown of Thailand’s

exports and economic growth. This crisis did not impact economic growth only in

Thailand, but also in other countries, especially in Asia. Japan also felt the effects of

this crisis. At that time, China was expected to devalue its currency, but it did not. It

maintained exchange rate and this made China become a stabilizing force in the Asian

financial system. By providing Southeast Asian countries with the financial support to

survive this crisis, China gradually attained a prominent position and influence in the

regional economy, and as a driver of social stability facilitated further development of

its relationships with Southeast Asian countries (Shiau, 2001). For almost two decades,

from the end of the crisis in late 1998 until now, successful economic recoveries and

developments have occurred throughout the East Asia region. Thailand, Malaysia and

Indonesia have been supported in the development of their capitalist economics model

by the International Monetary Fund (IMF) and the World Bank. Each country has

recovered and developed their economies. This crisis became a great lesson for Asia

and it also shows the close economic bond between these countries and the East Asia

region. Thailand in particular has learnt a great lesson from the crisis and has taken a

long step towards its own economic recovery and development.

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Thailand was a founding member of ASEAN and is located in the strategic

heart of the region. The Thai economy is the second largest economy among ASEAN

member countries, behind the largest which is Indonesia. Thailand’s GDP in 2015

ranked twenty-seventh in the world – for comparison the United States ranks as the

world’s largest GDP, followed by China and Japan as the second and third respectively.

These three countries are all Thailand’s important trade partners. In order to achieve an

industrialized economy and long term sustainable future growth, investment in

technology is necessary. Thailand still needs to solve this crucial point otherwise it will

not be able to get out of the middle income trap. Within the region, Thailand and some

other ASEAN member countries have had close economic ties with Japan for decades,

because Japan is the largest foreign direct investor to Southeast Asia. However, China

has been a competing economic influence in Southeast Asia since the year 2000 and

China continues to increase its influence on ASEAN member countries including

Thailand. The economic relationship between China and Thailand has developed

greatly since the year 2001 and their trade volumes have increased dramatically since

the AEAN-China Framework Agreement of Comprehensive Economic Cooperation

was signed in 2002. The top three overall Thai exports are cassava, rubber and fruit

(Kasikorn Bank, 2015). Furthermore, the financial sector has become a key mechanism

for China to support Thailand and other countries in ASEAN in the past few years. The

Asian Infrastructure Investment Bank was established at China’s initiative, encouraging

Thailand and others to support China in this role. The official visits of Chinese leader,

President Wen Jiaboa, and US leader, President Barack Obama, to Thailand in 2012

shows the interest of both powerful countries in Thailand. Thailand would be a potential

base for China to expand its relationships with other countries in Southeast Asia. It is

an important challenge for Thailand for rebalance its relationships with these two

countries.

To sum up the significance of this issue, the phenomenon of the rising

China increases its influence on Southeast Asian region in various aspects. Chinese

influence has become comparable to that of Japan in term of trade and it has become

only the largest trade partner to ASEAN, but also the largest trade partner to Thailand,

replacing Japan. Moreover, China nowadays has becomes comparable to the United

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States in term of political influence and overall, more policies from the powerful

countries focus on Southeast Asia.

1.5 Research Objectives

In order to achieve the research outcomes, the author would like to set three

objectives as follows:

(1) To understand the development of ASEAN-China economic relations

and its importance as an external partnership, through the framework of economic

cooperation called the ASEAN-China Free Trade Agreement.

(2) To study the driving forces behind Thai – Chinese economic

cooperation under the ASEAN China Free Trade Agreement, as seen through the lens

of political economy.

(3) To examine the advantages and disadvantages for Thailand under the

ASEAN China Free Trade Agreement.

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CHAPTER 2

REVIEW OF LITERATURE

This chapter reviews the related articles and research by separating these

into three main parts; (2.1) China and its economic influence; (2.2) ASEAN-China

Economic Relations; and (2.3) The China – Thailand Relationship.

2.1 China and Its Economic Influence

According to Mary Amiti and Caroline Freund (2008) in “The Anatomy

of China’s Export Growth”, China’s exports have grown over 500 percent since 1992.

Their analysis shows that China’s export structure transformed from agriculture and

soft manufacturing to hard manufacturing and that machinery has been the largest area

of export growth, including telecoms, electrical machinery and office machines. They

highlighted that processing trade is very important to China’s rapid income growth. By

excluding processing trade, the skill content of China’s manufacturing exports remain

unchanged. In trade export, China has become more specialized rather than diversified

and China’s 500 largest share of export account for nearly 80 percent of its total exports.

The Chinese research paper named “Assessing Regional Reactions to

China’s Peaceful Development: A Chinese View” written by Shulong Chu (2009)

expresses the view that China’s economy is basically at the same level as smaller

countries in Asia. However China’s development, even if peaceful, will regardless

include an element of competition for foreign investment and market share. The author

analyzed that the rise of China presents both opportunities and challenges for the

country’s neighbors, and organizes the perceived threats into three dimensions:

economic competition, security concerns, and historical grievances. The author agrees

that China should have good relations with neighboring countries, such as those of

Southeast Asia. Although the disputes in the South China Sea do exist, these

outstanding disputes have been managed peacefully and have been limited in scope,

providing evidence of China’s desire to cooperate with its neighbors instead of dictating

to them. This sentiment is a logical outcome of China’s peaceful development strategy.

The most significant factor shaping China’s peaceful development is the United States

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and its relationship with countries in Southeast Asia. China’s development offers these

countries many benefits through greater cooperation and economic and social

integration. Nowadays, many from Southeast Asia see China’s peaceful development

as successful and acceptable. In this research, the author suggest that China must

develop more trusting relations with these countries and continue to manage

sovereignty disputes in the South China Sea in a peaceful manner.

According to Michael Schuman in “Why do we fear a rising China?”,

China uses its economy to put political pressure on its partners. China has created the

competition due to its competing economic model called “State Capitalism”. He gives

the example of Australia, which benefits from the export of raw materials to the Chinese

market. This became a key factor in helping Australia to feel less effects of the global

financial crisis in 2008, as there was an inflow of Chinese investment and job creation

to Australia. This in turn meant that the Australian economy became more dependent

on China. With the growing Chinese economy, it has increased its economic influence

in the Asia region and it has come to be considered as a strategic threat. In addition, a

rising China is unlike a rising Japan in the past. Rising Japan in the past presented

challenges mostly for the world’s leading economies, whereas a rising China also

covers the expansion of its political power through the economic sphere, which can be

compared to the U.S.-led political and economic system. This can create a nervous

situation from many countries who have historical conflicts with China, such as Japan,

South Korea, Taiwan and Vietnam. From Schuman’s point of view, this is the reason

why political leaders of South Korea and Taiwan try very hard to maintain their

relationship with the US to counter the influence of the growing Chinese economy.

2.2 ASEAN-China Economic Relations

The cooperation between ASEAN and China has developed in various

aspects since the changes in the international landscape in the 1970s. Regional

cooperation has increased, especially in economic areas through trade and financial

cooperation. There are a number of papers and research that related to developmental

relation between ASEAN and China, especially the economic cooperation between

ASEAN and China under ACFTA.

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The analysis conducted for McKinsey Global Institute by Oliver Tonby,

Jonathan Ng and Matteo Mancini in the paper named “Understanding ASEAN: The

Manufacturing Opportunity” (2014) reported that while China remains the big

market for the world, at the same time Southeast Asia can be recognized as the world’s

fastest growing market. Most of ASEAN’s GDP comes from Indonesia, Malaysia, the

Philippines, Singapore, Thailand, and Vietnam. These six member countries account

for more than 95 percent of the regional GDP of ASEAN. Apart from promoting the

ASEAN Economic Community (AEC), intra-trade of ASEAN continues to increase

and remains attractive for multinational investors. Therefore, ASEAN can become a

global hub of manufacturing. Analysis shows that the manufacturing sectors’ scale can

rise from 5 to 15 percent of the total cross base. On the other hand, China has changed

its pattern from export-oriented to self-consumer, as it has a huge domestic market. A

survey by the American Chamber of Commerce Singapore and U.S. Chamber of

Commerce (2014) found that 19 percent of ASEAN businesses plan to move from

China back to ASEAN and this investment’s destination would mainly be Indonesia.

Other attractive countries for new business expansion are Vietnam, Thailand, and

Myanmar respectively. One of the competitive advantages for investment in ASEAN

is the availability of low-cost labor in countries such as Cambodia, Indonesia, Laos,

Myanmar, and Vietnam, the cost of which is now lower than the labor cost in China.

However, although low-cost labor is a competitive advantage, the productive output is

also low. This paper analyzed that these countries will have to focus on boosting

productivity to lift the wages of factory workers while remaining competitive.

Therefore the level of skilled labor should also be increased.

The study named AEC Blueprint Implementation Performance and

Challenges: Investment Liberalization by Ponciano S. Intal Jr. (2015) analyzed that

one of major driving forces behind the formation of the AEC was the concern regarding

FDI redirection from ASEAN to China. Inflow FDI to China during 2002-2003

averaged 8.7 percent of global FDI, whereas at the same time, inflow of FDI to ASEAN

averaged 2.3 percent. After the establishment of the ASEAN Community in 2003,

inflow of FDI to ASEAN increased to 5.2 percent of global FDI. Moreover, since the

release of the ASEAN community roadmap in 2009, inflow of FDI to ASEAN as

increasingly grown and since 2013, inflow of FDI to ASEAN and China has been the

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same at 8.6 percent. This study shows that the AEC has influenced investor’s decision-

making.

Alice D. Ba wrote “China and ASEAN: Renavigating Relations for a

21st Century Asia” in 2003. The author found that relations between ASEAN and

China are complex. Their relationships include economic interdependence, political

and security interests, and a mix of bilateral and multilateral activities. The author

argued that the United States plays an important role in the evolution of ASEAN and

China’s relationship. The United States’ foreign policy indirectly influences China’s

efforts to cultivate relations with Southeast Asia. ASEAN can also be seen as part of

China’s “good neighbor” policy. The author also wrote that China would become

ASEAN’s potential economic investors and political allies, even though there are some

contentious territorial and security issues. The important evidence given for this study

is the effect of the Asian financial crisis on multiple levels. Economically, the crisis

destabilized economies and undermined investor confidence in the region. Politically,

it unseated governments and helped fragment states. Institutionally, the credibility of

ASEAN as a regional organization was damaged because of its ineffective response to

the crisis. The author viewed that this financial crisis strengthened relations between

ASEAN and China, as ASEAN was disappointed with the response of the International

Monetary Fund (IMF) to the economic crisis. ASEAN found that IMF’s conditions

were intrusive, inappropriate, and insensitive to specific economic and political

conditions in affected countries. They also expressed unhappiness with the U.S. for

pressing affected ASEAN member countries to open their capital markets. This was not

only associated with the problematic IMF conditions but also was viewed as the U.S.

benefiting from Southeast Asia’s financial problems. Therefore, China at that time took

that opportunity to demonstrate its political and economic value as a partner and as a

regional leader.

A further analytical study by Kesarin Phanarangsan in 2006 was titled

“China’s Reach: Subregional Economic Cooperation in Southeast Asia” The

author stated that greater regional economic integration both strengthens China’s

position in the region and helps allay concerns over the impact of China’s economic

growth on neighboring states. This study elaborates the economic integration between

China and five ASEAN countries: Cambodia, Laos, Myanmar, Thailand and Vietnam.

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This subregional cooperation fulfills the scheme of ACFTA through trade, investment

and tourism. It also deepens their relations through trade, investment and tourism.

Overall, cooperation along the border not only involves positive economic cooperation,

but also concerning geopolitical and security issues. China’s Western Development

Strategy is used to promote this subregional cooperation. The author explains that the

cooperation was inspired by three main factors: Chinese politics and economy, ASEAN

interests, and the socio-cultural conditions. This agreement not only decreased ASEAN

concern about China’s rising power but also increased economic ties among the

counties. Furthermore, this agreement allows ASEAN access to Chinese market. The

author added that trade and investment can lead to the success of China’s Western

Development Program. China and these five ASEAN countries have already

cooperated in many areas such as hydropower, irrigation, transportation, tourism and

natural resources. She also argued that socio-cultural factors can facilitate deeper

economic cooperation. The top priority of this subregional cooperation is transportation

infrastructure development, which has resulted the successful Kumming-Bangkok

Highway and the Lancang-Mekong River subregion. In addition, the author suggests

three features for deepening economic cooperation: operation as an extension of

ACFTA should be complementary rather than conflicting, border economic

cooperation should act as grounds for ACFTA, and the private sector should be more

active in spurring the development of border economic cooperation. Still, political-

security concerns about China’s rising influence remain important, even if less

prominent; there is little doubt that the economic crisis has underscored historical and

material asymmetries. While China’s post-Tiananmen policy has gone a long way

toward reassuring ASEAN states, it has not completely eliminated concerns about

China’s long-term intentions. Thus, ASEAN will continue to encourage multilateralism

in an effort to mitigate Chinese influence and to ensure that there will still be a “role

for the small and medium size states of Southeast Asia.”

Nargiza Salidjanova and Iacob Koch-Weser (2015) wrote in “China’s

Economic Ties with ASEAN: a country-by-country Analysis” that ASEAN and

China have formed a closer relationship since the Asian financial crisis in 1997.

ASEAN and China launched a currency swap through the Chiangmai Initiative and

subsequently began free trade negotiations. The authors analyzed that each ASEAN

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country has its own unique relationship with China and there is both cooperation and

tension between ASEAN and China. In this research report, they categorized ASEAN

member countries into three levels: high income, middle income and low income.

Brunei and Singapore are categorized as high income countries. Indonesia, Malaysia,

Thailand and the Philippines are categorized as middle income countries. Cambodia,

Laos, Myanmar, and Vietnam are categorized as low income country. Using these

categories, they showed that the structure of ASEAN economies is very diverse and

that development is at different levels in each. In terms of cooperation, Salidjanova and

Koch-Weser pointed out that China invested 2.3 percent of its total FDI to ASEAN in

2013, which counted as 6.7 percent of China’s global outbound investment stock. On

the other hand are the territorial disputes and tension between China and five ASEAN

member countries; Brunei, Indonesia, Malaysia, the Philippines, and Vietnam. They

highlighted that three ASEAN member countries who were involved in territorial

disputes with China were also a members of the Trans-Pacific Partnership (TPP) which

was a trade agreement led by the United States and including 11 countries; Australia,

Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and

Vietnam. For Thailand, Salidjanova and Koch-Weser viewed that it is a very open

economy and unique in the export of services, especially in tourism. By this reasoning,

they explained why Thailand is in deficit in trade of goods. However, they argued that

Thailand could recover from the 1997-1998 Asian financial crisis through strong

exports and a prudent monetary policy. New urban Chinese consumers prefer eat to

higher quality fruit and vegetables from abroad. Therefore, Thailand signed the Early

Harvest program to eliminate tariffs on fruit and vegetables with China in 2003. This

program is under ACFTA. Thailand’s export was cut by global financial crisis and

decrease Thailand’s double digit drop. Moreover, Thailand faced flooding in industrial

area in 2011.

According to Yang Mu and Heng Siam-Heng (2010), in “Promoting

China-ASEAN Economic Cooperation under CAFTA Framework”, the free trade

agreement between ASEAN and China is important milestone in their relationship. It

resulted from the Asian financial crisis in 1997. At that time, China did not suffer the

effects of the crisis and it could continuously do business with those countries in

Southeast Asia which were affected by the crisis. Importantly, China did not devalue

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its currency, which compared favorably to the bullying IMF response to the crisis.

Moreover, the global financial crisis in 2008 also heled forge the draft agreement. The

authors agreed that this free trade agreement can increase the areas of investment and

infrastructure development and lead to further monetary and fiscal policies and

industrial policies. They believe that CAFTA can continue to strengthen economic ties

between ASEAN and China.

According to Shandre Thangavelu (2010) in “Will ASEAN benefit from

the ASEAN-China FTA?” ASEAN has a key motivation to access the growing market

of China in manufacturing and services, as China is the fastest growing market in the

world. China has provided developmental aid to ASEAN member countries, especially

Cambodia, Laos, Myanmar, and Vietnam, through special provisions under ACFTA.

Through ACFTA, ASEAN consumers and producers would benefit from the cheap

import of intermediate inputs from China and this would increase the important

linkages among the ASEAN-China production chain. Thangavelu agreed that ACFTA

liberalization would benefit ASEAN, especially in service sector and gave examples of

how Malaysia, the Philippines, Singapore and Thailand would benefit mostly in service

sectors such as aviation, logistics, and tourism. However, Thangavelu argues that it

remained unclear whether ASEAN would gain the benefit from ACFTA, because China

is the import source of inflow investment with its large unskilled worker. ASEAN

should try to realize the medium to long-term benefits, rather than the short run

adjustment costs via complementary effects of ACFTA. China’s machinery and

equipment exports are beneficial to small and medium enterprises (SME) in ASEAN

especially Malaysia, Singapore and Thailand. Thangavelu also points out that ACFTA

could perhaps decrease the importance of AFTA and the focus of AEC formation for

ASEAN region could be reduced. To counter this, ASEAN should focus more on a

united ASEAN and the ASEAN economic community. ASEAN should focus on

developing stronger infrastructure and human capital. These developments can be take

advantage of China’s growing market and further the evolution of ACFTA into a larger

free trade region such as the East Asian Free Trade Agreement (EAFTA), which

includes all ASEAN member countries and three important partners, China, Japan and

South Korea.

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2.3 The China – Thailand Relationship

China and Thailand officially established diplomatic relations in November

1975 and 2015 marked the 40th anniversary of diplomatic relations. In fact, China and

Thailand have had relations for a long time, from the Sukhothai Kingdom and the

Ayudhya dynasty until the present. There are various aspects involved in the

relationship between two countries, including politics, economy, and socio-culture.

Thailand and China have several areas of strategic cooperation.

Besides ACFTA, economic relations between China and Thailand have

been promoted and developed. According to Chen Yanwu’s (2012) analyzed in his

research paper “Sino-Thailand Trade and Economic Relations: Analysis and

Prospect”, intra-industry trade makes up the majority of trade between Thailand and

China. He explained that products of China and Thailand are similar because of their

similar geographical proximity and climate. Thailand has an advantage in cultivating

tropical agricultural products. The ASEAN-China Free Trade Agreement (ACFTA)

reduced trade barriers and the more advanced technology and favored treatments. This

agreement affected the traditional Chinese manufacturing industry, hastening its

transfer into a higher-grade manufacturing and service industry in order to enhance

China’s competitive ability. During the years 2009 to 2011, Thailand and China

succeeded in bilateral investments, contract projects and labor service cooperation.

Thailand is a leading exporter of cassava and rubber products, with the volume of 2010

exports being ten times those of 2001. Thailand is the largest exporter of natural rubber,

while at the same times China is the largest consumer. For other agricultural products,

rice and fruit, the export volume and growth rate are lower. Thailand’s 7.8 percent of

growth in gross domestic product (GDP) in 2010 made Thailand one of the fastest

growing economies in both Southeast Asia and Asia. Most Thai investments are related

to the agro-industry, banking service and real estate. Besides ACFTA, a five year plan

was agreed and three agreements signed by Thai and Chinese leaders in April, 2012.

These three agreements cover trade and manufacture of farm products, basic

infrastructure development, tourism promotion and the establishment of a center for

trade laws and rules exchange. This agreement shows the intention between the two

governments and their people to increase their bilateral ties. In this research paper, Yan

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suggested that Thailand can use its natural endowments in order to enhance its effective

exports, improve export scale and increase its competitive ability. He also added that

these two countries can strengthen their cooperation through a majority of vertical intra-

industry trade and promotion of the formation of division of labor at different stages of

the industry chain.

The article by Suwatchai Songwanich on “Thai-Chinese economic

relations enter new phase” (2013) reported that Thailand and China's relationship is

shifting to a new phase in the run-up to the ASEAN Economic Community (AEC), with

growing Chinese interest in using Thailand as an alternative production base. The two-

way investment between Thailand and China has led to major structural changes in their

bilateral trade.

On the other hand, the study by John Lee on China’s Economic Influence

in Thailand: Perception or Reality? (2013) stated that China uses economic tools

such as trade and investment to influence the strategic and political decisions of

decision-makers in strategic ‘swing states’ in Southeast Asia. When it comes to

Thailand, Beijing’s actual or material capacity to use these economic tools to

significantly alter decision-making in Bangkok is limited and frequently overstated.

Although its economic relationship with China will grow in importance, the relatively

open and diverse nature of the Thai economy offers the country significant trade and

investment alternatives. The author stressed that the perception of Thai reliance on

China now and into the foreseeable future differs from reality. In overestimating the

importance of the Chinese economy relative to other major economic players in Asia,

Bangkok shows an overriding fear of displeasing Beijing and damaging its political

relationship with China. Such a mindset could also lead to strain in Thailand’s security

relationship with its American treaty ally, and could inhibit Bangkok’s capacity to play

a more pro-active role in ASEAN and other multilateral institutions, especially when it

comes to regional approaches to addressing awkward but important disagreements vis-

à-vis China. The author explained that reality based on objective numbers is one thing,

whereas perception based on the inevitability of China’s rise to a position of economic

and possibly strategic dominance in Asia is another. China, however, is a dominant

economic partner and strategic player in Asia, as is commonly made out, and the

persistent underlying assumption in conversations with Thai elites including

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government and bureaucratic officials, business leaders, think-tanks and academics is

that China, and not the US or Japan, will be the more important economic player in the

future. This perception gives China the capacity to both intimidate and seduce Thai

decision-makers. To be sure, Thailand’s drift towards China is immensely aided by the

lack, in recent history, of enmity between the two countries, the absence of major

territorial disputes, and the powerful presence and role of ethnic-Chinese Thai political,

business and social elites who largely see China’s rise as an opportunity and much less

a threat. The approximately 20% of Thais who have an ethnic-Chinese background have

been well-integrated into all levels of Thai society for hundreds of years. 17 of the 28

Thai prime ministers since 1884 are of partial or full ethnic-Chinese background. This

adds to the fact that Thailand’s historical and contemporary record of deft diplomacy

vis-à-vis great powers is admirable and impressive.

The study, named China’s growth in Transition: Implications for the

Thai Economy, by Nasha Ananchotikul, Pornpinun Chantapacdepong and Chotima

Sitthichaiviset (2011) found that there have been changes in China’s economic structure

due to a shift of labor out of agricultural work into more productive jobs in industry and

service sectors. Also, urbanization is a related change as Chinese workers moved from

rural area to urban areas around 200 million people as the Chinese government had set

a target to reach 51.5 percent urbanization by the end of 2015. The researchers

expressed the view that Thailand has benefited from China’s growth through various

trade channels, including exporting agricultural products to feed China’s growing

demand for commodities, providing high-quality or differentiated consumer products

and services to serve China’s rising middle class, and supplying upstream materials as

part of China’s production chain. In addition, Thailand should learn from China’s

success in productivity and industrial upgrading and technological advancement, as

serious efforts in this direction are much needed for Thailand to escape the middle

income trap.

Ivan Tchakarov wrote in “Public Investment In Thailand:

Macroeconomic Effects And Implementation” (2007) that investment in Thailand

collapsed in the aftermath of the Asian crisis. While the sharp fall in private investment

was the main driver of the decline in overall investment, reduced public investment also

contributed to the slowness of the post-crisis investment recovery. In November 2005

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Thailand’s authorities announced plans for THB1.8 trillion in new infrastructure

spending over 2006–09, which was revised down to THB1.3 trillion in June 2006. The

megaprojects were concentrated mostly in transportation, including mass transit, and

water irrigation projects and these sectors comprise about 48 percent of overall

spending. Tchakarov wrote that infrastructure development in Thailand still lags behind

that in more advanced regional competitors, which could prove to be a drag on

competitiveness and growth prospects. The need for upgrading infrastructure seems

particularly acute in the area of transportation, where Thailand lags appreciably behind

the newly-industrialized countries in Asia.

2.3.1 Early Harvest Program

The agricultural sector remains important to Thai households, despite the fact

that its shared value to Thailand’s total trade has decreased. Thailand’s exports in the

agricultural sector provide opportunities for Chinese consumers of the increasing

middle income class to be able to consume higher quality fruit and vegetables from

overseas. For this reason, China urged Thailand to sign a special agreement named the

Early Harvest Program (EHP). This program gave the opportunity to Thailand to start

free trade ahead of other ASEAN member countries (Pupphavesa, 2008). Before the

full implementation of the EHP in 2004, Thailand and China agreed on accelerated

tariff elimination under the EHP (AEHP) in June 2003. This agreement was made

effective on 1 October 2003, eliminating tariffs on all vegetable and fruit products

subject to HS 07-08, including potatoes, tomatoes, onions, shallots, garlic, cabbages,

cauliflowers, broccoli, lettuce, carrots, salad beetroot, celeriac, cucumbers, peas, beans,

asparagus, sweet corn, olives, coconuts, Brazil nuts, cashew nuts, almonds, hazelnuts,

chestnuts, pistachios, bananas, figs, pineapples, avocados, guavas, mangoes,

mangosteens, oranges, grape, lemons, limes, melons, watermelons, papayas, apples,

pears, cherries, plums, strawberries, mulberries, kiwi, durians, longans, jackfruit,

lychees, rambutan, and others. When the full implementation of the EHP became

effective on 1 January 2004, the program eliminated tariffs on agriculture products

under HS01-08. Products with code HS 01-06 refer to live animals, meats, edible offal

of animals, fisheries, milk and cream, eggs, human hair, feathers, ivory, deer horns,

coral, mother-of-pearl, orchids, roses, and so on. After AEHP implementation in 2003,

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Thai farmers, especially garlic and onion farmers complained of the very low price of

huge amounts of imported garlic and onion from China. Therefore, China seems to be

not only a potential customer, but also seems to be Thailand’s potential trade competitor

in these agricultural products. For example, Thailand’s fruit imports from China

increased by 214 percent in the fourth quarter of 2013, on the other hands, Thailand’s

fruit exports to China increased less than 42 percent (Ratananarumitsorn &

Tangkitvanich, 2005). However, this AEHP provided a temporary advantage in terms

of allowing Thailand’s manioc exports to access China market and compete with

Vietnam’s manioc exports to China. Beside manioc exports, Thailand’s major exports

under AEHP are durian, longan, mangosteen, lychee, banana, and orange. Fresh durians

became the largest fruit export to China under AEHP in 2003 and frozen durians were

exported most to Chinese market in 2006. On the other hand, Thailand’s major imports

under AEHP are apples, pears, quinces, grapes, mandarins, carrots, turnips, dried

mushrooms, cauliflowers, broccoli, garlic, dried wood ears, onion and so on.

Furthermore, Thailand’s imports from other countries, such as Myanmar, Vietnam,

Australia and the United States slowly increased. It can be implied that AEHP indirectly

caused bias towards imports from China. For this reason, China became an important

importer and exporter of Thailand’s agricultural products. Entering the EHP

implementation, fisheries were added as another of Thailand’s major exports to China.

Although AEHP and EHP provide great opportunities for Thailand’s exports to access

the Chinese market, these programs have also created suffering to local Thai farmers

due to the lower price and enormous volume of fruit and vegetable imports from China.

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CHAPTER 3

RESEARCH METHODOLOGY

This chapter aims to address the research question and its hypothesis. Also,

this chapter explains about the research methodology which is employed in this

research; in order to achieve the research objective, answer the research question and

prove the research hypothesis.

3.1 Research Questions

In order to study Thailand and China’s economic cooperation under the

ASEAN-China Free Trade Agreement (ACFTA), the key research question to be raised

is - What are the key causes for cooperation between Thailand and China under the

ASEAN-China Free Trade Agreement framework?

3.2 Research Hypothesis

In order to answer the research question, the author would like to assume

that, as more than half of the Thai economy is dependent on exports, this free trade

agreement provides the opportunity for Thailand to access to Chinese market more

easily than in the past. Furthermore, Thailand has an advantage in the export of

agricultural products which are famous in the Chinese market and in global markets.

This free trade agreement should help in increasing the trade volume of Thailand’s

exports, because trade barriers are decreased.

3.3 Theoretical Reviews

There are two theories which the researcher uses them to apply to this

research: Neoliberalism and Regionalism. These theories will be applied to answer

the research questions and also explain economic relations between Thailand and China

under the ASEAN-China Free Trade Agreement (ACFTA).

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3.3.1 Neoliberalism

The neoliberal approach developed from liberalism or classic liberalism,

which was founded in the 18th century. There has been debated and differentiated

opinions regarding the definition of neoliberalism. Famous thinkers on the topic of

neoliberalism, for example, refer to Friedrich Von Hayek, LudwigVon Mises, Karl

Popper and Milton Friedman. Neoliberalism refers to the combination of economic

theory and a policy stance. It is the model imposed by the International Monetary Fund

(IMF) and the World Bank on the world nowadays. At its core is the view that society

should be shaped by the free market. This approach was believed to be a tool for

peaceful relations between states in the 19th century. Proponents of neoliberalism

believe that globalization is a positive force and that global markets can be expanded

through promoting free markets. In addition, it is believed that free trade is necessary

in the pursuit national economic growth. According to Daniel Stedman Jones (2012),

neoliberalism refers to a free market ideology, based on individual liberty and limited

government, that connects human freedom to the actions of the rational, self-interested

actor in the competitive market place. This is the case in a free trade agreement, which

has the purpose to promote cooperation between two states in order to decrease trade

barriers and facilitate business sector trade and investment. Kotz (2002) explained that

neoliberalism has come to dominate economic policymaking in both the United States

and the United Kingdom. Furthermore, the United States tries to impose this

neoliberalism onto third world countries through the International Monetary Fund

(IMF) and World Bank.

The ASEAN free trade agreement was promoted to ASEAN member

countries in 1993. This agreement helped ASEAN become a single market with a larger

number of consumers in term of population. However, the effect of the Asian crisis in

1997 forced ASEAN to expand its economic cooperation outside the region and since

then ASEAN has been negotiating many free trade agreements with its external

partners. Rungnapa Lakkanapornwisit (2008) stated that these free trade agreements

will be beneficial for Thailand in terms of greater market access for goods and services

due to the reduction in trade barriers, increased investment opportunities in overseas

markets and reduction of business costs arising from the dismantling of tariff and non-

tariff barriers. The ASEAN-China Free Trade Agreement is one of these free trade

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agreements, which was signed and become fully implemented in 2010. Thailand, as a

member country of ASEAN, is under this free trade agreement. This agreement aims to

reduce trade barriers between ASEAN countries, including Thailand, and China. It was

believed that this free trade cooperation would be an important shift in Thailand’s

economic development, as China is an increasing potential market in the present world.

After full implementation of the ACFTA, trade volume between Thailand and China

increased rapidly and China surpassed Japan to become the largest trade partner of

Thailand. However, the gap in the trade deficit of Thailand to China also increased.

Aksornsri Phanishsarn (2015) expressed the view that Thailand has become a good

choice for China to use as a base for the Chinese economy in ASEAN. At present, China

is involved a lot in trade and investment, especially in the tourism and service sector.

3.3.2 Regionalism

Regionalism has been a significant phenomenon in international relations

since post-Second World War. The old approach to regionalism was influenced by the

political drive resulting in government to government cooperation. Political factors can

have a heavy influence on regionalism (Mansfield & Milner, 1999). In the 20th century,

the novel form of regionalism was signified by the prefix word “Pan”, for example, Pan

Asia, Pan America, and Pan Europe. In the past regionalism was shaped by the powerful

countries in the region. For example, in Western Europe, the regional integration of

both the European Economic Community (EEC) and the European Union (EU) were

dominated and driven by Germany and France. In another example, the North American

Free Trade Agreement (NAFTA) was dominated by the United States. For Asia,

regionalization began when ASEAN was established in the cold war period of the year

1967. It originally was driven by political cooperation for regional security and anti-

communism.

In today’s world, a new regionalism has influences from science and

technology and these factors are making economic regionalism grow rapidly.

Geographical proximity is often a major consideration for countries within regional

economic cooperation, however economic cooperation can occur between countries in

different regions, or so-called trans-regionalism. Rajaratham (1992) stated that if

regionalism collapsed, ASEAN would go the same way as previous organizations

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including the Southeast Asian Treaty Organization (SEATO), The Association of

Southeast Asia (ASA), and Malaya-Philippines-Indonesia (MAPHILINDO). ASEAN

extended its cooperation through the ASEAN free trade agreement in 1993. Later,

ASEAN become the central organization for East Asian regionalism through

ASEAN+3, including other powerful countries: China, Japan and South Korea.

Therefore, ASEAN has, along with the EU, become one of only two functioning and

highly respected regional organizations. Moreover, these two well-functioning

organizations cooperate through the Asia-Europe Meeting (ASEM), of which their first

meeting was held in Bangkok in March 1996.

New regionalism began in the year 1997. It covers a security-economic

nexus, regional management, regional convergence and eventually financial integration

(Low, 2004). ASEAN can be seen as good example of both old regionalism and new

regionalism. ASEAN+3 is different from EU in that it does not seek to form a single

currency as the EU has done. ASEAN regionalism also responds to changing

geoeconomics and geopolitics. It can be argued that ASEAN appears marginalized by

ASEAN plus three (Webber, 2001), which covers a larger economic space and has

greater potential.

In the study on East Asian Ideas of Regionalism: A Normative Critique,

which was written by Baogang He in 2004, the author compared normative regionalism

elements between East Asia and Europe and found these to be different. Normative

regionalism elements in East Asia are based on nationalist doctrines and cultural values.

On the other hand, normative regionalism elements in Europe are based on democracy,

human rights, the reduction of national sovereignty and the rise of regional

organizations which override national governments. As Asian regionalism stresses

nationalism and cultural value, it is obstructed itself by historical relations, geo-politics,

and economic factors. For example, there are several conflicts between neighboring

countries, such as China and Japan, Thailand and Cambodia, and Singapore and

Malaysia. The study explained that the idea of Pan-Asianism was the initial regionalism

of Asia in the twentieth century. This idea was implied by various intellectuals in Asian

countries. Later, this idea was rejected because of the imbalance in relationship between

regionalism and nationalism. The author viewed that Pan-Asianism did not provide for

how to manage this imbalance in relations and how to separate regional and national,

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but the idea of Pan-Asianism still influenced regionalism in Asia, especially to Prime

Minister Mahathir Mohamad of Malaysia, with his regionalism concept of anti-US

superior power. Mahathir proposed to establish the East Asian Economic Group

(EAEG), later changed to the East Asian Economic Caucus (EAEC), in the 1990s,

limited to Asian membership only. EAEC was unsuccessful in its establishment

because there was disagreement by many countries, including China and Japan. Also,

the EAEC disrupted the linkages of APEC. Later, EAEC re-emerged as ASEAN Plus

Three which supports the concept of Asian regionalism. The author analyzed two main

obstacles to East Asian regionalism: sovereignty and culture. As East Asian national

status seemed to be abnormal and complex, there were not only domestic problems in

several countries but also distrust among several neighboring countries. Thus,

sovereignty was seen to be the most important element for countries in East Asia.

Moreover, the author analyzed that East Asian regionalism lacked systematic thinking

from the governmental level and a region-centric framework or commitment to a union.

From the Japanese perspective, Masahiro Kawai, wrote “East Asian

economic regionalism: progress and challenges” in 2005. The author’s perspective

was that the Asian financial crisis in 1997-1998 was the most fundamental driving force

behind the closer economic regionalism in the region and was the beginning of the

process of ASEAN Plus Three. Dissatisfaction with the IMF’s management of the crisis

caused affected countries to establish self-help mechanisms in order to prevent and

manage the effects of the crisis and increase the Asian voice in global finance. Kawai

analyzed that closer regionalism was needed to develop mutual trust and a shared

mutual vision of the political and economic future of East Asia.

3.4 Scope

This research will start with the relations between ASEAN and its important

external partner, China. Following this, it will explain about the development of the

ASEAN-China Free Trade Agreement (ACFTA). This research mainly focuses on

Thailand and China’s relationship under the free trade agreement in order to achieve

the research objectives and answer the research question.

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3.5 Qualitative Analysis

The methodology for the research is a qualitative analysis methodology.

This research will be mainly based on documentary research. The material sources for

this research are both primary sources and secondary sources.

The primary sources include speeches from related countries’ leaders and

interviews given by related high ranking officers in member countries or international

organization or sophisticated academics. Also, relevant statistics from ASEAN and

international organization are analyzed in order to assess the effects on trade volume

and investment under the pre-implementation and post-implementation of ACFTA.

The secondary sources include articles and news from academic journals,

newspapers or websites. It also includes related research or academic discussion papers.

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CHAPTER 4

RESULTS AND DISCUSSION

It has been over a decade since the beginning of the ACFTA negotiations

and over half a decade since the full implementation of the agreement by six ASEAN

member countries: Brunei, Indonesia, Malaysia, the Philippines, Singapore and

Thailand. In this time, the relationships between ASEAN member countries and China

have been developing dramatically and, although there is still a long way to go, this

development can be seen in the relationship between Thailand and China. In this

chapter, the author aims to analyze the causes of development in the relationship

between Thailand and China, through their economic cooperation under ACFTA from

the its beginning until 2015.

The official diplomatic relationship between Thailand and China was

influenced by the changes in the international strategic landscape in the early 1970s. It

is fortunate that in the past Thailand typically has had good political relations with

China and there has not been serious conflict between these two countries, even though

their political systems are different. Historically, in the 1950s, the relationship between

Thailand and China was expected to be shaped by official relations established during

the Sino-Thai dialogue at the Afro-Asian Conference in Bandung, Indonesia, between

Prince Wan, Minister of Foreign Affairs of Thailand and Chou En Lai, Prime Minister

of China. After this dialogue, the trade volume between the two countries increased and

restrictions on Chinese nationals in Thailand were eased. The outlook seemed positive,

but only lasted a short time, due to Thailand’s political instability and a military coup,

led by Field Marshal Sarit Thanarat, that caused the termination of the relationship

between the two countries. Adding to this were the tensions caused by communist

expansion, which the United States recognized it as a threat to the Southeast Asia

region. According to Harbin (1990), China’s role in communist expansion in Southeast

Asia seriously affected Thai-China relations. Hence, the focus of diplomatic relations

changed and these increased between Thailand and United States, especially in terms

of military support. Thailand and U.S. agreed to increase their military cooperation by

strengthening Thailand's military capability. This further exacerbated the strained

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relationship between Thailand and China, continuing until the late 1960s. During

Sarit’s Government, the dissolution of the National Assembly and the suspension of the

Thai Constitution led the silencing of public opposition as well as reaffirmation of the

Thai commitment to SEATO. Sino-Thai relations were discontinued and trade between

the two countries banned. Moreover, China’s military support to Communist Vietnam,

the encroachment of China on Tibet, as well as anti-Thai propaganda were all elements

of China’s international policy that were launched aggressively in late 1957. In response

to this, Sarit’s government continued to support SEATO intensively from early 1958.

Official diplomatic relations between Thailand and China were

reestablished on 1 July 1975 under the government of M.R. Kukrit Pramoj and their

40th anniversary occurred in July 2015. After the establishment of formal diplomatic

relations, the two countries signed many agreements on mutual benefit and cooperation

in economic matters, trade, science and technology, tourism, civil aviation, sea

transportation, and judicial, consular and other affairs. With the signing of these

agreements and protocols, broader prospects opened for the development of Thai-

Chinese economic relations.

Although there were several official visits between Thai and Chinese

leaders, the relations between Thailand and China were not only limited to the

governmental level and also included the people-to-people level. In particular, this

relationship has been strengthened by the Thai Royal Family, especially HRH Princess

Maha Chakri Sirindhron. From her first official trip until 2012, she made 34 visits to

China and her visits seem likely to continue in the future. The Princess also obtained

an honorary degree from Peking University, something rarely granted because it

requires authorization by the Chinese government. This can be seen as a sign of the

good relationship between the Thai Royal Family and China.

Since 1981, as the Thai economy developed into an industrial economy

there have been changes in the structure of both production and demand. Private

consumption expenditure has become the main driving force of the economy and

private consumer demand shares almost 73 percent of Thailand’s total GDP.

Because exports contributed a large share to Thailand’s trade, the Asian

financial crisis highly affected to Thailand’s economic growth in 1997 – 1998. Thailand

was the country which originated the Asian financial crisis by floating its currency,

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Thai baht on 2 July 1997. This caused the bankruptcy of large companies and

Thailand’s economic growth was -2.7 and -7.6 percent in 1997 and 1998 respectively

(see figure 1.1 and table 4.1). IMF was the leader in providing bailouts to the crisis and

Thailand signed an emergency lending agreement in August 1997. The Thai

government restored economic growth by reducing interest rates, which reached their

lowest levels in September 1999. The key policy of Thailand at that time focused on

restructuring the financial sector by recapitalizing the banking system. This crisis also

caused economic slowdown to neighboring countries and instability in East Asian

capitalism and financial markets. Japan and Korea also devalued their currencies and

their stock markets were affected and this crisis caused fluctuations on the world’s

currency market exchange.

In contrast to other Asian nations, China played an important stabilizing

role during this crisis. China made pro-active policy decisions, including by actively

participating in IMF-organized aid projects. China did not devalue its own currency and

contributed over 4 billion US dollars to the IMF for its rescue plan in 1999. China’s

active policy towards the crisis helped decrease the pressure on regional economies in

East Asia and led to their faster recovery. ASEAN and its Northeast Asia neighbors

including China, Japan and South Korea became aware of the importance of economic

cooperation within the East Asia region. The Chiang Mai Initiative was established to

provide a regional financing arrangement and this led to the bilateral swap arrangement

(BSA) in 2000 under the ASEAN plus three (ASEAN+3) financial minister framework.

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Table 4.1 Thailand’s Gross Domestic Product (GDP) and Its Annual Growth

(Unit: US Dollars)

Year GDP GDP Growth (annual %)

1990 85,343,189,320 11.1

1995 169,278,552,851 8.1

1996 183,035,154,107 5.6

1997 150,180,268,649 -2.7

1998 113,675,706,127 -7.6

1999 126,668,932,159 4.5

2000 126,392,308,497 4.4

2001 120,296,746,256 3.4

2002 134,300,851,255 6.1

2003 152,280,653,543 7.1

2004 172,895,476,152 6.2

2005 189,318,499,954 4.1

2006 221,758,486,880 4.9

2007 262,942,650,543 5.4

2008 291,383,081,231 1.7

2009 281,574,762,729 -0.7

2010 340,923,571,200 7.5

2011 370,608,559,050 7.5

2012 397,290,682,074 0.8

2013 419,888,628,523 7.2

2014 404,320,038,916 2.7

2015 395,281,580,952 2.8

Note: Adapted from World Development Indicators, Retrieved from the World Bank Group website: http://data.worldbank.org/indicator/NY.GDP. MKTP.CD

Based on Thailand’s Gross Domestic Product (GDP) and its annual growth,

table 4.1 shows that Thailand recovered from the Asian financial crisis and achieved

growth over 4 percent in the years 1999 and 2000. Thailand’s exports reached

2,773,827.02 million Baht in 2000, as shown in figure 4.1 below, on Thailand’s import-

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export statistics. Manufacturing shared 35 percent of Thailand’s GDP in 2000, whereas

agriculture’s share decreased to 12 percent of Thailand’s GDP.

(Unit: Millions of Baht)

Figure 4.1 Thailand’s Import – Export Statistics, 1995-2015. Adapted from Bank of Thailand.

(2015). EC_XT_001 Trade Classified by Commodity Group. Retrieved from

http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=50&language=eng

Foreign aid was necessary for Thailand’s economic recovery and China

provided Thailand with financial aid and export credit through bilateral channels.

China’s pro-active policies and response to the Asian financial crisis were not only

appreciated greatly by Thailand, Thailand was also recognized by China as an

increasingly powerful economic player in the region. Because of this, the relationship

between Thailand and China shifted from security cooperation to economic

cooperation.

In 2001, once Thaksin Shinawatra was elected as Thailand’s Prime

Minister, his first official visit after the other ASEAN member countries was to China,

instead of the United States. For this visit he went to Beijing and followed this with a

visit to Guangdong, where his Chinese ancestors once lived before they left to Thailand.

His official visit to China sent a signal of preference and it was an important step

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towards furthering Thailand and China’s relations (Chinwanno, 2008). Thaksin visited

China again in late 2001, 2003, 2004 and 2005. Free trade became an important feature

of ‘Thaksinomics’, Thailand’s economic policy under the Thaksin government. In the

2000s, more multinational corporations began operating at the regional level and China,

Japan and South Korea started discussions about an ASEAN+3 free trade agreement

(ASEAN+3 FTA). However, due to the slow progress of ASEAN+3 FTA negotiations,

China individually decided to negotiate a bilateral free trade agreement with ASEAN.

Later this same year, China formally announced its intention to start talks on

establishing a free trade agreement between ASEAN and China at the 2001 meeting in

Brunei.

Thaksin often expressed his intention for strengthening economic

engagement with China and strongly encouraged the negotiation of ACFTA and a trade

in goods agreement under ACFTA was signed in November 2004. Under this

agreement, Thailand exported 367,405.14 million Baht in 2005 an increase of 22.24

percent within one year of export growth, as shown in to figure 4.2 on Thailand’s trade

with China. After this, Thailand’s exports to China continuously increased and a similar

Trade in Service agreement was signed in January 2007.

Economic cooperation with such a large potential foreign market facilitated

Thai export market growth and contributed to its economic stability. Aside from

Thaksin’s focus on economic engagement, he tried to broaden Thailand’s strategic

relationship with China in other areas. Under his government, Thailand repaid all its

debts to the International Monetary Fund (incurred after the Asian Financial Crisis) four

years ahead of schedule. Under the Thaksin government, free trade agreements (FTA)

with China, New Zealand, Australia, India and United Arab Emirates were signed. Prior

to the government being overthrown by a military coup in 2006, FTA negotiations were

underway with the United States and Japan. In September 2006, Thaksin’s government

was deposed by a military coup and this led Thailand to enter a period of domestic

political instability.

Following the coup, demonstrations between the People's Alliance for

Democracy (PAD) and United Front of Democracy Against Dictatorship (UDD) caused

political turmoil in Thailand for a number of years. However, a joint action plan with

15 areas of cooperation between Thailand and China was negotiated and launched

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under Surayuth Chulanond, the new Thai Prime Minister who was installed by the coup.

In May 2008, the then Prime Minister Samak Sundaravej made an official visit to China

at the invitation of Wen Jiabao, the Chinese Premier. Thailand’s export-dependence

ratio increased from almost 60 percent in the early 2000s to 70 percent in 2008. The

Thai export structure was heavily dependent on manufacturing products, which made

up 78.68 percent in 2015, while agricultural products made up 9.41 percent and agro-

industrial products comprised 7.76 percent in the same year. The remaining 4.15

percent’s of the Thai export structure belonged to mining and fuel products.

Because of this, an overall slowdown in foreign markets directly impacted

Thailand’s exports, particularly the impacts of the global financial crisis in September

2008. This caused Thailand’s economic slowdown in 2008 – 2009. Table 4.1 shows

that Thailand’s annual GDP growth in 2008 to 2009 were only 1.7 percent and -0.7

percent respectively. In addition, Thailand had a balance of trade deficit around

11,111.35 million Baht in 2008.

(Unit: Millions of Baht)

Figure 4.2 Thailand’s trade with China during the years 1995-2015. Adapted from Bank of

Thailand. (2015). EC_XT_003_S2 Trade Classified by Country (US$). Retrieved from

http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=744&language=eng

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In 2009, Thailand’s head of government changed to Abhisit Vejjajiva, who

made an official visit to China in June that year, including visits to Beijing, Tianjin and

Guangzhou. During Abhisit’s official visit, he signed three agreements; 1) the Protocol

on Inspection and Quarantine Requirements for Thai Fruit Exports from Thailand to

China, 2) the Agreement on Expanding and Deepening Bilateral Economic and Trade

Cooperation (EDBETC), and 3) the Agreement on Education Cooperation. Following

this, in December 2011, Xi Jinping, China’s Vice President at that time, visited

Thailand at the invitation of the government of Yingluck Shinawatra. It was the first

time in eleven years that a member of the Chinese leadership made an official visit to

Thailand. The visit of Xi encouraged more trade and investment between Thailand and

China, targeting 20 percent in trade growth and 15 percent in investment growth over

the next five years. The following year, in November 2012, China’s Premier Wen

Jiabao also made an official visit to Thailand.

After the next coup in 2014, Prayuth Chan-ocha became Thailand’s Prime

Minister. Prayuth made his first official visit to China in November 2014 and Xi

Jinping, now President of China, assured him that the comprehensive strategic

partnership cooperation between the two countries would remain positive and be

enhanced to a bilateral friendship. One month later, China's Premier Li Keqiang made

an official visit to Thailand. In December of the following year, Prayuth visited China.

China’s Ambassador to Thailand expressed, in a remarkable speech on the occasion of

the 40th anniversary of the establishment of diplomatic relations in, that although there

was domestic political instability and a change of government in Thailand, it would not

affect the relationship between the two countries and Thailand remained a strategic

partner to China. Importantly, Thailand was appreciated by the Chinese government for

the positive role it played in coordination between China and ASEAN. From the regular

official visits of Thailand’s Prime Minister to China and the increasing number of

official visits of Chinese leaders to Thailand, it can be implied that a good relationship

continues between these two countries. China’s interest in Thailand shows its

importance as a strategic partner in the Southeast Asian region. Aksornsri Phanishsarn

(2015) expressed the view Thailand has become a good choice for China to use as a

base for the Chinese economy in ASEAN. At present, China is heavily involved in trade

and investment, especially in the tourism and service sectors.

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With their competitive geography proximately, the development of

ASEAN-China relations has received great interest and attention from both inside and

outside, especially by the United States. Thailand’s domestic political instability does

not effect its relationship with China as much as it does with Western countries, such

as the United States. In order to compare political interests in Southeast Asia, U.S.

President Barack Obama made his official visit to Southeast Asia in November 2012

and Thailand was the first country he visited among Southeast Asian nations. From this

can be implied that the United States’ interest is to rebalance its power towards this

region in order to compete with the increasing power of China in the region.

Furthermore, the United States views Thailand as an important ally, with over 180 years

of diplomatic relations between them. Japan’s Prime Minister, Shinzo Abe, made his

official visit to Thailand in 2013, the first official visit in 11 years by a Japanese Prime

Minister to Thailand. These recent official visits by foreign leaders to Thailand reflect

Thailand’s good foreign relations and important political role in Southeast Asia region.

Thailand’s important import trade partners are other ASEAN countries, the

EU, China, Japan and the United States, with the highest level of imports coming from

Japan. In 1995, Thai imports from Japan totaled about 538,711.37 million Baht, 30.54

percent of Thailand’s total imports. The second largest import trade partner in 1995 was

the EU, from which Thailand imported 289,786.07 million Baht in 1995, 16.43 percent

of total imports. ASEAN became an important import trade partner to Thailand in in

1998, when ASEAN imports exceeded those from the EU. In 1998, Thailand imported

from ASEAN about 266,576.69 million Baht, compared to about 227,128.68 million

Baht from the EU (see table 4.2). This reflects that the intra-ASEAN economy

recovered well after the Asian financial crisis in 1997. ASEAN has remained Thailand’s

second-largest import partner since then, with one of the main reasons being the signing

AFTA in 1992 after which intra-trade within ASEAN dramatically developed. From

Thailand’s import statistics (see table 4.2), in 2004 China surpassed the United States

to be Thailand’s third largest import trade partner. Thailand imported 329,631.52

million Baht from China, 8.67 percent of Thailand’s total imports in 2004. For the

United States, Thailand’s imports decreased to 291,182.56 million Baht. In 2013, the

ranking of Thailand’s import trade partners changed significantly. ASEAN became

Thailand’s largest trade partner, with an import value of 1,277,989.22 million Baht, or

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16.6 percent of Thailand’s total imports, while China and Japan shared 15 percent and

16.4 percent respectively. In 2014, Thailand imported 1,251,528.28 million Baht from

China and Chinese imports surpassed Japanese to make it the second largest import

trade partner. In 2015, China became Thailand’s largest import trade partner, ahead of

ASEAN and Japan. Imports from China now make up 20.31 percent of Thailand’s total

imports, while ASEAN and Japan share 18.94 percent and 15.40 percent respectively.

Table 4.2 Thailand’s Import Value to Selected Trade Partners between 1995 -2015

(Unit: Millions of Baht)

Year Import Value to Selected Trade Partners

ASEAN EU China Japan The US

1995 234,981.61 289,786.07 52,187.45 538,711.37 211,947.90

1996 244,537.11 286,588.82 49,499.35 518,106.39 228,973.98

1997 247,630.23 277,973.77 69,467.22 492,079.78 267,302.13

1998 266,576.69 227,128.68 74,807.13 420,297.50 249,745.34

1999 302,359.88 228,123.35 94,593.82 464,573.21 243,463.53

2000 415,230.84 262,289.05 135,699.85 615,661.82 293,580.30

2001 445,931.09 348,568.97 165,060.21 613,499.34 318,733.09

2002 467,276.50 313,318.89 211,706.56 639,104.27 265,803.91

2003 522,071.26 324,729.20 251,071.50 755,895.54 296,331.26

2004 640,316.68 380,456.55 329,631.52 901,118.93 291,182.56

2005 869,710.04 435,415.46 448,917.04 1,046,874.81 349,405.38

2006 905,681.60 432,692.49 521,523.79 985,755.28 367,062.84

2007 872,246.35 416,024.49 564,566.24 987,890.71 330,240.27

2008 1,002,144.58 477,286.91 670,342.74 1,116,459.47 380,675.40

2009 850,952.38 415,407.21 586,143.35 860,124.95 288,565.54

2010 972,605.91 445,008.00 775,391.18 1,211,476.41 342,119.90

2011 1,134,038.17 546,319.60 930,826.32 1,288,145.90 408,651.25

2012 1,261,078.25 631,100.70 1,160,448.99 1,523,457.50 391,397.68

2013 1,277,989.22 673,755.23 1,155,295.93 1,256,045.21 447,475.67

2014 1,333,908.79 633,177.23 1,251,528.28 1,154,512.91 474,102.42

2015 1,308,137.50 616,453.66 1,403,176.69 1,064,179.66 472,025.91

Note: Adapted from Bank of Thailand. (2015). EC_XT_003_S2 Trade Classified by Country

(US$). Retrieved from http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=744& language=eng

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Thailand’s key export trade partners are ASEAN, the EU, China, Japan and

the United States. From the export statistics in table 4.4, these trade partners combined

share 67.64 percent of Thailand’s total exports. Thailand’s exports have dramatically

developed, particularly since the early 2000s. After Thailand signed AFTA in 1992,

Thai exports to ASEAN increased markedly. AFTA was the first free trade agreement

Thailand signed and ASEAN remains Thailand’s largest export destination for

collective trade. The export trade volume between Thailand and ASEAN was over two

times larger than with the EU in 2015 (see table 4.4). Moreover, it has, increased over

500 percent from 305,660.12 million Baht in 1995 to 1,859,365.04 million Baht in

2015. This changed only once, after the Asian financial crisis in 1998, when the United

States became Thailand’s largest export trade partner, as many countries in ASEAN

were affected by the crisis. At this time, Thailand exported 500,786.96 million Baht to

the United States, 22.27 percent of its total exports. ASEAN once again became

Thailand’s largest export destination in 2002 and the EU became Thailand’s second

largest export destination in 2007. Thai exports to the United States decreased greatly

in 2009 due to the global economic crisis (see table 4.2 and 4.4). In 2009, Thai exports

to ASEAN, the EU, Japan and the United States decreased to 1,106,492.51 million

Baht, 619,989.76 million Baht, 535,880.34 million Baht and 567,698.96 million Baht

respectively. In 2010, China overtook the United States to become Thailand’s third-

largest export destination with export value of 678,631.83 million Baht and in 2011,

China overtook the EU to become Thailand’s second largest export partner. Thailand

exported 791,212.19 million Baht to China in 2011, 11.79 percent of total exports. In

2015, Thailand exports to ASEAN had a value of 1,859,365.04 million Baht, 25.72

percent of total exports, continuing as the largest export market. The second largest

destination in 2015 was the United States, which surpassed China to return to the second

rank of top export destinations, with an export value of 811,346.28 million Baht, 11.22

percent of Thailand’s total exports. At the same time, Thailand exported 801,234.98

million Baht to China, while for the EU and Japan, Thailand exported 740,811.15

million Baht and 675,702.27 million Baht, or 10.25 percent and 9.34 percent

respectively (see table 4.3).

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Table 4.3 Thailand’s Exports to Selected Trade Partners in 1995 -2015

(Unit: Millions of Baht)

Year Export Value to Selected Trade Partners

ASEAN EU China Japan The US

1995 305,660.12 232,178.05 40,867.65 236,099.41 250,684.82

1996 305,529.53 234,341.11 47,369.95 237,523.90 253,799.76

1997 390,410.12 302,120.66 55,495.84 270,765.87 354,551.66

1998 409,056.87 413,281.86 72,853.17 308,416.31 500,786.96

1999 411,650.29 382,996.49 70,569.79 312,842.62 479,361.08

2000 537,507.05 452,218.31 113,282.53 408,340.99 591,688.20

2001 557,801.15 482,623.53 127,205.17 439,830.20 584,496.96

2002 582,130.28 454,788.12 152,591.67 427,023.43 579,071.63

2003 684,943.21 508,252.85 236,057.84 471,956.25 565,094.87

2004 852,487.24 580,019.67 285,685.98 541,487.66 622,496.98

2005 975,867.90 603,815.83 367,405.14 602,899.87 680,321.96

2006 1,029,179.98 686,085.56 445,978.11 623,930.99 740,695.70

2007 1,129,092.27 749,263.10 511,109.61 625,037.13 669,511.38

2008 1,319,391.23 771,428.74 532,319.04 661,565.54 667,746.82

2009 1,106,492.51 619,989.76 548,760.05 535,880.34 567,698.96

2010 1,403,105.43 691,050.78 678,631.83 641,910.14 638,820.07

2011 1,628,801.33 728,974.77 791,212.19 719,382.47 656,591.57

2012 1,744,998.12 671,041.70 829,848.16 725,043.96 703,918.36

2013 1,792,533.74 678,487.87 824,672.21 671,804.54 694,326.19

2014 1,909,196.51 751,280.54 806,437.58 698,951.82 767,856.29

2015 1,859,365.04 740,811.15 801,234.98 675,702.27 811,346.28

Note: Adapted from Bank of Thailand. (2015). EC_XT_003_S2 Trade Classified by Country

(US$). Retrieved from http://www2.bot.or.th/statistics/ReportPage.aspx?reportID=744& language=eng

From analysis of Thailand’s imports and exports, we can see that Thailand’s

import structure remains heavily based on raw materials and intermediate goods, which

shared almost 37 percent of Thailand’s total imports in 2014. The major export products

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of Thailand are vehicle parts, which make up 12 percent of Thailand’s total exports,

followed by automatic data processing machines, jewelry, polymers of ethylene, and

refined fuels, which shared 8.2 percent, 5.1 percent, 3.8 percent, and 3.7 percent

respectively in 2015. For agricultural products, rubber made up 2.3 percent and rice 2.1

percent of Thailand’s total exports in 2015.

Before the year 2000, trade volume between Thailand and China was low

and China’s average trade volume during the period 1995-1999 accounted for only 3.3

percent of Thailand’s total trade volume. Thai exports to China were lower than Thai

exports to other powerful countries such as Japan and the United States (see tables 4.4

and 4.5). Thailand’s exports to China in 1995 totaled 40,867.65 million Baht, or only

2.9 percent of the total value. In the year 2000, Thailand exported 113,282.53 million

Baht to China and imported 135,699.85 million baht from China. In this year, exports

to China increased by 37 percent. After this, negotiations for ACFTA began and the

China-ASEAN Framework Agreement of Comprehensive Economic Cooperation was

signed in November 2002. Since the beginning of the ACFTA process, Thailand has

had more cooperation with China, especially in trade. Thailand exported 152,591.67

million Baht to China in 2002, making up 5.2 percent of its total exports, a 73.17 percent

increase from 1995. In 2003, Thailand exported 236,057.84 million Baht to China, 7.09

percent of its total exports showing a 35.35 percent growth in exports from the previous

year. This was because of accelerated tariff elimination under the EHP (AEHP) between

Thailand and China, which was agreed in June 2003 and became effective on 1 October

2003. Thailand exported 285,685.98 million Baht to China, 3.9 percent of total exports,

at the time of the full implementation of the Early Harvest Program in 2004. This

program created significant change in Thailand’s exports, especially for vegetables and

fruits and this issue will be separately analyzed in section 4.1.1.

At the time of the full implementation of ACFTA in 2010, Thailand

exported 678,631.83 million Baht to China, an increase of 19.13 percent within one

year. Exports increased greatly compared to pre-ACFTA, from around 113,282.53

million Baht in 2000 to 678,631.83 million Baht in 2010 after the full implement of

ACFTA, an increase of 83.3 percent. Thailand’s exports to China reached a total of

801,234.98 million Baht in 2015, making up 11 percent of total exports. Overall trade

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volume between Thailand and China reached 15 percent of Thailand’s total trade

volume in the same year.

Trade volume between these countries has continuously increased, despite

the instability of Thai domestic politics since 2006. On the other hand, the trade volume

of Thailand with Western countries was more effected by this situation and exports

decreased. Even though Thai exports to China have grown year by year since the year

2000, Thailand has accumulated a trade deficit to China. In 2014, Vietnam surpassed

Thailand to become the second largest trade partner of ASEAN and Thailand ranked as

only the fourth largest trade partner for ASEAN in 2014. Thailand’s trade volume to

China expanded only 2 percent whereas Vietnamese trade volume to China expanded

27.7 percent. Aksornsri Panichsarn (2015) argues that this decreased trade volume was

an effect of the global economic crisis, which made Chinese exports decrease.

Investment is another important sector for Thailand’s economic

development and Thailand is one of the key investment destinations in ASEAN.

Previously, since 1993, China was the largest recipient of FDI globally, however in

2014 ASEAN become the largest recipient of FDI in the developing world. FDI flow

was 136.2 billion US dollars to ASEAN in 2014 with FDI flow to Thailand making up

3.65 percent of ASEAN’s total inflow of FDI. ASEAN has become an important

production base for multinational corporations (MNCs) from Japan, Europe, and the

US and for large emerging Asian firms (Kawai & Naknoi, 2015). The EU and the

United States invest mostly in finance, while ASEAN intra-investments focus mostly

in the primary sectors (agriculture and mining activities) and real estate. Recently, the

FDI landscape in ASEAN has changed, as there have been transfers of labour-intensive

manufacturing activities to the CLMV countries (Cambodia, Lao PDR, Myanmar, and

Vietnam). These changes have increased manufacturing competitiveness among

ASEAN and impacted Thailand as well.

As shown in Table 4.6, Thailand’s inflow of FDI slightly decreased to

6,411.46 million US dollars due to the global economic recession. In 2010, Thailand

received 14,746.67 million US dollars of FDI, an increase of 56.52 percent from

previous years. A “One Start One Stop Center” was established under Abhisit’s

government to serve as a point of contact that would help facilitate foreign investors to

access relevant Thai authorities. Foreign investors were accorded privileges, for

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example, in regards to property rights and tax-breaks for up to a maximum of 13 years.

In 2011, Thailand received its lowest inflow of FDI in ten years, only 2,473.69 million

US dollars, because there were large floods in industrial areas which caused huge

damages to foreign investors’ property. Thailand’s inflow of FDI started increasing

again in 2012 and 2013, with 12,899.04 million US dollars and 15,935.96 million US

dollars respectively. Domestic political instability occurred again in 2014, with a

military coup did against Yingluck’s government. This affected the confidence of

foreign investors and inflow of FDI was only 4,975.46 million US dollars for the year.

Table 4.4 Thailand’s Foreign Direct Investment

(Unit : Millions of US Dollars)

Country Net flow of FDI for all sectors

2005 2010 2015p

ASEAN 2,022.20 2,220.92 441.91

EU 650.74 1,276.52 1,070.31

China 18.36 633.43 240.78

Japan 2,997.55 4,400.04 3,022.87

South Korea -34.66 180.23 148.78

The United States 812.75 1,431.05 1,100.86

Note: Adapted from Bank of Thailand. (2015). EC_XT_057 Foreign Direct Investment

Classified by Country (US$) 1/ 2/. Retrieved from http://www2.bot.or.th/statistics/Report

Page.aspx?reportID=654&language=eng

China’s plan to sign an FTA with ASEAN must be understood within the

context of Chinese and Japanese competition for political leadership in East Asia,

alongside the desire of China to assure neighbors that its ascension to the WTO would

not cause them economic hardship. ACFTA implementation was strongly influenced

by the dynamics and challenges of the political and economic changes taking place in

the East Asian region. Thailand’s important FDI partners are ASEAN, EU, Japan, and

the United States. As shown in table 4.4, Japan has been the largest foreign investor to

Thailand for the past decade. According to JETRO Bangkok (2016), the top source of

foreign investment in Thailand still is Japan, accounting for 39 percent. Compared to

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this, China accounts for 7 percent of total FDI. Foreign investment also comes from

Singapore at 12 percent, Hong Kong at 6 percent and other countries make up the

remaining 36 percent. In 2008, Chinese investors submitted application for 21 projects

to the Board of Investment (BOI) of Thailand. By the end of 2014, the total number of

project applications reached 74, of which the BOI approved 40. Increasing trade volume

and gradually increasing investment into Thailand has deepened economic ties between

these two countries. The statistics of trade volume between Thailand and China show

that China has used its economic power through trade and investment to influence

Thailand. According to Lee (2013), China is using economic influence to achieve its

political objectives. The more economic ties, the more influence over strategic and

political decisions. Moreover, Sompop Manarungsan (2012) analyzed that due to these

increasing trade and investment ties, it may soon become harder for Thailand to balance

its relationships between China and the United States. Overall however, China seems

to be not only a huge market for Thailand, but also a major competitor in trade and

investment to Thailand. For example, ACFTA has benefits to China in allowing the

export of more lower-priced fruits and vegetables to Thailand and other ASEAN

member countries. Many other products from China can also be very competitive

because of their lower prices. Nasha Anachotikul (2011) suggests that Thailand should

learn from China’s successes in productivity, industrial upgrading and technological

advancement, as serious efforts in this direction are much needed to help Thailand to

escape the middle income trap.

In terms of the research question, there are a number of key causes for

cooperation between Thailand and China under ASEAN China Free Trade Agreement

framework. From above informative analysis, the author’s point of view is that there

are three driving forces behind the cooperation under ACFTA. Firstly, Thailand’s

economy heavily depends on its exports; secondly, China is steadily expanding its

power in the region using economics rather than politics; and finally, the two major

Asian powers, China and Japan, continue to compete and both consider Thailand an

important base of trade and investment for projecting power into the ASEAN region.

In the first area, Thailand’s economic policy largely relies on trade,

especially in terms of exports. After the reform of its economic orientation from

agriculture to hard manufacturing, Thailand’s trade volumes have dramatically

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increased but also its exposure to risks of international financial crises as seen in the

Asian crisis and the 2008 global crisis. but unfortunate crisis occurred in 1996.

According to Lauridsen (1998) stated that “During 1996 it became clear that the Thai

economy had lost its momentum. The economy was slowing down, heading toward the

lowest rate of growth in GDP in a decade. Thailand suddenly experienced negative

export growth and export sales of labor-intensive goods such as footwear, textiles,

garments and plastic products. As imports kept growing the current account deficit was

booming”. Besides, the deficit of Thai’s trade continuously increased; 8 percent in 1995

and 7.9 percent in 1996 and 1997 of GDP respectively. Moreover, during 1995 and

1996, the export growth rate reduced by 23.5 percent. It led Thailand to hugely borrow

external funding (Craig, 2000). However, during the crisis, China exportation

consistently determined comparing with other countries in Asia. According to Yang

(1998) mentioned that China rapid export growth and large capita inflows in the capital

account made a powerful China Yuan among world currencies. Investors trusted that

Chinese domestic market with competitive exports were very attractive. Therefore,

China launched aids to help Thailand and other Asian countries out of this obstacle.

According to Ministry of Foreign Affairs of the People’s Republic of China (“Pro-

active policies,” n.d.), stated that “It actively participated in the IMF-organized aid

projects for some Asian countries. In the wake of the financial crisis in 1997, the

Chinese Government provided Thailand and other Asian countries with over 4 billion

US dollars in aid, within the framework of IMF or through bilateral channels. It offered

Indonesia and other countries export credit and emergency medicine given gratis”.

China has been an important player in Thailand’s recovery during these financial crises,

providing support and aid to help Thailand overcome its economic hardship.

In terms of the second point, China continues to expand its authority and

power in the region primarily by using economics instead of politics. Kirton (2017)

explained the role of Chinese economic policy in Asia as follows:

“As the Asian financial crisis opened, China faced the global economy

from a position of relative strength. Unlike Japan and South Korea at a

comparable stage of their economic development, China had an outward

looking policy grounded in considerable amount of inward and outward

foreign direct investment… The latter included a major trade surplus both

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overall and with the United States in particular, and the world's second

largest source (after Japan) of convertible foreign exchange reserves. It was

thus understandable that China was seeking to play a larger role in regional

and global affairs, and that the crisis offered it an opportunity to do so”.

As China expands its economic power in the region, its main targets will

remain Southeast and Northeast Asia. China uses its extensive network of business

communities, along with its bilateral relations at the national level to increase its

influence on countries throughout Asia (Bremmer, 2013). Furthermore, China’s

influence over ASEAN is also increasing with its increasing business ties. According

to Goh (2014), Chinese economic power has heavily impacted the region. The volume

of trade between China and ASEAN has increased rapidly; from US$8 billion in 1980

to $178 billion in 2009 (during which China became ASEAN’s largest external trading

partner) and $280 billion in 2011. China utilizes economics for strategic and diplomatic

purposes and its policies are unique and complex, effective tools for encouraging other

countries to act according to China’s preferences (Reilly, 2013).

Thirdly, China and Japan compete with each other to be the leading power

in the region and Thailand is the main target for both countries in their strategy to

expand their power in ASEAN. For China, Thailand is an important trade partner with

the ACFTA being a key economic mechanism. China also makes closer relations with

neighboring countries through policies such as the Maritime Silk Road and the Asian

Infrastructure Investment Bank (AIIB), which support the expansion of its economic

power in Southeast Asia region, helping to develop its overall influence (Mazza, 2015).

According to Guerrero (2007), development assistance is an alternative mode of

support that China uses to balance its relations with ASEAN members. This also

contributes to a good relationship between China and its neighbors within the region.

“This shows that there are diversities in comparative advantage between two countries

economically in the use of natural resources and the stage of economic development.

The changing pattern of comparative advantages between two countries would shape

the long-term sustainable economic relationship” (Lu, 2016). At the same time, Japan

is still acting in its role as a powerful partner of both Thailand and ASEAN. Thailand

is the main base for Japanese factories and other investments, while ASEAN is the

largest FDI source as well as the second largest trade partner of Japan. The main

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interactions between Japan and ASEAN countries are also economic which help to

tighten relations. Japan also strongly supports ASEAN cooperation, including by

establishing funds for regional projects and exchanges (Kawai, Thuzar, and Hayton,

2016). Because Thailand is the main base for Japanese investment, both countries have

strong and effectiveness economic linkages. The Japan-Thailand Economic Partnership

Agreement (JTEPA) came into effect in 2007, with the aim to enhance trade, investment

and cooperation. It directly affected the total volume of trade between the two countries

and also increased Japan’s direct investment (“Japan-Thailand relations,” 2016).

Consequently, China and Japan both still see Thailand as the most strategic country in

ASEAN in terms of trade as well as investment, which are both increasing continuously.

“Since 2012, China has been Thailand’s largest trade partner but this is a recent

phenomenon. Previously, Japan held this position since at least 1993. Last year, trade

volume with China was around 2 percent higher than that with Japan. After a Free Trade

Agreement was struck in 2003, Thailand-China trade began to significantly increase,

along with a widening trade deficit which rose almost three-fold within a year of

enactment (from $428 million to $1.26 billion). This trade deficit reached $17 billion

last year. In contrast, Thailand runs a trade surplus with the U.S. (one of its top three

trade partners) of between $6 billion to $10 billion a year. China only replaced the U.S.

as top importer of Thai products during 2010-2014. Foreign Direct Investment is the

life blood of Thailand’s economic growth and export-led economy. Japan always tops

the list of FDI sources by a large margin. Last year, Japanese investment stood at $4.2

billion, followed by Singapore, which contributed $1.1 billion. China did not make the

top five” (Chingchit, 2016). It can be implied that both China and Japan will continue

to expand their power in ASEAN, especially with Thailand as their main strategic

partner.

Following on from the above, we can apply the international relations

theories of neoliberalism and regionalism to the relationship between China and

Thailand.

The theory of regionalism applies to the monetary support of China to

Thailand during the Asian Financial Crisis in 1997. To enhance economic cooperation

within the region, ASEAN incorporated China into ASEAN plus Three and later

established ACFTA to further economic collaboration and integration. During

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Thailand’s economic hardship, China provided aid funding to help boost the Thai

economy and get it back on track again. This explains the objective of regionalism in

terms of government to government cooperation. According to Halloran (1998),

China’s Vice Minister of Foreign Trade and Economic Cooperation, Long Young-tu,

agreed to support Thailand, saying that …

“We have evaluated the pros and cons and decided that it is in the best

interests of China not to devalue. This might affect China's competitive

position but we have more important things to do”.

Furthermore, the Ministry of Foreign Affairs of the People’s Republic of

China (“Pro-active policies,” n.d.) mentioned that China would not devalue its currency

to maintain the situation for regional economic restoration.

“While sticking to its non-devaluation policy, the Chinese Government

adopted the policy of boosting domestic demand and stimulating economic

growth. This policy played an important role in ensuring a healthy and

stable economic growth at home, easing the pressure on the Asian

economy and leading it into recovery”.

Neoliberalism refers to China’s use of economic cooperation to broaden

power in ASEAN. After the country’s reformation, China opened its markets freely and

became one of world’s fastest development countries. China later signed ACFTA with

ASEAN, which brought free trade, and tariff and tax reductions to the region to increase

its potential market in the global economy. “The impressive growth of the biggest

developing country in the world is currently a key economic and political issue. China’s

high rate of economic expansion is based on a development model that combines a

modernization of state-led economic organization and regulation with a gradual,

controlled neoliberalization in which (foreign) transnational companies play a central

role. China thus developed a successful model of mixing public and private roles and

investment in order to achieve growth through economic integration in the world

market” (Fernandez & Hogenboom, 2007).

Both theories, regionalism and neoliberalism, can be applied to the

competition between China and Japan to play the leading role in this region, primarily

by using their economic power. The establishment of ASEAN plus Three allowed both

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countries to increase their politics, economics, and cultural cooperation with ASEAN,

bringing further prosperity and wealth into East and Southeast Asia. In addition, China

agreed to establish ACFTA with ASEAN, and later became one of the leading trade

partners for both Thailand and ASEAN. However, Japan also agreed to establish

JTEPA in order to boost its economic cooperation with Thailand. Japan then became

the largest investor in Thailand. Therefore, to answer the research question, the author

interprets that both regionalism and neoliberalism are accurately applied to the

relationship between China and Thailand in the context of ACFTA.

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CHAPTER 5

CONCLUSIONS AND RECOMMENDATIONS

Since the changes in the international strategic landscape in the 1970s, there

has been more regional cooperation in East Asia. The outstanding regional organization

in Southeast Asia is ASEAN, a gathering of ten member countries, all diverse in term

of politics, economy and socio-culture. For this reason, ASEAN has been an attractive

focus for the policies of more powerful countries. Besides the internal cooperation

between its ten members, ASEAN has broadened its cooperation through external

partnerships. One of the most important of these is the ASEAN-China relations, which

began officially in 1996. China is one of the most important external partners of

ASEAN because its rising political influence and the consumer power of its growing

middle class has increased its role on the world stage. China nowadays has become

comparable to the United States in term of its political influence. In terms of its

influence on the regional economy, China can be best compared to Japan. Importantly,

China’s location next to ASEAN gives it a competitive advantage. The Chinese doctrine

of peaceful rise and its policies of ‘Look South’ and ‘Good Neighbor’, show the overall

good intentions of the Chinese government toward ASEAN.

The recovery period after the Asian crisis was the starting point for ASEAN

and its three partners in Northeast Asia to strengthen economic relations within the

region. During this period, China showed its potential in providing financial support to

Southeast Asian countries, both by maintaining its exchange rate and helping the

affected ASEAN member countries via the IMF rescued plan. This helped the

relationship between China and Southeast Asian countries become stronger and

solidified their intention to deepen their economic cooperation with each other. This

became a driver of economic regional integration and free trade among these countries.

Thailand, under Prime Minister Thaksin Shinawatra’s government at the time, also

played an active role in this matter. The relations between China and Thailand became

broader and deeper under the Thaksin government, as shown by his making an official

visit to China before the United States, reflecting his preference. This was an important

step for Thailand and China’s relations. Comprehensive economic and strategic

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partnerships were pushed to strengthen relations between Thailand and China after the

return of Thaksin to Bangkok. His government also played an important role in

negotiating the beginning of the ASEAN-China Free Trade Agreement, known as

ACFTA. The economic relationship between China and Thailand has developed greatly

since the year 2001 and their trade volumes have increased dramatically. The trade

volume between Thailand and China has continuously increased, despite the instability

of domestic politics, the coup d’etat against Prime Minister Thaksin in 2006 and the

global economic recession in 2008.

The ASEAN community has not only strengthened its own relationships, it

has also resulted in attracting foreign direct investment from other powerful countries,

especially China, Japan and the United States. ASEAN has become a prime investment

destination for FDI, of which these three countries are the largest foreign direct

investors. ACFTA’s implementation has been strongly influenced by the dynamics and

challenges of the political and economic changes in the East Asian region.

Thailand’s export dependence ratio increased from almost 60 percent in the

early 2000s to 70 percent in 2008. Thailand’s export structure is heavily reliant on

manufacturing products, which make up more than 70 percent. Thailand’s important

trade partners are both individual trade partners, such as China, Japan and the United

States and collective trade partners, such as ASEAN, and the EU. Among its individual

trade partners, China surpassed Japan and the United States to become Thailand’s main

trade partner in 2010. This was the case until 2015, when the United States once again

became Thailand’s largest trade partner. The major export products of Thailand are

motor car parts, which made up almost 12 percent of Thailand’s total exports, automatic

data processing machines, jewelry, polymers of ethylene and refined fuels which made

up 8.2 percent, 5.1 percent, 3.8 percent, 3.7 percent respectively in 2015. For

agricultural products, rubber shared 2.3 percent and rice shared 2.1 percent of

Thailand’s total exports in 2015. Both the AEHP and EHP provided great opportunities

for Thailand’s exports, helping them to access the Chinese market. However, these

programs also created suffering for local Thai farmers, due to the lower price and

enormous volume of fruit and vegetable imports from China. Overall, the top source of

foreign investment to Thailand is still Japan, accounting for 39 percent, while China

accounts for only 7 percent of total FDI. In addition, considering Overseas

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Development Assistance (ODA) to Thailand, there is low ODA from China, as it is not

a major aid donor to Thailand.

The official visits of Chinese leader, Wen Jiaboa, and US leader, President

Barack Obama, to Thailand in 2012 show the interest of both powerful countries in

Thailand. It is a challenge for Thailand to continue to rebalance its relationship with

these two countries, particularly as they develop increasing trade and investment ties

with Thailand.

Since the year 1990, relations between Thailand and China have focused

more on economic cooperation. China’s rapid economic growth has increased its active

role, both at the regional and global level. As the country with world’s largest

population, China has a large market with an increasing number of potential consumers

in the middle-income class. Since the year 2000, economic cooperation between

Thailand and China has grown rapidly and nowadays, economic cooperation between

Thailand and China has become more tied to trade, investment and tourism. The signing

of the ACFTA in the early 2000s, and its full implementation in 2010, provided a great

opportunity for increased trade and investment between Thailand and China. Adding to

this, the implementation of AEHP in 2003 provided further opportunity for Thailand to

access Chinese markets.

In terms of trade, Thailand’s GDP ranked the second highest among

ASEAN countries, behind Indonesia, in 2015. At the same time, China surpassed Japan

in terms of higher GDP and became the largest trade partner to Thailand. Under ACFTA

and the EHP, Thailand can export more agricultural products to China. In addition to

the increasing level of Thai exports to China, tourism in Thailand has benefited from

the growing middle class in China and has become a prime destination for Chinese

tourists.

In terms of investment, there are more inflows of investment from China in

both the government and private sector in Thailand. The most important recent project

is a railway in Thailand, which will connect and facilitate logistics in the future.

Importantly, the good relationship between China and Thailand continues

to strengthen and promote more cooperation between these two countries. Thailand has

become one of China’s most important strategic partners in Southeast Asia, particularly

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as there are no obvious points of conflict. It is expected that these two countries will

develop closer ties in all aspects in the near future.

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APPENDICES

Ref. code: 25595403040131WTU

74

APPENDIX A

LIST OF PRIME MINISTERS OF THAILAND

No Name Term of the office

1 Phraya Manopakorn Nititada 28 June 1932 – 20 June 1933

(358 Days)

2 Phraya Phahonphonphayuhasena 21 June 1933 – 16 December 1938

(5 Years and 178 Days)

3 Plaek Phibunsongkhram 16 December 1938 – 1 August 1944

(5 Years and 229 Days)

4 Khuang Aphaiwong 1 August 1944 – 31 August 1945

(1 Year, 30 Days)

5 Tawee Boonyaket 31 August 1945 – 17 September 1945

(17 Days)

6 Seni Pramoj 17 September 1945 – 31 January 1946

(136 Days)

(4) Khuang Aphaiwong 31 January 1946 – 24 March 1946

(52 Days)

7 Pridi Banomyong 24 March 1946 – 23 August 1946

(152 Days)

8 Thawan Thamrongnawasawat 23 August 1946 – 8 November 1947

(1 Year, 79 Days)

- Phin Choonhavan 8 November 1947 – 10 November 1947

(2 Days)

(4) Khuang Aphaiwong 10 November 1947 – 8 April 1948

(150 Days)

(3) Plaek Phibunsongkhram 8 April 1948 – 16 September 1957

(9 Years, 161 Days)

- Sarit Thanarat 16 September 1957 – 21 September 1957

(5 Days)

9 Pote Sarasin 21 September 1957 – 1 January 1958

(102 Days)

10 Thanom Kittikachorn 1 January 1958 – 20 October 1958

(292 Days)

11 Sarit Thanarat 20 October 1958 – 8 December 1963

(5 Years, 49 Days)

(10) Thanom Kittikachorn 9 December 1963 – 14 October 1973

(9 Years and 309 Days)

12 Sanya Dharmasakti

14 October 1973 – 15 February 1975

(1 Year, 124 Days)

Ref. code: 25595403040131WTU

75

No Name Term of the office

(6) Seni Pramoj 15 February 1975 – 14 March 1975

(27 Days)

13 Kukrit Pramoj 14 March 1975 – 6 October 1976

(1 Year and 124 Days)

- Sangad Chaloryu 6 October 1976 – 8 October 1976

(2 Days)

14 Thanin Kravichien 8 October 197 – 20 October 1977

(1 Year, 34 Days)

- Sangad Chaloryu 20 October 1977 – 10 November 1977

(21 Days)

15 Kriangsak Chamanan 11 November 1977 – 3 March 1980

(2 Years, 113 Days)

16 Prem Tinsulanonda 2 March 1980 – 4 August 1988

(8 Years and 154 Days)

17 Chatichai Choonhavan 4 August 1988 – 23 February 1991

(2 Years and 204 Days)

- Sunthorn Kongsompong 24 February 1991 – 2 March 1991

(6 Days)

18 Anand Panyarachun 2 March 1991 – 7 April 1992

(1 Year and 36 Day)

19 Suchinda Kraprayoon 7 April 1992 – 10 June 1992

(47 Days)

- Meechai Ruchuphan 24 May 1992 – 10 June 1992

(17 Days)

(18) Anand Panyarachun 10 June 1992 – 23 September 1992

(105 Days)

20 Chuan Leekpai 23 September 1992 – 13 July 1995

(2 Years and 293 Days)

21 Banharn Silpa-acha 13 July 1995 – 25 November 1996

(1Year and 135 Days)

22 Chavait Yongchaiyudh 25 November 1996 – 9 November 1997

(349 Days)

(20) Chuan Leekpai 9 November 1997 – 9 February 2001

(3 Years 3 months)

23 Thaksin Shinawatra 9 February 2001 – 5 April 2006

(5 Years and 55 Days)

- Chitchai Wannasathit 5 April 2006 – 23 May 2006

(48 Days)

(23) Thaksin Shinawatra 23 May 2006 – 19 September 2006

(119 Days)

- Sonthi Boonyaratglin 19 September 2006 – 1 October 2006

(12 Days)

24 Surayud Chulanont 1 October 2006 – 29 January 2008

(1 Year and 120 Days)

Ref. code: 25595403040131WTU

76

No Name Term of the office

25 Samak Sundaravej 29 January 2008 – 2 September 2008

(224 Days)

26 Somchai Wongsawat 8 September 2008 – 2 December 2008

(92 Days)

- Chaovarat Chanweerakul 2 December 2008 – 15 December 2008

(15 Days)

27 Abhisit Vejjajiva 17 December 2008 – 5 August 2011

(2 Years and 231 Days)

28 Yingluck Shinawatra 5 August 2011 – 7 May 2014

(2 Years and 275 Days)

- Niwatthamrong Boonsongpaisan 7 May 2014 – 22 May 2014

(15 Days)

29 Prayut Chan-o-cha 22 May 2014 – Present

Source: List of Prime Ministers of Thailand, adapted from History of Thai Prime

Ministers, Retrieved 12 September 2016 from http://www.soc.go.th/

bb_main01.htm. Copyright 2015 by the secretariat of the cabinet, Prime

Minister's Office

Ref. code: 25595403040131WTU

77

APPENDIX B

LIST OF PRESIDENT OF CHINA

No Name Term of the office

1 Mao Zedong 27 September 1954 – 27 April 1959

2 Liu Shaoqi 27 April 1959 – 31 October 196

Dong Biwu Acting Chairman

24 February 1972 – 17 January 1975

Song Qingling Honorary Chairwoman

16 May 1981 – 28 May 1981

3 Li Xiannian 18 June 1983 – 8 April 1988

4 Yang Shangkun 8 April 1988 – 27 March 1993

5 Jiang Zemin 27 March 1993 – 15 March 2003

6 Hu Jintao 15 March 2003 – 14 March 2013

7 Xi Jinping 14 March 2013 – present

Source: List of President of China, Adapted from World President DB, Retrieved on

15 December 2016, from http://www.worldpresidentsdb.com/list/countries/China/

Copyright 2007-2016 by WorldPresidentsDB.com

Ref. code: 25595403040131WTU

78

APPENDIX C

EARLY HARVEST PROGRAM

between Thailand and China under Thailand and China Free Trade Agreement

Tariff = 0% since Oct 1, 2003

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

group 1 > 15 % 10 5 0

1 010190 Live horses, not for pure-bred breeding 10 5 0

2 010410 LIVE SHEEP, NOT FOR BREEDING 10 5 0

3 010420 LIVE GOATS 10 5 0

4 010511 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 10 5 0

5 010512 TURKEYS, WEIGHTING NOT MORE THAN 185 G, FOR BREEDING 10 5 0

6 010519 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 10 5 0

7 010592 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGHTING MORE THAN 185 G, BUT NOT MORE THAN 2,000 G, F

10 5 0

8 010593 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 10 5 0

9 010599 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 10 5 0

10 010611 Primates, for draught, consumption of meat, milk or eggs, imported not for breeding 10 5 0

11 010612 Whales,dolphins and porpoises(mammals of the order Cetacea);manatees and dugongs(mammals of the orde

10 5 0

12 010619 Mammals, for draught, consumption of meat, milk or eggs, imported for breeding 10 5 0

13 010620 Reptiles (including snakes and turtles), for draught, consumption of meat, milk or eggs, imported fo

10 5 0

14 010631 Birds of prey 10 5 0

15 010632 Psittaciformes (including parrots, parakeets, macaws and cockatoos), for draught, consumption of mea

10 5 0

16 010639 Other birds, for draught, consumption of meat, milk or eggs imported for breeding 10 5 0

17 010690 Frog 10 5 0

Ref. code: 25595403040131WTU

79

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

18 020110 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED, CARCASSES AND HALF-CARCASSES

10 5 0

19 020120 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED, OTHER CU 10 5 0

20 020130 MEAT OF BOVINE ANIMALS, FRESH OR CHILLED, BONELESS 10 5 0

21 020210 MEAT OF BOVINE ANIMALS, FROZEN, CARCASSES AND HALF - CARCASSES 10 5 0

22 020220 MEAT OF BOVINE ANIMALS, FROZEN, OTHER CUT WITH BON 10 5 0

23 020230 MEAT OF BOVINE ANIMALS , FROZEN, BONELESS 10 5 0

24 020311 MEAT OF SWINE, FRESH OR CHILLED, CARCASSES AND HALF-CARCASSES 10 5 0

25 020312 MEAT OF SWINE, FRESH OR CHILLED, HAMS, SHOULDERS AND CUTS THEREOF, WITH BONE IN

10 5 0

26 020319 MEAT OF SWINE, FRESH OR CHILLED, OTHER CUT WITH BONE IN OR BONELESS

10 5 0

27 020321 MEAT OF WSINE, FROZEN, CARCASSES AND HALF-CARCASSES 10 5 0

28 020329 MEAT OF SWINE, FROZEN, OTHER CUT WITH BONE IN OR B 10 5 0

29 020410 CARCASSES AND HALF-CARCASSES OF LAMB, FRESH OR CHI 10 5 0

30 020421 MEAT OF SHEEP, FRESH OR CHILLED, CARCASSES AND HALF-CARCASSES 10 5 0

31 020422 MEAT OF SHEEP, FRESH OR CHILLED, OTHER CUTS WITH B 10 5 0

32 020423 MEAT OF SHEEP, FRESH OR CHILLED, BONELESS 10 5 0

33 020430 CARCASSED AND HALF-CARCASSES OF LAMB, FROZEN 10 5 0

34 020441 MEAT OF SHEEP, FROZEN, CARCASSES AND HALF-CARCASSES 10 5 0

35 020442 MEAT OF SHEEP, FORZEN OTHER CUTS WITH BONE IN 10 5 0

36 020443 MEAT OF SHEEP FROZEN, BONELESS 10 5 0

37 020450 MEAT OF GOATS 10 5 0

38 020500 MEAT OF HORSES, ASSES, MULES OR HINNIES, FRESH CHILLED OR FROZEN 10 5 0

39 020610 EDIBLE OFFAL OF BOVINE ANIMALS, FRESH OR CHILLED 10 5 0

40 020621 TONGUES OF BOVINE ANIMAL, FROZEN 10 5 0

41 020622 LIVERS OF BOVINE ANIMAL, FROZEN 10 5 0

Ref. code: 25595403040131WTU

80

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

42 020629 EDIBLE OFFAL OF BOVINE ANIMAL, FROZEN 10 5 0

43 020630 EDIBLE OFFAL OF SWINE, FRESH OR CHILLED 10 5 0

44 020641 LIVERS OF SWINE, FROZEN 10 5 0

45 020649 EDIBLE OFFAL OF SWINE, FROZEN 10 5 0

46 020680 OTHER EDIBLE OFFAL OF BOVINE ANIMALS, SWINE, SHEEP 10 5 0

47 020690 OTHER EDIBLE OFFAL OF BOVINE ANIMALS, SWINE, SHEEP 10 5 0

48 020711 NOT CUT IN PIECES, FRESH OF CHILLED FOWLS OF THE SPECIES GALLUS DOMESTICUS

10 5 0

49 020712 NOT CUT IN PIECES, FROZEN FOWLS OF THE SPECIES GALLUS DOMESTICUS

10 5 0

50 020713 CUTS AND OFFAL, FRESH OR CHILLED FOWLS OF THE SPEC 10 5 0

51 020714 CUTS AND OFFAL, FROZEN FOWLS OF THE SPECIES GALLUS 10 5 0

52 020724 NOT CUT IN PIECES, FRESH OR CHILLED OF TURKEYS 10 5 0

53 020725 NOT CUT IN PIECES, FROZEN OF TURKEYS 10 5 0

54 020726 CUTS AND OFFAL, FRESH OR CHILLED OF TURKEYS 10 5 0

55 020727 CUTS AND OFFAL, FROZEN OF TURKEYS 10 5 0

56 020732 NOT CUT IN PIECES, FRESH OR CHILLED OF DUCKS, GEES 10 5 0

57 020733 NOT CUT IN PIECES, FROZEN OF DUCKS, GEESE OR GUINEA FOWLS 10 5 0

58 020734 FATTY LIVERS, FRESH OR CHILLED OF DUCKS, GEESE OR 10 5 0

59 020735 CUT AND OFFAL (EXCLUDING FATTY LIVERS), FRESH OR C 10 5 0

60 020736 CUT AND OFFAL (EXCLUDING FATTY LIVERS), FROZEN OF 10 5 0

61 020810 MEAT AND EDIBLE MEAT OF RABBITS OR HARES, FRESH, CHILLED OR FROZEN

10 5 0

62 020820 FROGS' LEGS, FRESH, CHILLED OR FROZEN 10 5 0

63 020830 Meat and edible meat offal of primates, fresh, chilled or frozen 10 5 0

64 020840 Meat and edible meat offal of whales, dolphins and porpoises (mammals of the order Cetacea); of man

10 5 0

65 020850 Meat and edible meat offal of reptiles (including snakes and turtles), fresh, chilled or frozen

10 5 0

66 020890 MEAT AND EDIBLE MEAT OF OFFAL, RICE BIRDS, FRESH, 10 5 0

Ref. code: 25595403040131WTU

81

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

67 020900 PIG FAT FREE OF LEAN MEAT AND POULTRY FAT (NOT REN 10 5 0

68 021011 MEAT OF SWINE, HAMS, CHOULDERS AND CUTS THEREOF, W 10 5 0

69 021012 MEAT OF SWINE, BELLIES (STREAKY ) AND CUTS THEREOF, SALT, IN BRINE, DRIED OR SMOKED

10 5 0

70 021019 MEAT OF SWINE BELLIES ( STREAKY ) AND CUTS THEREOF 10 5 0

71 021020 MEAT OF BOVINE ANIMALS, SALTED, IN BRINE, DRIED OR 10 5 0

72 021091 Meat and edible meat offal of primates, salted, in brine, dried or smoked; edible flours and meals o

10 5 0

73 021092 Meat and edible meat offal of whales, dolphins and porpoises (mammals of the order Cetacea); of ma

10 5 0

74 021093 Meat and edible meat offal Of reptiles (including snakes and turtles), salted, in brine, dried or sm

10 5 0

75 021099 Other meat and edible meat offal, salted, in brine, dried or smoked; including edible flours and m

10 5 0

76 030110 ORNAMENTAL FISH, LIVE 10 5 0

77 030191 TROUT ( SALMO TRUTTA, ONCORHYCHUS MYKISS, ONCORHYNCHUS CLARKI, ONCORHYNCHUS AGUABONITA, ONCORHYNCHUS

10 5 0

78 030192 EALS ( ANGUILLA SPP. ), LIVE 10 5 0

79 030193 CARP, LIVE 10 5 0

80 030199 OTHER LIVE FISH 10 5 0

81 030222 PLAICE, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 10 5 0

82 030263 COALFISH, EXCLUDING LIVERS AND ROES, FRESH OR CHIL 10 5 0

83 030265 DOGFISH AND OTHER SHARKS, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED

10 5 0

84 030332 PLAICE, EXCLUDING LIVERS AND ROES, FROZEN 10 5 0

85 030378 HAKE, EXCLUDING LIVERS AND ROES, FROZEN 10 5 0

86 030559 OTHER FISH MEAL, DRIED, WHETHER OR NOT SALTED 10 5 0

87 040110 MILK AND CREAM, OF A FAT CONTENT BY WEIGHT NOT EXC 10 5 0

88 040120 MILK AND CREAM, OF A FAT CONTENT BY WEIGHT EXCEEDING 1 % BUT NOT EXCEEDING 6 %

10 5 0

Ref. code: 25595403040131WTU

82

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

89 040130 MILK AND CREAM, OF A FAT CONTENT BY WEIGHT EXCEEDI 10 5 0

90 040221 MILK AND CREAM, CONCENTRATED NOT CONTAINING ADDED 10 5 0

91 040229 MILK AND CREAM, CONTAINING ADDED SUGAR OR OTHER S 10 5 0

92 040291 MILK AND CREAM, IN POWDER, GRANULES OR OTHER SOLID 10 5 0

93 040299 OTHER MILK AND CREAM CONCENTRATED 10 5 0

94 040310 YOGURT, WHETHER OR NOT CONCENTRATED OR CONTAINING 10 5 0

95 040390 BUTTERMILK, CURDLED MILK AND CREAM,KEPHIR AND OTHE 10 5 0

96 040410 WHEY AND MODIFIED WHEY, WHETHER OR NOT CONCENTRATE 10 5 0

97 040490 PRODUCTS CONSISTING OF NATURAL MILK CONSTITUENTS 10 5 0

98 040510 BUTTER 10 5 0

99 040520 DAIRY SPREADS 10 5 0

100 040590 OTHER FATS AND OILS DERIVED FROM MILK 10 5 0

101 040610 FRESH CHEESE (NOT FERMENTED) INCLUDING WHEY CHEESE 10 5 0

102 040620 GRATED OR POWALERED CHEESE OF ALL KINDS 10 5 0

103 040630 PROCESSED CHEESE, NOT GRATED OR POWDERED 10 5 0

104 040640 BLUE-VEINED CHEESE 10 5 0

105 040690 OTHER CHEESE 10 5 0

106 040700 BIRDS' EGGS, IN SHELL, FRESH, PRESERVED OR COOKED 10 5 0

107 040811 EGG YOLKS, DRIED 10 5 0

108 040819 EGG YOLKS, FRESH, COOKED BY STEAMING OR BY BOILING 10 5 0

109 040891 BIRDS'EGGS, DRIED 10 5 0

110 040899 BIRDS EGGS, DRIED FRESH, COOKED BY STEAMING OR BY 10 5 0

111 040900 NATURAL HONEY 10 5 0

112 041000 EDIBLE PRODUCTS OF ANIMAL ORIGIN, NOT ELSEWHERE SP 10 5 0

113 050400 GUTS, BLADDERS AND STOMACHES OF ANIMALS (OTHER THA 10 5 0

114 050710 IVORY : IVORY POWDER AND WASTE 10 5 0

115 050790 TORTOISE-SHELL, WHALEBONE AND WHALEBONE HAIR, HORN 10 5 0

116 050800 CORAL AND SIMILAR MATERIALS, UNWORKED OR SIMPLY PR 10 5 0

117 050900 NATURAL SPONGES OF ANIMAL ORIGIN 10 5 0

118 051000 AMBERGRIS, CASTOREUM, CIVET AND MUSK; CANTHARIDES; 10 5 0

Ref. code: 25595403040131WTU

83

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

119 051199 OTHER ANIMAL PRODUCTS NOT ELSEWHERE SPECIFIED OR I 10 5 0

120 060110 BULBS, TUBERS, TUBEROUS ROOTS, CORMS CROWNS AND RH 10 5 0

121 060120 BULBS, TUBERS, TUBEROUS ROOTS, CORMS CROWNS AND RH 10 5 0

122 060210 UNROOTED CUTTINGS AND SLIPS 10 5 0

123 060220 EDIBLE FRUIT OR NUT TREES, SHRUBS AND BRUSHES, GRA 10 5 0

124 060230 RHODODENDRONS AND AZALEAS, GRAFTED OR NOT 10 5 0

125 060240 ROSES, GRAFTED OR NOT 10 5 0

126 060290 OTHER LIVE PLANTS (INCLUDING THEIR ROOTS) 10 5 0

127 060310 CUT FLOWERS AND FLOWERS BUDS OF A KIND SUITABLE FO 10 5 0

128 060390 CUT FLOWERS AND FLOWERS BUDS OF A KIND SUITABLE FO 10 5 0

129 060410 MASSES AND LICHENS BEING GOODS OF A KIND SUITABLE 10 5 0

130 060491 FOLIAGE, BRANCHES AND OTHER PARTS OF PLANTS, WITHO 10 5 0

131 060499 FOLIAGE, BRANCES AND OTHER PARTS OF PLANTS, WITHOU 10 5 0

132 070110 POTATOES, SEED 10 5 0

133 070190 POTATOES, FRESH OR CHILLED 10 5 0

134 070200 TOMATOES, FRESH OR CHILLED 10 5 0

135 070310 ONIONS AND SHALLOTS (FRESH OR CHILLED) 10 5 0

136 070320 GARLIC, FRESH OR CHILLED 10 5 0

137 070390 LEEK AND OTHER ALLIACEOUS VEGETABLES, FRESH OR CHI 10 5 0

138 070410 CAULIFLOWERS AND HEADED BROCCOLI, FRESH OR CHILLED 10 5 0

139 070420 BRUSSELS SPROUTS, FRESH OR CHILLED 10 5 0

140 070490 CABBAGES, KOHLRABI, KALE AND SIMILAR EDIBLE BRASSI 10 5 0

141 070511 CABBAGES LETTUCE (HEAD LETTUCE), FRESH OR CHILLED 10 5 0

142 070519 LETTUCE, FRESH OR CHILLED 10 5 0

143 070521 WITLOOF CHICARY, FRESH OR CHILLED 10 5 0

144 070529 CHICORY, FRESH OR CHILLED 10 5 0

145 070610 CARROTS AND TURNIPS, FRESH OR CHILLED 10 5 0

146 070690 SALAD BEETROOT, SALSIFY, CELERIAC, RADISHES AND SI 10 5 0

147 070700 CUCUMBERS AND GHERKINS, FRESH OR CHILLED 10 5 0

148 070810 PEAS, SHELLED OR UNSHELLED, FRESH OR CHILLED 10 5 0

Ref. code: 25595403040131WTU

84

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

149 070820 BEANS 10 5 0

150 070890 OTHER LEGUMINOUS VEGETABLES, SHELLED OR UNSHELLED, 10 5 0

151 070910 GLOB ARTICHOKES, FRESH OR CHILLED 10 5 0

152 070920 ASPARAGUS, FRESH OR CHILLED 10 5 0

153 070930 AUBERGINES, FRESH OR CHILLED 10 5 0

154 070940 CELERY OTHER THAN CELERIAC, FRESH OR CHILLED 10 5 0

155 070951 MUSHROOMS, FRESH OR CHILLED 10 5 0

156 070952 TRUFFLES, FRESH OR CHILLED 10 5 0

157 070959 Other mushrooms, fresh or chilled 10 5 0

158 070960 FRUITS OF THE GENUS CAPSICUM OR OF THE GENUS PIMEN 10 5 0

159 070970 SPINACH, NEW ZEALAND SPINACH AND ORACHE SPINACH, F 10 5 0

160 070990 OTHER VEGETABLES, FRESH OR CHILLED 10 5 0

161 071010 POTATOES (UNCOOKED OR COOKED BY STEAMING OR BOILIN 10 5 0

162 071021 PEAS (UNCOOKED OR COOKED BY STEAMING OR BOILING IN 10 5 0

163 071022 BEANS (UNCOOKED OR COOKED BY STEAMING OR BOILING IN WATER), FROZEN

10 5 0

164 071029 OTHER LEGUMINOUS VEGETABLES, SHELLED OR UNSHELLED 10 5 0

165 071030 SPINACH, NEW ZEALAND SPINACH AND ORACHE SPINACH 10 5 0

166 071040 SWEET CORN (UNCOOKEE OR COOKED BY STEAMING OR BOIL 10 5 0

167 071080 OTHER VEGETABLES(UNCOOKED OR COOKED BY STEAMING OR 10 5 0

168 071090 MIXTURES OF VEGETABLE (UNCOOKED OR COOKED BY STEAM 10 5 0

169 071120 OLIVES, PROVISIONALLY PRESERVED BUT UNSUITABLE IN 10 5 0

170 071130 CAPERS, PREVISIONALLY PRESERVED BUT UNSUITABLE IN 10 5 0

171 071140 CUCUMBERS AND GHERKINS, PREVISIONALLY PRESERVED BU 10 5 0

172 071151 Mushrooms of the genus Agaricus provisionally preserved, but unsuitable in that state for immediate

10 5 0

173 071159 Other mushrooms and truffles provisionally preserved, but unsuitable in that state for immediate con

10 5 0

174 071190 OTHER VEGETABLES, PREVISIONALLY PRESERVED BUT UNSU 10 5 0

175 071220 DRIED ONION 10 5 0

Ref. code: 25595403040131WTU

85

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

176 071231 Dried mushrooms of the genus Agaricus, whole, cut, sliced, broken or in powder, but not further prep

10 5 0

177 071232 Dried wood ears (Auricularia spp.), whole, cut, sliced, broken or in powder, but not further prepare

10 5 0

178 071233 Dried jelly fungi (Tremella spp.), whole, cut, sliced, broken or in powder, but not further prepared

10 5 0

179 071239 Other dried mushrooms and truffles, whole, cut, sliced, broken or in powder, but not further prepare

10 5 0

180 071290 OTHER DRIED VEGETABLES, WHOLE, CUT, SHICED, BROKEN 10 5 0

181 071310 DRIED PEAS, SHELLED, WHETHER OR NOT SKINNED OR SPL 10 5 0

182 071320 DRIED CHICKPEAS, SHELLED, WHETHER OR NOT SKINNED O 10 5 0

183 071331 DRIED MUNG, BEANS, SHELLED, WHETHER OR NOT SKINNE 10 5 0

184 071332 DRIED SMALL RED BEANS, SHELLED, WHETHER OR NOT SKI 10 5 0

185 071333 KIDNEY BEANS, INCLUDING WHITE AND PEA BEANS (PHSEO 10 5 0

186 071339 OTHER DRIED BEANS, SHELLED, WHETHER OR NOT SKINNED 10 5 0

187 071340 DRIED LENTILS, SHELLED, WHETHER OR NOT SKINNED OR 10 5 0

188 071350 DRIED BROAD BEANS AND HORSE BEANS,SHELLED, WHETHER 10 5 0

189 071390 OTHER DRIED LEGUMINOUS VEGETABLES, SHELLED, WHETHE 10 5 0

190 071410 MANIOC ROOTS, FRESH OR DRIED, WHETHER OR NOT SLICE 10 5 0

191 071420 SWEET POTATOES, FRESH OR DRIED, WHETHER OR NOT SLICED OR IN THE FORM OF PELLETS

10 5 0

192 071490 TARO, FRESH OR DRIED, WHETHER /NOT SLICED OR IN T 10 5 0

193 080111 DESICCATED COCONUTS 10 5 0

194 080119 FRESH COCONUTS 10 5 0

195 080121 BRAZIL NUTS, IN SHELL 10 5 0

196 080122 BRAZIL NUTS, SHELLED 10 5 0

197 080131 CASHEW NUTS, IN SHELL 10 5 0

198 080132 CASHEW NUTS, SHELLED 10 5 0

199 080300 BANANAS, INCLUDING PLANTAINS, FRESH OR DRIED 10 5 0

200 080410 DATES, FRESH OR DRIED 10 5 0

Ref. code: 25595403040131WTU

86

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

201 080420 FIG, FRESH OR DRIED 10 5 0

202 080430 PINEAPPLES 10 5 0

203 080440 AVOCADOS, FRESH OR DRIED 10 5 0

204 080450 GUAVAS, MANGOES,MANGOSTEEN FRESH OR DRIED 10 5 0

205 080510 SWEET ORANGES, FRESH OR DRIED 10 5 0

206 080520 MANDARINS (INCLUDING TANGERINES AND SATSUMAS); C 10 5 0

207 080540 GRAPEFRUIT, FRESH OR DRIED 10 5 0

208 080550 Lemons (Citrus limon, Citrus limonum) and limes (Citrus aurantifolia, Citrus latifolia), fresh or dr

10 5 0

209 080590 OTHER CITRUS FRUITS, FRESH OR DRIED, OTHER THAN SU 10 5 0

210 080610 GRAPES, FRESH 10 5 0

211 080620 GRAPES, DRIED 10 5 0

212 080711 WATERMELONS 10 5 0

213 080719 OTHER MELONS 10 5 0

214 080720 PAPAWS (PAPAYAS), FRESH 10 5 0

215 080820 PEARS AND QUINCES, FRESH 10 5 0

216 080910 APRICOTS, FRESH 10 5 0

217 080920 CHERRIES, FRESH 10 5 0

218 080930 PEACHES, INCLUDING NECTARINES, FRESH 10 5 0

219 080940 PLUMS AND SLOES, FRESH 10 5 0

220 081010 STRAWBERRIES, FRESH 10 5 0

221 081020 RASPBERRIES, BLACKBERRIES, MULBERRIES AND LOGANBER 10 5 0

222 081030 BLACK, WHITE OR RED CURRANTS GOOSEBERRIES, FRESH 10 5 0

223 081040 CRANBERRIES, BILFERRIES AND OTHER FRUITS OF THE GE 10 5 0

224 081050 KIWIFRUIT 10 5 0

225 081060 Durians, fresh 10 5 0

226 081090 OTHER FRESH FRUIT, FRESH, OTHER THAN SUBHEADING NO 10 5 0

227 081110 STARBARIES UNCOOKED OR COOKED BY STEAMING OR BOILI 10 5 0

228 081120 RASPBERRIES, BLACKBERRIES, MULBERRIES LOGANBERRIES 10 5 0

229 081190 OTHER FRUITS AND NUTS, UNCOOKED OR COOKED BY STEAN 10 5 0

Ref. code: 25595403040131WTU

87

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

230 081210 CHERRIES, PROVISIONALLY PRESERVED, BUT UNSUITABLE 10 5 0

231 081290 OTHER FRUITS AND NUTS, PROVISIONALLY PRESERVED, BU 10 5 0

232 081310 APRICOT, DRIED 10 5 0

233 081320 PRUNES, DRIED 10 5 0

234 081330 APPLE, DRIED 10 5 0

235 081340 OTHER FRUIT DRIED, OTHER THAN THAT OF HEADING NOS 10 5 0

236 081350 MIXTURES OF NUTS OR DRIED FRUITS OF THIS CHAPTER 10 5 0

237 081400 PEEL OF CITRUS FRUIT OR MELON (INCHEDING WATERMELO 10 5 0

Group 2 5%- 15 % 5 0 0

1 010290 LIVE BOVINE ANIMALS, NOT FOR PURE-BRED BREEDING 5 0 0

2 010391 LIVE SWINE, NOT FOR PURE-BRED BREEDING, WEIGHING LESS THAN 50 KG 5 0 0

3 010392 LIVE SWINE, NOT FOR PURE-BRED BREEDING , WEIGHING 50 KG OR MORE 5 0 0

4 030211 TROUT(SALMO TRUTTA, ONCORHYNCHUS MYKISS, ONCORHYNC 5 0 0

5 030212 PACIFIC SALMON (ONCORHYNCHUS NERKA, ONCORHYNCHUS G 5 0 0

6 030219 OTHER SALMONIDAE, EXCLUDING LIVERS AND ROES, FRESH 5 0 0

7 030221 HALIBUT, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0

8 030223 SOLE (SOLEA SPP.), EXCLUDING LIVERS AND ROES, FRES 5 0 0

9 030229 OTHER FLAT FISH, EXCLUDING LIVERS AND ROES, FRESH 5 0 0

10 030231 ALBACORE OR LONGFINNED TUNAS, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED

5 0 0

11 030232 YELLOWFIN TUNAS, EXCLUDINGING LIVERS AND ROES, FRE 5 0 0

12 030233 SKIPJACK OR STRIPE-BELLIED BONITO, EXCLUDING LIVES 5 0 0

13 030234 Bigeye tunas (thunnus obesus ), fresh or chilled 5 0 0

14 030235 Bluefin tunas (Thunnus thynnus), fresh or chilled 5 0 0

15 030236 Southern bluefin tunas(Thunnus maccoyii), fresh or chilled 5 0 0

16 030239 OTHER TUNAS, EXCLUDING LIVERS AND ROES, FRESH OR C 5 0 0

17 030240 HERRING, EXCLUDING LIVERS AND ROES, FRESH OR CHILL 5 0 0

Ref. code: 25595403040131WTU

88

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

18 030250 COD, EXLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0

19 030261 SARDINES, SARDINELLA, BRISLING OR SPRATS, EXCLUDIN 5 0 0

20 030262 HADDOCK, EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0

21 030264 MACKEREL, EXCLUDING LIVERS AND ROES, FRESH OR CHIL 5 0 0

22 030266 EELS (ANGUILLA SPP.), EXCLUDING LIVERS AND ROES, FRESH OR CHILLED 5 0 0

23 030269 OTHER FISH, EXCLUDING LIVERS AND ROES, FRESH OR CH 5 0 0

24 030270 LIVERS AND ROES OF OTHER FISH, FRESH OR CHILLED 5 0 0

25 030311 Sockeye salmon (red salmon) (Oncorhynchus nerka) frozen, excluding livers and roes, fish fillets an

5 0 0

26 030319 Other pacific salmon, frozen, excluding livers and roes, fish fillets and other fish meat of headin

5 0 0

27 030321 TROUT (SALMO TRUTTA, ONCORHYNCHUS MYKISS, ONCORHYN 5 0 0

28 030322 ATLANTIC SALMON AND DANUBE SALMON, EXCLUDING LIVER 5 0 0

29 030329 OTHER SALMONIDAE, EXCLUDING LIVERS AND ROES, FROZE 5 0 0

30 030331 HALIBUT, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

31 030333 SOLE, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

32 030339 OTHER FLAT FISH, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

33 030341 ALBACORE OR LONGFINNED TUNAS, EXCLUDING, LIVERS AN 5 0 0

34 030342 YELLOWFIN TUNAS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

35 030343 SKIPJACK OR STRIPE-BELLIED BONITS, EXCLUDING LIVER 5 0 0

36 030344 Bigeye tunas (Thunnus obesus), frozen, excluding livers and roes, fish fillets and other fish meat o

5 0 0

37 030345 Bluefin tunas (Thunnus thynnus), frozen, excluding livers and roes, fish fillets and other fish meat

5 0 0

38 030346 Southern bluefin tunas (Thunnus maccoyii), frozen, excluding livers and roes, fish fillets and other

5 0 0

39 030349 OTHER TUNAS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

40 030350 HERRINGS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

41 030360 COD, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

Ref. code: 25595403040131WTU

89

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

42 030371 SARDINES, SARDINELLA, BRISLING OR SPRATS, EXCLUDIN 5 0 0

43 030372 HADDOCK, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

44 030373 COALFISH, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

45 030374 MACKEREL, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

46 030375 DOGFISH AND OTHER SHARKS, EXCLUDING LIVERS ROES, F 5 0 0

47 030376 EELS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

48 030377 SEA BASS, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

49 030379 OTHER FISH, EXCLUDING LIVERS AND ROES, FROZEN 5 0 0

50 030380 LIVERS AND ROES, FROZEN 5 0 0

51 030410 FISH FILLETS AND OTHER FISH MEAT (WHETHER OR NOT M 5 0 0

52 030420 FISH FILLETS, FROZEN 5 0 0

53 030490 OTHER FISH MEAT (WHETHER OR NOT MINCED), FROZEN 5 0 0

54 030510 FISH MEAL AND FISH PELLETS FIT FOR HUMAN CONSUMPTI 5 0 0

55 030520 LIVERS AND ROES, DRIED, SMOKED, SALTED OR IN BRINE 5 0 0

56 030530 FISH FILLETS DRIED SALTED OR IN BRINE, BUT NOT SMOKED 5 0 0

57 030541 PACIFIC SALMON (ONCORHYNCHUS NERKA, ONCORHYNCHUS G 5 0 0

58 030542 HERRINGS, INCLUDING FILLETS, SMOKED 5 0 0

59 030549 OTHER FISH MEAL, SMOKED 5 0 0

60 030551 COD, DRIED, WHETHER OR NOT SALTED 5 0 0

61 030559 OTHER FISH MEAL, DRIED, WHETHER OR NOT SALTED 5 0 0

62 030561 HERRINGS, SALTED BUT NOT DRIED OR SMOKED AND FISH 5 0 0

63 030562 COD, SALTED BUT NOT DRIED OR SMOKED AND FISH IN BRINE 5 0 0

64 030563 ANCHOVIES SALTED BUT NOT DRIED OR SMOKED AND FISH IN BRINE 5 0 0

65 030569 OTHER FISH MEAL, BUT NOT DRIED OR SMOKED AND FISH 5 0 0

66 030611 ROCK LOBSTER AND OTHER SEA CRAWFISH, FROZEN 5 0 0

67 030612 LOBSTERS (HOMARUS SPP.), FROZEN 5 0 0

68 030613 SHRIMPS AND PRAWNS, FROZEN 5 0 0

69 030614 CRABS, FROZEN 5 0 0

70 030619 OTHER CRUSTACEANS, FROZEN 5 0 0

71 030621 ROCK LOBSTER AND OTHER SEA CRAWFISH, NOT FROZEN 5 0 0

Ref. code: 25595403040131WTU

90

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

72 030622 LOBSTER, NOT FROZEN 5 0 0

73 030623 SHRIMPS AND PRAWNS 5 0 0

74 030624 CRAB 5 0 0

75 030629 OTHER CRUSTACEANS, NOT FROZEN ; CRUSTACEANS MEAL A 5 0 0

76 030710 OYSTERS, WHETHER IN SHELL OR NOT 5 0 0

77 030721 SCALLOPS, INCLUDING QUEEN SCALLOPS, OF THE GENERAP 5 0 0

78 030729 SCALLOPS, INCLUDING QUEEN SCALLOPS, OF THE GENRAPE 5 0 0

79 030731 MUSSELS (MYTILUS SPP., PERNA SPP.), LIVE, FRESH OR 5 0 0

80 030739 MUSSELS (MYTILUS SPP., PERNA SPP.), LIVE, FROZEN, 5 0 0

81 030741 CUTTLE FISH, SQUID LIVE, FRESH OR CHILLED 5 0 0

82 030749 CUTTLE FISH HEAD,CUTTLE FISH,SQUID FROZEN OR DRI 5 0 0

83 030751 OCTOPUS (OCTOPUS SPP.), LIVE, FRESH OR CHILLED 5 0 0

84 030759 OCTOPUS, FROZEN OR DRIED, SALTED OR IN BRINE 5 0 0

85 030760 SNAILS , OTHER THAN SEA SNAIL, FROZEN, DRIED SALTED 5 0 0

86 030791 OTHER MOLLUSCS, LIVE, FRESH OR CHILLED 5 0 0

87 030799 OTHER MOLLUSCS, FROZEN, DRIED, SALTED OR IN BRINE 5 0 0

88 040210 MILK AND CREAM, IN POWDER, GRANULES OR OTHER SOLID 5 0 0

89 040221 MILK AND CREAM, CONCENTRATED NOT CONTAINING ADDED 5 0 0

90 040229 MILK AND CREAM, CONTAINING ADDED SUGAR OR OTHER S 5 0 0

91 040310 YOGURT, WHETHER OR NOT CONCENTRATED OR CONTAINING 5 0 0

92 040390 BUTTERMILK, CURDLED MILK AND CREAM,KEPHIR AND OTHE 5 0 0

93 040410 WHEY AND MODIFIED WHEY, WHETHER OR NOT CONCENTRATE 5 0 0

94 040490 PRODUCTS CONSISTING OF NATURAL MILK CONSTITUENTS 5 0 0

95 040590 OTHER FATS AND OILS DERIVED FROM MILK 5 0 0

96 050510 FEATHERS OF A KIND USED FOR STULLING, DOWN, OF BIR 5 0 0

97 050590 SKIN AND OTHER PARTS OF BIRDS WITH THEIR FEATHERS 5 0 0

98 051191 PRODUCTS OF FISH OR CRUSTACEANS, MOLLUSCS OR OTHER 5 0 0

99 080211 ALMONDS, IN SHELL, FRESH OR DRIED 5 0 0

100 080212 ALOMONDS, SHELLED, FRESH OR DRIED 5 0 0

101 080221 HAZELNUTS OR FILBERTS, IN SHELL, FRESH OR DRIED 5 0 0

Ref. code: 25595403040131WTU

91

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

102 080222 HAZELNUTS OR FILBERTS, SHELLED, FRESH OR DRIED 5 0 0

103 080231 WALNUTS, IN SHELL, FRESH OR DRIED 5 0 0

104 080232 WALNUTS, SHELLED, FRESH OR DRIED 5 0 0

105 080240 CHESTNUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED 5 0 0

106 080250 PISTACHIOS, FRESH OR DRIED, WHETHER OR NOT SHELLED 5 0 0

107 080290 OTHER NUTS, FRESH OR DRIED, WHETHER OR NOT SHELLED 5 0 0

108 080810 APPLES, FRESH 5 0 0

Group 3 < 5% 0 0 0

1 010110 Live horses, asses, mules and hinnies, for pure-bred breeding 0 0 0

2 010190 Live horses, not for pure-bred breeding 0 0 0

3 010310 LIVE SWINE, FOR PURE-BRED BREEDING 0 0 0

4 010410 LIVE SHEEP, NOT FOR BREEDING 0 0 0

5 010420 LIVE GOATS 0 0 0

6 010511 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 0 0 0

7 010512 TURKEYS, WEIGHTING NOT MORE THAN 185 G, FOR BREEDING 0 0 0

8 010519 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 0 0 0

9 010592 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGHTING MORE THAN 185 G, BUT NOT MORE THAN 2,000 G, F

0 0 0

10 010593 LIVE FOWLS OF THE SPECIES GALLUS DOMESTICUS, WEIGH 0 0 0

11 010599 LIVE DUCKS, GEESE, TURKEYS AND GUINEA FOWLS, WEIGH 0 0 0

12 010611 Primates, for draught, consumption of meat, milk or eggs, imported not for breeding

0 0 0

13 010612 Whales,dolphins and porpoises(mammals of the order Cetacea);manatees and dugongs(mammals of the orde

0 0 0

14 010619 Mammals, for draught, consumption of meat, milk or eggs, imported for breeding 0 0 0

15 010620 Reptiles (including snakes and turtles), for draught, consumption of meat, milk or eggs, imported fo

0 0 0

16 010631 Birds of prey 0 0 0

Ref. code: 25595403040131WTU

92

NO. HS. Description Applied Rate หลังการลดภาษี

(%)

2004 2005 2006

17 010632 Psittaciformes (including parrots, parakeets, macaws and cockatoos), for draught, consumption of mea

0 0 0

18 010639 Other birds, for draught, consumption of meat, milk or eggs imported for breeding

0 0 0

19 010690 Frog 0 0 0

20 040700 BIRDS' EGGS, IN SHELL, FRESH, PRESERVED OR COOKED 0 0 0

21 050100 HUMAN HAIR, UNWORKED, WHETHER OR NOT WASHED OR SCO 0 0 0

22 050210 PIGS' HOGS' OR BOARS' BRISTLES AND HAIR WASTE THER 0 0 0

23 050290 BADGER HAIR AND OTHER BUSH MAKING HAIR 0 0 0

24 050300 HORSEHAIR AND HORSEHAIR WASTE, WHETHER OR NOT PUT 0 0 0

25 050610 OSSEIN AND BONES TREATED WITH ACID 0 0 0

26 050690 BONES AND HORN-CORES, UNWORKED, DEFATTED, SIMPLY P 0 0 0

27 051110 BOVINE SEMEN 0 0 0

28 051191 PRODUCTS OF FISH OR CRUSTACEANS, MOLLUSCS OR OTHER 0 0 0

29 051199 OTHER ANIMAL PRODUCTS NOT ELSEWHERE SPECIFIED OR I 0 0 0

Ref. code: 25595403040131WTU

93

BIOGRAPHY

Name Miss Kansinee Somjai

Date of Birth 14 September 1988

Educational Attainment

2007: Bachelor of Arts

2011: Master of Social Science