Key outcomes of the Thailand-Australia Free Trade Agreement

Principal outcomes on trade in goods

Overall

  • Upon TAFTA's entry into force on 1 January 2005, Thailand eliminated its tariffs on some 2,934 tariff items, around 53% of all items, accounting for 78% of current Thai imports from Australia. Of these, only 206 items were previously duty free.
  • A further 41% of Thai tariffs were phased to zero in 2010. These items cover 17% of current trade.
  • All remaining tariffs, including tariff rate quotas, will phase to zero in 2015 or 2020, with the exception of skim milk powder and liquid milk and cream, for which the tariff rate quotas will be eliminated in 2025.
  • For agricultural products subject to tariff rate quotas prior to 1 January 2005, Thailand has either eliminated the tariff and quota restrictions or will expand access for Australia over a transition period varying according to the product, before final elimination of the tariff rate quota.
All references to an "immediate" elimination of or reduction in tariffs mean immediately upon entry into force of the agreement (1 January 2005).

Industrials

General

  • On entry into force, Thailand reduced tariffs on any industrial goods not subject to immediate elimination to a ceiling of no more than 20% (with the exception of small and medium passenger motor vehicles), before phasing to zero. Where not eliminated immediately, tariffs on a range of industrial goods identified by Australia as of specific interest were halved immediately before phasing to zero.

Automotive

  • Thailand immediately eliminated tariffs on large passenger motor vehicles (engine capacity of over 3000cc) and goods vehicles, previously at 80% and 60% respectively. For other passenger motor vehicles, Thailand immediately reduced the previous 80% tariff to 30%, before phasing this down by 6% each year to zero in 2010.
  • Tariffs on all automotive parts, components and accessories, previously up to 42%, were immediately reduced to a ceiling of 20%, and will be phased to zero by 2010. Tariffs on engines were immediately reduced from the previous 30% to 15%. Other tariffs previously at or below 20% were also immediately reduced and phased down accordingly.

Machinery and equipment

  • Prior to 1 January 2005, Thai tariffs ranged up to 30%. Tariffs were either immediately eliminated or were phased to zero by 2010, with the exception of three tariffs covering electric power boards, which will be eliminated in 2015.
  • Tariffs of 20% for electric transformers and inductors were eliminated immediately.
  • Tariffs of 30% for fully-automatic washing machines and combined refrigerator-freezers were eliminated immediately.

Steel

  • Thailand immediately eliminated its 1% tariff on slab steel.
  • Thailand immediately halved its tariffs on flat-rolled steel products of interest to Australia, including hot-rolled coil (previous tariff of 10%), cold-rolled coil (12%) and coated steel (15%). Tariffs will then be eliminated in 2015, with the exception of most coated steel products for which the tariffs were phased to zero in 2008.
  • On long products, Thailand generally reduced tariffs to zero by 2010. On a limited number of products, including structural sections and merchant bar, Thailand immediately halved tariffs, which will then be held until elimination in 2015.
  • On steel articles, where Thailand's previous tariffs were generally 20%, Thailand eliminated some tariffs immediately, with the remainder phased to zero by 2010.

Non-ferrous metals

  • On unwrought copper cathode, Thailand eliminated the tariff in 2010.  Prior to that Thailand bound the rate at no more than 5%, and applied a tariff of no higher than the rate applied to its ASEAN partners.
  • On copper bars and pipes, with previous tariffs of 10%, Thailand either eliminated the tariff immediately or reduced it immediately to 5% and then eliminated it completely in 2007.
  • On aluminium bar, sheet and foil, with previous tariffs of 10%, Thailand reduced immediately to 5% the tariff on items of specific interest and eliminated it in 2007, while remaining tariffs phased to zero in 2009. Thailand immediately eliminated its 1% tariff on unwrought aluminium.
  • On unwrought lead and zinc, with previous tariffs of 10%, Thailand either eliminated the tariff immediately or reduced the tariff immediately to 5% and then eliminated it in 2007.

Pharmaceuticals

  • Thailand phased current tariffs of 10% or 20% to zero in 2009. On products of specific interest, previous tariffs of 10% were halved immediately and were eliminated in 2007.

Fertilisers

  • Thailand immediately eliminated previous fertiliser tariffs at 5%, and immediately halved previous tariffs of 10% before elimination in 2007.

Photographic goods

  • Thailand immediately eliminated tariffs of 20% on photographic film, paper and chemicals.

Plastics

  • Thailand immediately reduced tariffs of 30% on plastic articles to 20% and phased to zero in 2010. For the most significant item of current trade, miscellaneous plastic articles, not separately identified in the tariff schedule, Thailand immediately eliminated the previous 30% tariff.
  • Thailand phased the tariffs of up to 20% on polymers to 5% in 2008 and to zero in 2010.

Other

  • Thailand immediately eliminated the previous tariff of 10% on golf club parts.
  • Thailand immediately eliminated the previous tariff of 20% on parts of seats.
  • Thailand immediately eliminated the previous tariff of 20% on ferries under 1,000 tonnes, and will bind the current zero tariff on ferries of over 1,000 tonnes.

Agriculture

Meat

  • Thailand phased the current 32% tariff for sheep meat to zero in 2010.
  • Thailand immediately reduced the tariff on beef to 40%, down from 51%, and for beef offal to 30%, down from 33%, and will phase these rates to zero in 2020.
  • Thailand will phase the current 33% tariff for pork to zero in 2020.

Dairy

  • Thailand immediately eliminated the previous tariffs on infant formula (5%), lactose (up to 20%), casein and milk albumin (10%), and phased the tariffs on butter fat, milkfood, yoghurt, dairy spreads and ice cream to zero in 2010.
  • It provided an immediate additional quota for Australia of 2,200 tonnes for skim milk powder and 120 tonnes for liquid milk and cream, expanding by 17% at five-yearly intervals until 2025, when all tariffs and quotas will be eliminated.
  • It will phase the tariffs for butter and cheese, other milk powders and concentrates to zero in 2020.

Grains and related products

  • Thailand immediately eliminated the previous tariffs on wheat (ad valorem equivalent of 12-20%), barley, rye and oats (ad valorem equivalents of up to 25%), and the tariff and tariff rate quota on rice.
  • It also immediately eliminated the tariffs on unroasted malt (ad valorem equivalent of 28%) and wheat gluten (31%), and phased the tariffs on wheat flour (32.6%) and starch (31%) to zero in 2010.

Fruit and vegetables

  • Thailand phased tariffs on most fresh fruit and vegetables (current rates mostly 33% or 42%) to zero in 2010. Tariffs on mandarins (42%) and grapes (33%) were immediately reduced to 30%, and will be phased to zero in 2015.
  • Thailand immediately eliminated its tariffs on most tropical fruit.
  • Thailand provided immediate additional quota for fresh potatoes, expanding yearly until 2020, when all tariffs and quotas will be eliminated. The current 30% tariffs for processed potatoes will be phased to zero in 2015.
  • Thailand immediately reduced to 24% the previous tariffs of 30% on fruit juices and canned fruit, and phased the tariff to zero in 2010. The previous 30% tariffs on canned mixed fruit and canned pineapple were eliminated immediately.

Sugar

  • Thailand provided immediate additional quota for sugar, expanding annually by 10%, with tariff and quota free access in 2020.

Wine, beer and spirits

  • Thailand immediately reduced its previous 54% tariffs on wine to 40%, and will phase the tariff to zero in 2015.
  • For beer and spirits, Thailand immediately reduced its previous tariffs of 60% to 30%, before phasing to zero in 2010.

Other processed foods

  • Thailand immediately eliminated its previous 10% tariffs on chocolate confectionery, and phased its 30% tariff on sugar confectionery to zero in 2010.
  • For bakery products, Thailand mostly phased tariffs of 25-30% to zero in 2010, with immediate elimination of tariffs on crispbread and some cereals.

Other

  • Thailand immediately eliminated its previous tariffs of up to 10% on hides and skins.
  • Thailand immediately eliminated its previous 1% tariff on wool and bound its tariff on cotton at zero.

Principal outcomes on services and investment

Foreign investment

  • Thailand permits majority Australian ownership of mining operations (up to 60%).  The previous limit was 49.9%.
  • Thailand permits Australian companies which manufacture goods in Thailand to provide distribution services in relation to those goods without limitation of Australian equity (i.e. up to 100%). The previous limit was 49.9%.
  • Thailand permits up to 100% Australian ownership of companies providing certain construction services.[1] The current limit is 49.9%.
  • Thailand permits 100% Australian ownership of companies providing management consulting services through a regional operating headquarters or associated company or branch. The previous limit was 49.9%.
  • Thailand permits majority Australian ownership of major restaurants or hotels (up to 60%). The previous limit was 49.9%.
  • Thailand permits majority Australian ownership of tertiary education institutions specialising in science and technology (up to 60%) (provided it is located outside of Bangkok).  The previous limit was 49.9%.
  • Thailand permit majority Australian ownership of companies providing certain maritime cargo services (up to 60%) [2].  The current limit was 49.9%.
  • The agreement incorporates provisions on investment protection which guarantee a range of rights of Australian direct investors in Thailand, including the right to transfer their funds out of Thailand at any time.  The agreement gives Australian investors the right to seek impartial resolution of any disputes with the Thai government over their investments.

Temporary entry of business people

  • Thailand will grant a visa and work permit for up to five years' stay for all Australian citizens being transferred to work in Thailand within the same company (to be renewable annually) (previously one year).
  • Thailand will grant a visa and work permit for up to three years' stay for all Australian citizens entering Thailand to work on the basis of a contract with an Australian or Thai company other than their employer in Australia (to be renewable annually) (previously one year).
  • Thailand will not require a work permit for Australian citizens who are business visitors conducting business meetings in Thailand for up to 15 days, and up to 90 days for APEC Travel Card Holders.
  • Thailand will consider applications for visas and work permits submitted by an employer on an applicant's behalf and advise in advance of approval and (with visa to be granted on arrival subject to identity verification).
  • Thailand will permit all Australian business visitors access to the one-stop visa and work permit service (previously restricted to visitors representing or employed by major investors).
  • Thailand will permit all Australians who hold work permits to participate in business meetings anywhere in Thailand, including locations not specified in their work permits (previous work permits had to be changed if any work was to be conducted in a location not specified in the permit).
  • Thailand will reduce the number of documents required from Australians for work permits and renewals and work permits.

Future commitments

  • Thailand has made an undertaking to further negotiations on services and investment to enhance its commitments across the board.  Thailand has also agreed specifically to explore the scope for improving its commitments in a number of areas of priority interest to Australia, including:
    • negotiations on financial services
    • negotiations on telecommunications services
    • extending the initial period of visas and work permits for intra-corporate transferees to three years, with a total stay of up to 10 years
    • provision of offshore processing and granting of visas and work permits
    • granting of automatic work rights for spouses of intra-corporate transferees
    • abolition of labour market testing
  • [1] Relating to services to the public in utilities or transport requiring special tools, machinery, technology or construction expertise.
  • [2] Port and waterway operation services including marina facilities, provided the facilities included a ship lifter, inland berthing and a ship yard for maintenance and repair.

Australian commitments on tariffs

Overall

  • Under TAFTA, Australia bound its already zero tariff on 3,080 tariff items for goods of Thai origin, accounting for 36% of current Australian imports from Thailand.
  • Under TAFTA, Australia also eliminated its tariffs on goods of Thai origin under a further 2,003 tariff items, accounting for 47% of current Australian imports from Thailand.
  • Australia phased tariffs on goods of Thai origin under a further 786 tariff items to zero by 2010. These items cover 13% of current trade.
  • For all remaining tariffs on goods of Thai origin, consisting of the 239 tariff items for apparel and certain finished textiles with current tariffs at 25%, the tariffs will be phased to zero in 2015. These items cover 4% of current trade.

Automotive

  • On entry into force, Australia eliminated existing tariffs on all passenger vehicles, off-road vehicles, goods vehicles and other commercial vehicles of Thai origin. These tariffs were 15% for passenger motor vehicles (although the general rate fell to 10% on 1 January 2005) and 5% for other vehicles.
  • Prior to 1 January 2005, there were 146 tariff items covering automotive parts and components where the Australian tariffs for goods of Thai origin were 10% or 15%. Of these, the tariffs on 98 items fell to 5% on entry into force of the Agreement, and were held at that level until elimination in 2010. On the remaining 48 items, Australia and Thailand both eliminated relevant tariffs upon entry into force of the Agreement on 1 January 2005.
  • Australia eliminated all current tariffs of 5% or below on automotive parts and components of Thai origin on entry into force of the Agreement.

Textiles, clothing and footwear

  • Australia reduced tariffs previously at 25%, consisting of the 239 tariff items for apparel and certain finished textiles, to 12.5% on entry into force of the Agreement for goods of Thai origin. The 12.5% tariff was held until 2010, when it was reduced to 5%.  The 5% tariff will then be held until elimination in 2015.
  • For textiles, clothing, leather items and related products, but excluding carpets, with tariffs previously at 10% or 15%, the tariff was reduced to 5% on entry into force of the Agreement for goods of Thai origin. The 5% tariff was then held until elimination in 2010. However, for the five tariff items listed below, Australia eliminated its tariffs for goods of Thai origin on entry into force of the Agreement.
    • 5007.10.10, 5607.90.00, 5608.19.90, 5608.90.90, 5911.10.00.
  • For textile yarns and other textile products with tariffs at 5% or below prior to 1 January 2005, the tariff was reduced to 3% on entry into force of the Agreement for goods of Thai origin. The tariff was then reduced to 2% in 2006, 1% in 2007, and eliminated in 2008. However, for the single tariff item, 5902.20.00, Australia eliminated its tariff for goods of Thai origin upon entry into force of the Agreement.
  • For carpets, with tariffs at 15% prior to 1 January 2005, Australia reduced the tariff to 10% upon entry into force of the Agreement for goods of Thai origin. The tariff was reduced to 8% in 2008, 5% in 2009, and eliminated in 2010.
  • For footwear, with tariffs at 15% prior to 1 January 2005, Australia reduced the tariff to 9% upon entry into force of the Agreement for goods of Thai origin. The tariff was reduced to 8% in 2008, 5% in 2009, and eliminated in 2010.
  • For footwear parts under the tariff items, 6406.20.00 and 6406.99.99, mainly soles, with tariffs for goods of Thai origin at 5%, Australia held the current tariff until 2009, when it was eliminated. For other footwear parts, the pre- 1 January 2005 tariffs for goods of Thai origin at 5% or 10%, Australia eliminated its tariffs on entry into force of the Agreement.

Steel

  • Australia maintained its tariff of 4% for goods of Thai origin on eight tariff items until 2010, when the tariff was eliminated.
  • Australia eliminated tariffs of 5% or less on other steel items on entry into force of the Agreement for goods of Thai origin.

Plastics and chemicals

  • Australia maintained tariffs of 5% on 71 tariff items until 2008, when Australia eliminated the tariff for goods of Thai origin.
  • Australia eliminated tariffs of 5% or less on other plastics and chemicals items on entry into force of the Agreement for goods of Thai origin.

Canned tuna

  • Australia reduced its tariff of 5% on canned tuna to 2.5% on entry into force of the Agreement for goods of Thai origin, and eliminated the tariff in 2007.

Other

  • Prior to 1 January 2005, Australian tariffs on all items in other sectors were at 5% or below.  Australia eliminated these tariffs on entry into force of the Agreement for goods of Thai origin.

Australian commitments on services and investment

Overall

  • Under the FTA, Australia has undertaken to guarantee Thai service providers and investors access to the Australian market in a range of sectors
    • and has undertaken to minimise discrimination Thai service providers and investors may face in the Australian market compared with Australian service providers and investors.
  • The sectors in which Australia has made these undertakings largely mirror those sectors in which Australia has indicated a willingness in the WTO to make commitments to other WTO members in the current WTO negotiations
    • these sectors are set out below.
  • Australia has not made any undertakings to Thailand under the FTA to provide access in the audio-visual, broadcasting or media sectors, among others.
  • Australia has not made any undertakings that would allow higher levels of Thai ownership than currently permitted in Australian international or domestic airlines, Australian airports or Telstra
    • Australia's undertakings to Thailand on investment are all consistent with current Australian government policy.
  • The FTA does not include any undertakings on any government subsidies or grants provided to Australian service providers, service consumers or investors
    • governments remain free to maintain or impose conditions on such subsidies or grants they consider appropriate from time to time.

Australia’s commitments on foreign investment

  • Australia has made commitments to Thailand to permit Thai investment in certain sectors of the Australian market consistent with Australia’s current policy on foreign investment (the sectors are listed below).
  • Under the FTA, Australia permits Thai investment in business interests in those sectors without specific approval from the Australian government, except in the following circumstances:
    • acquisition of “substantial interests” in existing Australian businesses with total assets of $50 million or more
    • proposals to take over offshore companies whose Australian subsidiaries or assets are valued at $50 million or more or account for more than 50 percent of the target company’s global sales
    • proposals to establish new businesses in Australia involving a total investment of more than $10 million
    • investments by the Thai Government.
  • Australia also permits Thai investment in real estate that does not fall into any of the following categories:
    • non-residential commercial real estate, where the property is subject to a heritage listing, valued at more than $5 million
    • developed non-residential commercial real estate, where the property is not subject to a heritage listing, valued at $50 million or more
    • accommodation facilities
    • vacant urban real estate
    • residential real estate

Australia’s commitments on temporary entry of business people

  • Australia has also undertaken to provide access to Thai citizens visiting Australia for business purposes consistent with Australia’s current policies on temporary entry
    • unlike the other commitments Australia has made under the FTA, the commitments on temporary entry apply to all Thai citizens, regardless of the industry or services sector in which they work.
  • Under the FTA, Australia permits the temporary entry of Thai citizens without labour market testing in the following circumstances:
    • business visitors are permitted to enter and stay for up to three months
    • service sellers are permitted to enter and stay initially for six months, with a maximum stay of 12 months
    • intra-corporate transferees are permitted to enter and stay initially for up to four years with a total of up to ten years
    • contractual service suppliers are permitted to enter and stay for up to three years. Specialist Thai chefs entering as contractual service suppliers are permitted to enter and stay for up to four years
    • independent executives are permitted to enter and stay initially for up to four years
    • spouses and dependants of intra-corporate transferees are permitted to enter stay and work for the period of the intra-corporate transferee’s visa.
  • Thai citizens entering Australia under the FTA will be required to meet the conditions applying to the relevant visa, including any conditions relating to level of qualification/specialisation.

State and territory government measures

  • As with the WTO General Agreement on Trade in Services, Australia’s undertakings on trade in services under the FTA apply in general to State and Territory Government measures as well as Australian Government measures
    • Australia’s undertakings on services specifically exempt any State and Territory Government measures which are inconsistent with the general undertaking to provide access to and reduce discrimination against Thai service providers
    • Australia’s undertakings on investment exempt all State and Territory Government measures relating to mining and manufacturing.

Local government measures

  • The FTA does not affect the rights of local governments to maintain or introduce measures which may affect Thai service providers or investors, provided the intention of the measure is not to nullify the benefit of the undertaking to permit access.

Sectoral coverage

  • Under the FTA, Australia has made new undertakings to guarantee access to Thai service providers and investors in the sectors set out in this section
    • as noted above, these sectors mirror those on which Australia has offered to provide access to WTO members in the current WTO negotiations.
  • Australia has made undertakings in the following business services:
    • legal services: Australia will permit Thai service suppliers to provide advisory services in Thai law, third country law and international law, as well as international commercial arbitration services and other alternative dispute resolution services. Australia will also permit Thai lawyers to join local law firms in all states and territories except Western Australia and South Australia
    • landscape architectural services: Australia will permit Thai service suppliers to provide planning and design services for the aesthetic landscaping of parks, commercial and residential land
    • computer and computer-related services: Australia will permit Thai service suppliers to provide database services and other computer services. The commitment does not apply to content
    • mining and related services: Australia will permit Thai service suppliers to provide consultancy services incidental to mining, and other services incidental to mining, including drilling services, repair and dismantling services and well-casing services. In addition, Australia will permit Thai service suppliers to provide mining related scientific and technical consulting services, as well as mining site preparation (such as tunnelling).
  • In relation to communications services, Australia will not impose quotas on the number of satellite and mobile services and will permit unlimited Thai interest in Optus and Vodafone. Australia has not made any commitment on the ownership by Thai nationals of Telstra.
  • Australia will permit Thai service suppliers to provide the following environmental services: protection of ambient air and climate; remediation and cleanup of soil and water; noise and vibration abatement; and protection of biodiversity and landscape.
  • Australia has made the following undertakings relating to financial services:
    • banking: Australia will permit the Thai central bank and government monetary institutions to invest in Australia at interest without providing an assurance to the Reserve Bank that it will be a stable holder or the Australian dollar or that it will consult the Reserve Bank in the event of a significant change in its Australian dollar profile.
  • Australia will permit Thai service suppliers to provide the following education services: provision of Thai cooking training, Thai language training and training in Thai traditional massage through training institutes.
  • Australia has made the following undertakings relating to transport services:
    • air services — ground handling: Australia will permit Thai service suppliers to provide ground-handling services, including airport operation services, cargo handling and other supporting services for air transport. Australia’s undertakings do not extend to airport and terminal fire-fighting services.
    • maritime services: Australia will permit Thai service suppliers to provide cargo handling, customs clearance and maritime agency services (excluding cabotage). Australia will also permit Thai international maritime operators non-discriminatory access to tug assistance and fuelling at Australian ports, and reasonable and non-discriminatory rights to have their cargoes on-forwarded from ports using other modes of transport.
  • Australia will permit Thai service suppliers to provide automotive repair services.
Last Updated: 12 January 2011