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On entry into force of the CEP on 1 July 2005, Thailand will eliminate tariffs and quotas on 52% of imports[1] from New Zealand. Currently only 4% of imports from New Zealand receive duty free access.
By 2010, a further 13% of trade will be duty free. Another 20% of trade will have tariffs phased out by 2020. Trade restrictions on the remaining 15% of imports (covering only skim milk powder and liquid milk and cream) will be eliminated by 2025.
The first round of tariff cuts will take place on implementation of the CEP on 1 July 2005 and the second round on 1 January 2006, with subsequent reductions being applied on 1 January each year.
There is scope within the Agreement to accelerate these tariff reductions in the future.
The following section covers the outcomes on tariff reductions for New Zealand’s major export sectors to Thailand.
[1] All percentages of trade are estimates based on 2003 trade by value statistics.
Thailand will, on implementation, eliminate tariffs on most New Zealand horticulture exports to Thailand including sweet potatoes, carrots, frozen peas, frozen mixed vegetables, dried peas, avocadoes, apples, cherries, kiwifruit and persimmons. These items currently face tariffs of up to 40%.
Thailand will establish and then gradually increase additional New Zealand-specific quotas for imports of fresh potatoes and onions. All trade restrictions on these products will be removed by 2020.
Most New Zealand forestry exports to Thailand currently face a tariff of only 1%, which will be removed on implementation.
Other tariffs of up to 30% will be either eliminated on implementation or phased out by 2010. The 12.5% tariff on fibreboard will be cut to 5% in 2005 and removed in 2012.
Thailand's higher tariffs (20-30%) on seafood products will phase to zero tby 2010.
The 5% tariffs on New Zealand's main seafood exports to Thailand will variously be eliminated on implementation or be phased to zero by 2009 or 2015. (Note: These tariffs are not applied to fish exported to Thailand for processing and re-export).
Almost all Thailand’s tariffs on imports of mechanical and electrical machinery items from New Zealand will be eliminated either on implementation or by 2010.
Tariffs on most other industrial items will phase to zero in 2010 although a selected number will be eliminated immediately.
Significant New Zealand manufactured exports which stand to benefit from the CEP include gas pumps (15% tariff to be eliminated on implementation), plastic goods (tariffs of up to 30% to be phased to zero in 2010) and aluminium foil (7.5% tariff to be phased to zero in 2007).
For New Zealanders doing business and investing In Thailand
Thailand will take some steps to make it easier for New Zealand business people and investors to operate in Thailand.
Temporary entry for business people
Business visitors will be eligible to apply for one-year multiple-entry non-immigrant business visas valid for visits of 90 days at a time. Business visitors with a non-immigrant business visa will be granted a temporary stay and work permit for up to 90 days.
Business people with a non-immigrant business visa will be permitted to conduct business meetings in Thailand for stays for up to 15 days (90 days for APEC Business Travel Card holders) without a work permit. A notification procedure still applies.
New Zealand investors with fully paid up capital of at least two million Baht will have access to Thailand's One Stop Service Centre for visa and work permit applications.
Intra-corporate transferees employed as managers, executives or specialists in Thailand can have their work permits extended annually, up to a maximum of five years.
Intra-corporate transferees will be permitted to attend business meetings and seminars anywhere in Thailand without giving prior notification to the Thai authorities.
New Zealand companies in Thailand may apply for work permits for New Zealand employees prior to their entry into Thailand.
The spouses of investors and intra-corporate transferees with non-immigrant visas will have the right to be employed as managers, executives or specialists, provided they comply with the relevant Thai laws and regulations.
Investment
Thailand is committed to allowing 100% equity participation and not restricting the number of New Zealand directors for investments in a number of manufacturing sectors including machinery and mechanical appliances, food processing, paper products, software manufacture, furniture and textile manufacture.
The Agreement provides for additional protections for New Zealand investments. These include compensation for losses and appropriate protection against expropriation unless internationally accepted criteria are met.
New Zealand currently provides duty free access for 65% of imports from Thailand.
On implementation, New Zealand will eliminate tariffs on a further 20% of imports from Thailand, covering a range of items including the remaining tariffs on agricultural products, air-conditioning machines, processed food and sporting equipment.
New Zealand will remove tariffs on further items by 2010, at which point 97% of Thailand’s current exports will become duty free. This list includes aluminium products, some automotive parts, furniture, plastics, steel and iron products, plasterboard and wallboard, and whiteware items.
The remaining tariffs, covering textile, apparel, footwear and carpet products, will be phased to zero by 2015.
Investment
Thai investors will remain subject to New Zealand’s overseas investment screening regime.
The CEP provides for any disputes between investors and governments to be resolved through domestic courts or, if both Parties agree, through international dispute settlement mechanisms.
Temporary employment
New Zealand will provide access for qualified Thai chefs to be employed on contract in New Zealand without labour market testing for up to four years.
New Zealand will also explore the scope for developing a system to recognise the qualifications of traditional Thai massage therapists with a view to facilitating their entry into New Zealand for temporary employment purposes.
Products must be substantially transformed in either country to qualify for preferential tariff treatment under the Agreement.
A change of tariff classification (CTC) rule is used to determine if the "substantially transformed" requirement has been met (a value-added rule serves this purpose in CER and the New Zealand/Singapore CEP).
Textile, apparel, footwear and carpet products must meet a 50% FOB[2] Thai/New Zealand content rule, in addition to the change of tariff classification requirement.
Robust provisions for verification of the rules of origin are included.
Under the CEP, both parties will retain their existing WTO rights and obligations on anti-dumping and countervailing duties procedures and the use of global safeguard measures (although there is discretion to exclude partner country trade from any global safeguard action).
Bilateral transitional safeguards will also be available. These will allow either Party to address situations of serious injury to domestic industries caused by increased imports due to tariff reductions unde the CEP by reverting to higher tariffs for a certain period.
Thailand will apply special safeguards for the most sensitive agricultural products (whole milk powder and a number of other dairy products, beef, beef offal, honey and processed frozen potatoes). Imports of these products will benefit from reducing tariffs up to a certain volume based on historical imports, plus a growth factor. Once the volume of imports from New Zealand reaches this level, these safeguards automatically trigger a snapback to the normal tariff. The same provisions were included in Thailand’s Free Trade Agreement with Australia.
The CEP contains provisions aimed at facilitating trade and reducing transaction costs through cooperation and information sharing. The CEP will establish mechanisms for regulators and officials to work together more effectively to resolve any barriers to trade in the areas of:
customs procedures
sanitary and phytosanitary measures
standards and conformance, and
electronic commerce.
Efforts will be made to facilitate consideration of each Party’s sanitary and phytosanitary requests within the existing biosecurity regimes.
The CEP reaffirms both countries’ WTO commitments on intellectual property rights. It also aims to facilitate the enforcement of intellectual property rights and the promotion of innovation through cooperation between the Parties.
A chapter on competition policy is included in the CEP to promote fair competition in line with the APEC Principles of non-discrimination, comprehensiveness, transparency and accountability.
A substantive negotiation on the liberalisation of services trade (including recognition of qualifications) is scheduled to commence within three years after entry into force of the CEP.
The two countries will work progressively to eliminate barriers related to government procurement. Further substantive negotiations to expand on the initial commitments are envisaged.
As in the New Zealand/Singapore CEP, this Agreement contains a specific provision whereby New Zealand maintains its rights to take measures including in fulfilment of its obligations under the Treaty of Waitangi.
Similar to what was negotiated in the New Zealand/Singapore CEP, this Agreement will not preclude the Parties from taking the necessary measures to protect national treasures or specific sites of historical or archaeological value or to support creative arts of national value.
Both sides are committed to a general review of the Agreement after five years and specifically to review the special agricultural safeguard mechanisms after three years.
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