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Thailand and New Zealand are natural trading partners with complementary export profiles. The economic structures and trade patterns show that the two countries have comparative advantages in different product groups. As Chapter Five illustrated, New Zealand specialises in exporting primary products and intermediate goods. In turn, the focus of Thailand’s trade is in manufactured products. Even within agricultural trade there are complementarities. Thailand’s most important agricultural exports include sugar, rice, chicken and preserved fruit compared to New Zealand’s production of dairy, meat, temperate fruits[1] and vegetables.
Merchandise trade is the major component of bilateral trade between Thailand and New Zealand accounting for more than 80% of total trade including services.
Table 6.1 illustrates the complementary nature of Thailand and New Zealand’s bilateral trade profiles. Industrial goods, predominantly automobiles and parts, machinery, plastic products, and processed seafood accounted for 83% of total Thai exports to New Zealand over the past three years. New Zealand’s exports to Thailand were dominated by the agricultural and processed foods sectors, which have accounted for two thirds of total exports to Thailand since 2001.
Table 6.1 Bilateral Trade by Sector (December Year, US$millions)
| NZ Imports from Thailand | Thailand Imports from NZ | |||||
| Product | 2001 | 2002 | 2003 | 2001 | 2002 | 2003 |
| Agriculture (HS-01-14) | 12.2 | 13.2 | 16 | 101.8 | 85.5 | 104.1 |
| Processed Food (HS -15-24) | 22.8 | 28.5 | 31.3 | 45 | 39.3 | 42.9 |
| Minerals (HS-25-27) | 6.3 | 104 | 5 | 0.7 | 0.8 | 3.6 |
| Industrial (HS-28-97) | 172.7 | 218.7 | 282.5 | 62.5 | 63.5 | 60.6 |
| Total | 214.1 | 261.7 | 334.8 | 209.9 | 189.1 | 211.2 |
Trade data consistency is a problem. The export data from one country will, for a variety of reasons, seldom reconcile with the import data of the partner. To overcome this problem the study follows the practice of using the respective import statistics from each partner to represent the official trade flow. For example the above New Zealand export figures are based on Thai Customs import data. This practice reflects the generally held view that imports are scrutinised more closely than exports. All data are expressed in US dollars (NZ$/US$ exchange rate in 2003 averaged 58.19 cents while the Thai Baht averaged 41.6 Baht to the US Dollar).
[1] E.g. apples and kiwifruit.
Figure 6.1: Thailand – New Zealand Historical Trade
Source: Statistics New Zealand
Figure 6.1 presents a picture of the historical trading relationship. Over the seven-year period 1991-1997 New Zealand exports to Thailand more than doubled. During the Asian financial crisis, New Zealand exports to Thailand fell by US$70 million, as the Thai economy shrank and the Baht depreciated. Apart from a small dip in 2000, Thai exports to New Zealand have enjoyed a period of sustained growth, expanding fivefold since 1990.
Table 6.2 Bilateral Trade Flows (December Years, US$millions)
| Total Trade | Thai Exports to NZ | NZ Exports to Thailand | ||||
| Year | Value | Growth | Value | Growth | Value | Growth |
| 1999 | 394.1 | 14% | 207.2 | 33% | 176.9 | -2% |
| 2000 | 399.7 | 4% | 208.1 | -2% | 196.6 | 11% |
| 2001 | 424 | 6% | 214.1 | 5% | 209.9 | 7% |
| 2002 | 450.8 | 6% | 261.1 | 22% | 189.1 | -10% |
| 2003 | 546 | 21% | 334.8 | 28% | 211.2 | 12% |
Table 6.2 details trade flows between Thailand and New Zealand since 1998. Growth has been solid over the past six years, with bilateral trade expanding by over US$200 million. This growth has largely been driven by an expansion of Thai exports to New Zealand and has resulted in Thailand maintaining a merchandise trade surplus since 1999. For the 2003 year this surplus stood at US$124 million. In 2003 Thailand ranked as New Zealand’s fourteenth largest export destination and tenth largest source of imports. Conversely New Zealand ranked as Thailand’s 38th largest export market and 37th largest source of imports.
Thailand’s exports to New Zealand have increased continuously since 1999 except in 2000 when exports declined by 2%. From 1998-2003, annual average exports from Thailand to New Zealand were US$229.5 million. In 2003, the value of exports amounted to US$334.8 million, up 28% on the previous year.
Table 6.3 Thailand's Top Ten Exports to New Zealand (December Year 2003, US$millions)
| Product | Export Value | % of Total | Import Market Share | Ad Valorem Tariff Rates |
| Total Exports | 334.8 | 1.80% | ||
| Vehicles and Automotive Parts | 84.3 | 25% | 3% | 0-10% |
| Machinery | 42.7 | 13% | 2% | 0-10% |
| Electrical Machinery | 26.3 | 8% | 2% | 0-10% |
| Plastics | 25.8 | 8% | 4% | 0-19% |
| Canned and Processed Seafood | 12.2 | 4% | 29% | 0-6.5% |
| Glas and Glassware | 11.9 | 4% | 9% | 0-10% |
| Fish and Seafood | 9.8 | 3% | 36% | Free |
| Furniture and Bedding | 9.4 | 3% | 4% | 0-12% |
| Rubber | 8.4 | 3% | 4% | 0-11.5% |
| Iron and Steel | 7.9 | 2% | 3% | 0-6.5% |
Source: World Trade Atlas
Thailand’s major export commodities to New Zealand include automotive parts, machinery, computer parts, air conditioning machines, plastic products, canned and processed seafood, and glass products, as shown in Table 6.3. These product groups account for approximately 70% of Thailand’s total exports to New Zealand. At present, they encounter tariff rates ranging from of zero to 19%.
In 2003 New Zealand merchandise exports to Thailand totalled US$211 million. Although export flows have fluctuated somewhat since 1998, overall growth has been 16% per annum. Details of New Zealand’s top exports to Thailand are provided in Table 6.4.
Table 6.4 New Zealand's Top Ten Exports to Thailand (December Year 2003, US$millions)
| Product | Export Value | % of Total | Import Market Share | Ad Valorem Tariff Rates |
| Total Exports | 211.2 | 0.28% | ||
| Diary | 87.6 | 41% | 32% | 5-30% |
| Infant Milk and Food Formula | 34.9 | 17% | 21% | 5% |
| Wood | 16.3 | 8% | 3% | 1-20% |
| Seafood | 9.6 | 5% | 1% | 5-30% |
| Woodpulp | 5.9 | 3% | 2% | 1% |
| Wool | 5.7 | 3% | 4% | 1-10% |
| Electrical Machinery | 5.6 | 3% | 0% | 0-30% |
| Sheepskins | 4.1 | 2% | 73% | 5% |
| Plastics | 3.7 | 2% | 0% | 5-30% |
| Leather, Skins | 3.5 | 2% | 1% | 0-10% |
Source: World Trade Atlas
Mirroring New Zealand’s overall export profile, dairy products form a significant proportion of total goods exports to Thailand. In 2003 dairy products, predominantly milk powder, accounted for 41% of total exports. When infant milk food is included, this rises to nearly 60%. Other significant exports include wood and wood pulp, seafood, wool and electrical machinery.
Market share information shows that New Zealand is a key supplier in Thailand’s dairy, infant milk food and sheepskin markets. Other sectors where New Zealand has a significant interest include wood and wood pulp, temperate fruits, and seafood.
Figure 6.2 shows Thailand’s average tariffs by tariff chapter. Thailand’s tariffs are relatively high on agricultural products (Agriculture in this context is defined as defined as chapters 1 to 24 of the international trade Harmonised System.) and labour-intensive industries such as footwear, headgear, umbrellas and articles made of feathers.
Thailand’s average MFN applied tariff rate is 14.7%, with lower rates in industrial sectors (12.9%) and higher protection in the agricultural area (25.4%).
Figure 6.2: Thailand's Simple Average Applied MFN Tariff Rates (1999 and 2003)
At present, Thailand maintains tariff rate quotas on 23 products, namely milk and cream, potatoes, onions, garlic, coconut, copra, coffee, tea, pepper, maize, rice soya beans, onion seeds, soya oil, palm oil, coconut oil, sugar, instant coffee, soya bean cake, tobacco, raw silk, and dried longans. (For more information, see Trade Policy Review, Thailand (2003), World Trade Organisation).
In 2003, tariff quotas covered 1.0% of all tariff lines (at HS 7-digit level) Tariff quotas do not apply to imports from ASEAN countries, which may, in principle, supply unlimited quantities at preferential AFTA rates, unless they are excluded from the AFTA scheme. This is the case, for example, with palm oil. As of 1 January 2000, all products were, in principle, to be included in the AFTA scheme, with maximum duties of 20%. Quotas are under-filled for several products.
Some products are subject to import licensing in Thailand. Import licensing is used primarily for the administration of tariff quotas. Quota allocations may not be transferred. (Procedures for the allocation of quotas are described in a WTO document G/AG/N/THA/38/Add.1, 8 February 2002.) In addition, imports of four items (used tyres, used motorcycle engines, gaming machines and CFC refrigerators) are prohibited for health, public moral, and environmental reasons. The legislative authority for regulating imports is provided by the Export and Import Act B.E. 2522 (1979). The Act empowers the Minister of Commerce, with the approval of the Cabinet, to control imports for specific reasons such as economic stability, public interest, public health, national security, peace and order, morals, or for any other reason in the national interest.
Thailand applies a combination of tariffs (both ad valorem and alternative specific), tariff rate quotas, and other regulations to imports. Ad valorem rates are a percentage cost charged against the import value. (Import valuation for customs purposes is based on a Cost, Insurance, Freight (CIF) or a Free on Board (FOB) methodology. Royal Thai Customs uses a CIF valuation, whereas Customs New Zealand uses FOB.) Alternative specific tariff rates differ from ad valorem in that a precise monetary value is attributed to each import unit (for example New Zealand kiwifruit attracts a charge of 25 Baht per kilogram imported).
Table 6.5 below sets out an estimate of the duties paid on New Zealand exports to Thailand in the June 2003 year.( Note: this estimate is based on a current copy of the Thai Tariff Schedule and includes consideration of both ad valorem and alternative specific rates.) Exports of US$195 million attracted estimated tariff charges of US$21.3 million, at an average rate of 10.9%.
Table 6.5 Duty paid on New Zealand Exports to Thailand (June Year 2003, US$millions)
| Tariff Brackets* | Exports | Duty paid | Average Rate (%) | % of Exports |
| Zero | 12,624,806 | 0 | 0 | 6.5 |
| Zero to 5% | 100,304,145 | 3,789,238 | 3.8 | 51.5 |
| 5.1% to 10% | 11,338,182 | 1,096,824 | 9.7 | 5.8 |
| 10.1% to 20% | 58,770,325 | 11,143,064 | 19 | 30.2 |
| 20.1% to 40% | 9,097,971 | 2,843,381 | 31.3 | 1.4 |
| Greater than 40% | 2,762,665 | 2,396,944 | 86.8 | 1.4 |
| Total | 194,898,094 | 21,269,451 | 10.9 | 100 |
*Alternative specific rates have been converted to Ad Valorem for the purposes of presentation in this table
Source: MInistry of Froeign Affairs and Trade, New Zealand
Currently 95% of global imports enter New Zealand duty free, either because the normal Most Favoured Nation (MFN) tariff is set at zero or because of preferential tariff arrangements with Australia, Singapore, Pacific Island countries, and Least Developed Countries. New Zealand applies ‘normal’ tariff rates to countries which are not party to preferential tariff arrangements. ‘Normal’ tariff rates on protected sectors in New Zealand are typically in the region of 5-7%. However, certain sectors receive higher protection. For example, clothing, carpets and certain footwear items are currently protected by a 19% tariff (or more when “alternative specific” tariffs, expressed in dollars per garment, are applied to low cost clothing). New Zealand’s average applied MFN tariff rate is 4.1%.
(World Trade Organisation Secretariat, Trade Policy Review of New Zealand, 2003.) Average rates applied to agricultural and industrial products are 2.1% and 4.4% respectively. The average rate for textiles, clothing and footwear is 9.5%.
The outcome of the New Zealand Government’s post-2005 review of tariffs was announced on 30 September 2003. Under the review decisions New Zealand’s applied tariff rates will reduce to either five or ten percent. All tariffs currently at 12.5% or lower will reduce to 5% by 1 July 2008. New Zealand’s highest tariffs (17-19%) will reduce gradually between 1 July 2006 and 1 July 2009 to 10%. Tariffs currently between zero and 5% will remain unchanged. All alternative specific tariffs will be converted to ad valorem rates on 1 July 2005. A further tariff review in 2006 will determine tariff policy after 2009.
Figure 6.3: New Zealand’s Average Applied Tariff Rates (Trade Weighted)
Source: New Zealand Customs (This graph is based on New Zealand Customs raw data. This data does differfrom official trade statistics produced by Statistics New Zealand which is subject to editing and compilation according to international standards).
Like Thailand, the New Zealand Government imposes tariffs (both ad valorem and specific rates) on some imports. By comparison, the overall level of protection is much lower, especially in the agricultural sector.
Table 6.6 below sets out the actual duties paid on Thai exports to New Zealand in the June 2003 year. Exports of US$291 million attracted tariff charges of US$4.0 million, at an average rate of 1.4%.
| Tariff Brackets* | Exports | Duty paid | Average Rate (%) | % of Exports |
| Zero | 204,154,914 | 0 | 0 | 70.2 |
| Zero to 5% | 54,441,707 | 1,444,910 | 2.7 | 18.7 |
| 5.1% to 10% | 26,631,220 | 1,576,789 | 5.9 | 9.2 |
| 10.1% to 20% | 5,218,641 | 825,065 | 15.8 | 1.8 |
| 20.1% to 40% | 253,968 | 68,376 | 26.9 | 0.1 |
| Greater than 40% | 33,905 | 17,815 | 52.5 | 0 |
| Total | 290,734,355 | 3,932,955 | 1.4 | 100 |
Although New Zealand has a maximum Ad Valorem tariff rate of 19%, all alternative specific rates have been converted to Ad Valorem equivalents for the inclusion in this table.
Source: Statistics New Zealand
