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An Analysis of Trade Potential of Thailand's Textile Industries

Under Thailand - Australia Free Trade Agreements

Teeravadee Chotmeechai

A Thesis Submitted in Partial Fulfillment of the Requirements

for the Degree of Master of Economics (Business Economics )

Department of Economics

Graduate School, Dhurakij Pundit University

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Thesis Title An Analysis of Trade Potential of Thailand's Textile Industries

Under Thailand - Australia Free Trade Agreements

Author Teeravadee C hotmeechai

Thesis Advisor Dr. Somchai Hanhiran

Department Economic (Economic Business)

Academic Year 2007

ABTRACT

The principal objectives of this study are to investigate the possibilities of trade

complementary between Thailand and Australia in textile industry under the existence of

Thailand-Australia Free Trade Agreement (TAFTA), and to possible impact of the Rules of Origin

relating textile industry, specified in TAFTA, on the capability of Thai exporters. The last part of the

study is contributed to provide policy suggestion on how to enhance the competitiveness of Thai

textile in Australian market.

By employing the trade statistic from the United Nations, the study found that the

Revealed Competitiveness Advantages (RCA) of Thai textile commodities under Harmonization

System (HS) 61 and 62 in the world market are slightly over 1, and Australia's RCA in these

commodities are less than 1. In the Australian market, the results of the study revealed that there is

no significantly different RCA between Thai textile and Those of Chinese. However, the market

share of the Chinese is much larger.

As far as the analysis of Rules of Origin relating textile industry in TAFTA is

concerned, the study found that they are not all sorts of actively barriers to Thai export to Australia.

However, it has to be kept in mind that, particular in this industry, Thailand does need to import raw

materials from countries outside the list specified in the agreement. If there are more requirements on

this part in the future, the Rules of Origin could prevent Thai textile exporters from making use of

tariff privilege under this agreement. Hence, the future of this industry will very much rely on how

they can improve the product quality, develop product design and make use of innovation.

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n' w 2 nszu?urnsdi+y l1nu~nru~~l#4o1~tu1n141i11~fdq~1i~~9 2 N linlnoln wqu

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(1) ~ U R O U R I ~ R S P ~ ~ S ~ n r i ~ ~ d i a u w " n ' n o ' m ~ ~ ~ n n ~ n r ~diuurdo~nin'u

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(Nan-preferential Rules of Origin) T * ~ U ~ U L ~ ~ ~ ~ # I I W T O ~ ~ ~ I M H ~ ~ I ~ ~ I ~ ~ L I B ~ ~ Q ~ ~ Q L ~ ~ ~ ~ ~ d a d ~ ~ ~ ~ ~ i ~ u u ~ ~ ~ n ~ i f l o d o ~ ~ ~ ~ ~ u ~ n ' u s ~ ~ ~ u n ~ n m ~ ~ ~ l j i i ~ ; ' u e l ~ ~ i ~ ~ ~ ~ ~ ' ~ n i ' i ~ ~ ~ ~ ~ i ~ ~ d ~

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m u l n ' n ~ ~ u n n n ~ ~ ~ ~ d . ; i ~ ~ a u n ~ ~ ~ ~ r n n s ~ ~ a ~ m r F i i (General Agreement on Tariff and Trade:

GATT)

n a i ~ t ; ? ~ u ~ d ~ r i ~ ~ ~ ~ 2 p d ~ ~ ~ p f " ~ p 1 ~ n l ~ ~ ' b e r ~ p s " 3 ~ ~ ~ n " ~ ~ ~ ~ ~ ~ v ~ ~ # ~ (Preferential Rules of

Origin)

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ib i iu 617% i~a'uiinadn'~s'lims idubiu iuoqoln t 44

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6~nriciiiu'nvi;ldu rnn~~1~i1uaol~ar i i l~x11 i i1n .d1 lhreshoid idu 1unnm5nYim~?o1~4~~ 44

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d r ~ i ~ f f n " m u ~ s o n ~ ~ ~ ~ n ~ ~ ~ ~ u ~ ~ ~ ~ n ~ u ~ ~ d ~ u ~ ~ ~ i ~ d ~ ~ ~ ~ ~ ~ n " ~ ~ ~ ~ ' ~ ~ ~ d ~ ~ ~ u ' t l u ' k ; ~ ~ ~ ~ n ~

W I ~ ~ I ~ ~ S B ~ ~ U ~ ~ Z ~ ~ B ~ I ~ ~ S : T U T ~ ~ ~ ~ Y ~ d ~ u ~ i n 0 ~ ! ~ ~ i l l ~ ; d ~ ~ ~ ~ ~ d ~ ~ ~ f ~ 1 ~ ~ ~ 5 ~ r n r w n ' m

AillElfl Network Production ~ U I Q s

Origin Cumulation: 4 Straight Line Models

Thai Positions on 3 Hwothetical Goods Production Routes

Model # 1 2 3

Thailand

Malaysia

India

China

India Q Singapore Q China

Malaysia

mwd 3.1 &innurns w ~ n n " ~ ~ u n d ~ ~ ~ ~ u " w ~ ~ f f % ~ ~ ~ u a kq

DPU

OrIgln Cumulation: Finger Module

Hypothetical Goods Productfon Route

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(ASEAN 1a:nu 16.2 USD Non-ASEAN 50.8 USD: 2.lnin19f130 USD (25% Content) ASEAN I

Qualify ul~~rnv'uqnfifl 7.5 USD Non-ASEAN 22.5 USD

d l n l 3 ~ % 1 3 3 USD (1 00% Content)

3. dulniii4h 10 USD (31% Content) #1+1154q Jynnli I 00 USD

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ASEAN Content 49.2% 4. % i f l ~ R ( 10 USD (28% Content) ASEAN 1

Non-ASEAN Content 50.8% 5.6 USD Non-ASEAN 14.4 USD

S.mni J ~ & i ] ~ ~ T u w dIaln

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DPU

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A a ~ c l

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Garment & Textile Industry

Extrusion & Spinning

mwd 3.3 ~ ~ n s t n f ~ m s w a ' n d ~ 8 i n ~ u d d ~ 8 ~ 1 a ~ 1 f l f ~ ~ a ~ i ~

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Polyesters

H.S.39.07

3907.60 PET

Bleaching, Dyeing or Printing CTSH

Knitted or Crocheted Articles of Apparel

and Clothing

Not Knitted or Crocheted Accessories

Yarn

H.S.54.02 54.03

Mono filament

H.S. 54.04 54.05

54.06

CC CTH . Woven Fabric

H.S. 54.07 54.08 DPU

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(CTH)

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