March 14, 2006

Thailand signs FTA with China, but remains wary of competition

Although export of Thai chicken and products will benefit from the opening of a free trade area between Thailand and China, the latter would soon become a competitor, said the Kasikorn Research Center, the economic research wing of KaskikornBank, a Thai bank.

Thai exports would benefit from the FTA as tariffs on processed chicken would be cut from the present 17 percent to 15 percent when it is put into effect and would be completely removed in 2010.

However, KRC said China would soon become Thailand's competitor for chicken exports since chicken production in the country had rapidly increased due to improvements in production and hygiene conditions.

China has already begin competing with Thai chicken products in its traditional markets such as Japan and Hong Kong. It is also eyeing other destinations such as South Korea, Middle East, and East Europe.

KRC predicts China's export of chicken products would be 470,000 tonnes this year, up 31 percent from last year.