InfoQuest, (April 18, 2019) -- Ms. Onmon Subthawitham, Director-General of the Department of Trade Negotiations (DTN) under the Ministry of Commerce (MOC) of Thailand, revealed the latest progress of Brexit: recently leaders of 27 EU members agreed to extend the Brexit deadline by six months to October 31, 2019. More time will be given to the UK to discuss on and formulate the forms and conditions for the agreement on the relationship between the UK and the EU, or Withdrawal Agreement. The Withdrawal Agreement has not been passed, which means many possibilities, such as: the UK will leave the EU without a deal, or change its tune and revoke Article 50, or host the second referendum on Brexit or form a new government.
Currently, it is important to watch closely the progress of Brexit, especially the results of negotiation between British Prime Minister Theresa May and Jeremy Bernard Corbyn, leader of the Labour Party (the Opposition), which opposes the passing of the Withdrawal Agreement. Other issues that need attention include: whether the two can reach an agreement on Brexit plan, and when to reach a compromise; whether an amendment of the previously formulated Withdrawal Agreement is needed to reach such a compromise; and whether the EU will accept such an amendment.
Besides, the EU will host European Parliament election on May 23-26, 2019. If Theresa May still cannot persuade parliament members and British Parliament to approve the Withdrawal Agreement before May 22, 2019, then the UK may need to participate in the European Parliament election and stay in the EU temporarily.
The uncertainties of Brexit have brought short-term effects on UK's financial sector and pound. What's more, investors postponed their investment decisions for lack of confidence on the economy. If the UK leaves the EU finally with no deal, it is predicted that it will affect the stability and economy of the UK and the EU. That is because the EU is the largest trading partner of the UK, with total trading volume around 580 billion U.S. dollars or 50 percent of UK's total foreign trade volume. Plus, if tariff barriers exist between the UK and the EU, the UK will lose various trade and investment privileges previously reached between the two, added Ms. Onmon.
Yet judging from the UK's attitude after the parliament vote on March 13, 2019, and that EU does not want to see major economic impact on both sides caused by Brexit, the odd of a Brexit with no deal is small.
Based on these factors, we can predict how Brexit may affect Thailand. The fluctuations of British pound may bring short-term impact, and may lead to higher prices of Thai exports. Besides, the UK's demands for Thai products will drop. In the long run, it is predicted that Thailand will not be affected greatly. Through UK is the 20th largest trading partner of Thailand, the total trading volume of some 7 billion U.S. dollars between the two countries accounts for a small share (about 1.40 percent) of Thailand's total foreign trade.
On the contrary, Thailand may benefit from the trade and investment rules to be formulated after Brexit. That is because UK may issue more tolerant, flexible trade and investment rules to attract foreign investors. Previously, the UK announced that it would cancel the anti-dumping duty on four kinds of Thai products, including sweet corn, fiberglass wire mesh, hand pallet truck, and malleable cast iron pipe fitting. The UK also proposed the "Global Britain" policy of focusing on new trading partners, which means that Thailand may have access to more trade and investment opportunities in the UK.
To cope with Brexit, currently the DTN of the MOC is discussing with the EU and the UK on amending the tariff quotas of 31 product categories under WTO framework, such as cassava, cassava starch, rice, brown rice, broken rice, poultry products, and canned fish. The 31 kinds of products have obtained the quota of EU, which will be redistributed after Brexit. Currently, the preliminary target of Thailand is to protect its national interests, which means that its total quota (the quota offered by the EU and the UK combined) should not be less than the previous quantity, and ensure that the total quota fits to the actual trading volume between Thailand and 27 EU members and the UK. Meanwhile, the MOC prepares to launch a feasibility study on an EU-UK FTA after Brexit.
Source: InfoQuest, by Phana / Kasamarporn / Sasithorn, translated by Xinhua Silk Road
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