The cabinet has approved the Thailand-Bhutan free trade agreement (FTA), which is expected to take effect early next year.
Speaking after Wednesday's cabinet meeting, deputy government spokeswoman Lalida Persvivatana said the cabinet approved the submission of the Thailand-Bhutan FTA to parliament for approval under Section 178 of the constitution.
The government is preparing the necessary measures to ensure the agreement takes effect as planned on Jan 1, 2027.
Thailand and Bhutan signed the pact on April 3 last year, aimed at enhancing trade relations between the two countries.
According to Ms Lalida, the FTA is the first trade deal between the two countries, covering 10 chapters and four annexes, with the objective of liberalising and facilitating trade, reducing trade barriers, promoting economic and technical cooperation, and establishing clear and mutually beneficial trade rules for both nations.
The agreement also covers Bhutan's Gelephu Mindfulness City, a new special administrative and economic zone.
Under the market access commitments, Bhutan eliminates customs duties on 99.8% of all tariff lines for Thai products, while Thailand grants duty-free access on 94% of tariff lines for Bhutanese goods.
Thai products expected to benefit from increased exports include automobiles and auto parts, agricultural and food products such as dried fruits, fruit juices, instant rice vermicelli, processed foods, textiles and garments, chemicals, rubber and plastic products, and electrical appliances.
Thai businesses should gain access to additional sources of raw materials from Bhutan, including minerals, cordyceps, matsutake mushrooms, and temperate-climate fruits such as apples.
Ms Lalida said economic impact studies indicate the FTA could increase Thai GDP by 0.02 to 0.03 percentage points a year, equivalent to 4.13-4.34 billion baht.
Thai exports to Bhutan are projected to rise by 229-266% a year, or 12.4-14.4 billion baht, while foreign direct investment in Thailand could increase by 0.05-0.06% a year, roughly 1.79-1.99 billion baht.
Although the government is expected to forgo customs revenue of roughly 215,696 baht per year, the economic benefits to Thailand are expected to far outweigh the revenue loss, she noted.
The FTA marks another important step in expanding export markets in South Asia, creating new opportunities for Thai businesses, enhancing competitiveness, and strengthening long-term economic ties between the two countries, said Ms Lalida.
The cabinet also approved the submission of the protocol to upgrade the framework agreement between Asean and China, known as ACFTA 3.0, to parliament for consideration and approval.
A key feature of ACFTA 3.0 is trade facilitation and improving the efficiency of business operations among member countries. Existing commitments on market access for goods, services and investment remain unchanged, and there are no further tariff reductions or additional market-opening commitments.
Customs procedures and trade facilitation measures are revised, including greater use of electronic systems, increased transparency in publishing import and export information, and expedited clearance of perishable goods within six hours of arrival.
The agreement also strengthens standards relating to technical regulations, sanitary and phytosanitary measures, and economic and technical cooperation in line with international standards.
