US FTAs push Thai garment exporter out of the country
July 14, 2006 - Thailand
Thai garment manufacturers are currently on tenter hooks as the US goes about concluding Free Trade Agreements with different countries having apparel and textile manufacturing bases.
Fear of losing out to rivals has prompted them to seek new locales and plants overseas mainly from Vietnam and Cambodia.
With the fluid political situation within the country, and no sight of trade deal with the US, currently, Thai garment exports attract tariff to the tune of 27 percent to that country.
However, an FTA may raise down the duty structure to zero and help Thai garment exporters to offer more attractive prices to the US buyers.
Even the pending Japan-Thailand Economic Partnership Agreement may affect export earnings as it is also considered an important export destination.
Already India, and other Asian countries, particularly Bangladesh, Burma, Pakistan, the Philippines, Cambodia, Indonesia, Malaysia, Sri Lanka and Vietnam have been offering stiff competition to Thai garment exporters.
Assessing this scenario, several Thai garment-makers are scheming their flight to Least Developed Countries like Cambodia and Vietnam which lack in internal raw material resources but have large textile quotas to their credit to the US and the European Union markets.
Thai’s are concerned most with FTAs with the US and Japan, because these two countries control 58 percent of the Kingdom's garment exports.
FTA would create a domino effect in the Thai textile industry, forcing Thai manufacturers to restructure both manufacturing and management to take bigger orders, in accordance with demand.
Huge production volumes will revive the Kingdom's nearly dead weaving and bleaching, dyeing, printing and finishing industries.
The industry employing about 1.2 million workers had generated US $3.16 billion in foreign exchange income last year.
In the Kingdom both fabric and garment manufacturing have a combined investment of Bt220 billion, out of which spinning, yarn production and the printing, dyeing and finishing industries account for Bt200 billion and the remaining vying for garment production.