When a Thai-US FTA is eventually concluded, Thai exports of garments to the US should increase in value by 25% in the first two years, according to Suchart Chantaranakaracha, president of the Thai Garment Manufacturers Association. At present the US imposes 10-20% import duties on garments and textiles originating in Thailand; in the reverse direction the duties are respectively 30% and 20%. The US generally takes slightly over 50% of total Thai garment exports, worth roughly US$3b. At the recent APEC meeting in Bangkok Prime Ministers Taksin Chin-nawat of Thailand and John Howard of Australia announced an agreement to establish an FTA under which tariffs on 2000-3000 fast-rrack items of commerce will be abolished on January 1, 2005. Other items considered to be on the normal track will become free in 2010, tariffs on more sensitive items will disappear in 2015. Mr Suchart believes that from 2005 Thai garment exports to Australia will more than triple in value from today's annual US$33m, since Australian tariffs run as high as 25%. "As the Australian market demands high-value products, our garments could do very well," he says. Rules of Origin are still tendentious. Australia first asked for a minimum 50% Thai content, fearing an invasion of cheap clothing; in the end the figure was set at 30% for the first 20 years. Mr Suchart has no problem with this; he sees 40% as the competitive barrier.
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