Thailand and Bangladesh have agreed in principle to establish a free trade agreement (FTA), aiming to double bilateral trade to US$2 billion by 2021.
According to Commerce Minister Jurin Laksanawisit, who chaired the 5th Joint Trade Committee (JTC) meeting between the two nations yesterday, Thailand is ready to kick off FTA talks with Bangladesh and conduct a joint feasibility study as soon as possible.
Bangladesh is Thailand's third-largest trade partner in South Asia, trailing India and Pakistan, with annual two-way trade worth $1.25 billion in 2018, down 4.4% from the previous year.
Thailand has enjoyed a huge trade surplus, with exports to Bangladesh amounting to $1.2 billion and imports worth just $59.24 million.
For the first 11 months of 2019, trade value between the two countries totalled $980.41 million, down 16.9% year-on-year, with exports to Bangladesh making up $905.10 million.
Major exports include cement, plastic pellets, chemical products, textiles, steel, tapioca products, air conditioners, cosmetics, and automobiles and parts.
Thailand, meanwhile, imported a small amount of garments, scientific and medical gear, fresh and frozen aquatic animals, and machinery and parts from Bangladesh.
Thailand's direct investment in Bangladesh totalled $1.5 billion from 2006 to 2019, mainly in agriculture and processed agricultural industries, construction, and hotels and related services, while Bangladesh's investment in Thailand was worth $1.12 million during the period.
According to Mr Jurin, Bangladesh proposed that Thailand lower import tariffs to 0% or offer special tariffs for 36 products such as jute, garments, textiles and shoes, while Thailand recommended such proposals be discussed through the FTA talks.
Mr Jurin said Bangladesh also requested that Thailand's tariff cuts be equal to those that the UN grants to less-developed countries.
"Bangladesh is strategically located in the Indian Ocean and a part of the Belt and Road Initiative of China," he said. "Bangladesh could potentially develop into a trading hub for South Asia, the Middle East, and Africa."
Mr Jurin said Thailand also proposed that connectivity between Ranong port in southern Thailand and Chittagong port in Bangladesh be sped up.