Thailand Australia Free Trade Agreement (TAFTA)

Coming into force in January 2005, the TAFTA - Thailand Australia Free Trade Agreement was designed to stimulate and increase two-way trade between Australia and Thailand. It was also designated to improve business mobility, increase transparency, enhance fuel investments and promote cooperation in several arenas. The areas of cooperation targeted in this agreement include competition policies, customs procedures, government procurement and intellectual property protection.

The guidelines for requesting a Business Operations Certificate under TAFTA are set out in Section 10 of the Foreign Business Act B.E.2542 (1999).

Some Benefits of TAFTA

Besides the elimination of the tariffs, there are a number of other key benefits to businesses operating under the terms of the Thailand-Australia Free Trade Agreement. The agreement provides more open access to the service markets in Thailand by Australian companies, as well as a commitment to the future liberalization of two-way services trade. Australian investors now have greater access to opportunities in Thailand, with majority Australian shareholding permitted in certain business sectors, such as construction services, maritime cargo services, mining operations, restaurants and hotels, and others listed in the agreement.

Rights of Australian direct investors are protected, such as the right to transfer their funds out of Thailand when they wish, as well as the right to seek the impartial resolution of any dispute that may arise with Thai authorities in relation to their investments.

Visas and other requirements for the temporary entry of Australian businesspersons into Thailand are facilitated under the terms of the agreement. The application process is streamlined, including access to one-stop visa and work permit processes. A longer-term of stay is permitted for business visa holders as well.

Certain criteria regarding qualifications of the persons having the right to request a business operations certificate under TAFTA have also been set out.

What is Traded Under this Free Trade Agreement?

The Free Trade Agreement allows to trade many products that might be difficult to come by in Thailand due to either lack of natural resources or the climate. These raw materials include raw and tanned hides, mineral ore, oil, etc. Other products that are commonly traded between Thailand and Australia comprise processed foods, pick-up trucks, certain dairy products, meat products, rubber products, pineapple juice, and canned pineapple. These are the goods imported to Thailand regularly.

Are There Other Free Trade Agreements with Thailand?

Free Trade Agreements facilitate trade and strive to eliminate trade barriers between two or more countries. Thailand has free trade agreements with several countries, including India, Peru, Japan, New Zealand, Laos, China, Chile, and Australia. The country is also a member of ASEAN, which allows free trade with any of the other ASEAN free trade area countries as well.

A Free Trade Agreement maintains a competitive international marketplace and sound economic cooperation between two countries. It enhances export opportunities and opens up a world of new investment opportunities.

Foreign affairs between two countries with a Free Trade Agreement are often easier, government tariffs on imports are lower, it is much easier to move goods across international borders, and economic cooperation is strong. It is even easier for people from a Free Trade Agreement country to obtain work permits in Thailand under some circumstances.

While some tariff classification still exists, the government is continually working on lowering or eliminating these as needed, so that trade barriers may be overcome and investment between two countries may increase.

There are several other Free Trade Agreements still being discussed between Thailand and other countries, for example, the Bay of Bengal Initiative, and ASEAN Hong Kong, both of which can open up more cross-investment opportunities and trade in multi-sectoral technical areas.

A Free Trade Agreement between countries enhances cooperation and harmony between countries and breaks down barriers. It is not only a tool for trade but also a tool for harmony.

TAFTA Certificate

Any person applying for the certificate must be a juristic person established under the laws of Thailand in the form of a registered ordinary partnership, limited partnership, or limited company. The authorized directors must be of either Australian or Thai nationality. If the juristic person is a registered ordinary partnership or limited partnership, then the manager or managing partner must be a Thai national. All the juristic person's shareholders must be Australian nationals or a combination of Australian and Thai nationals. If the entity was established under Australian law, then the shareholding must be more than 50% Australian. Shareholding percentages must be in compliance with the conditions set for the relevant type of business under TAFTA for which the person is applying for.
The applicant's company must also show a debt-to-equity ratio no greater than 3:1. There are 18 types of businesses covered by the Thailand Australia Free Trade Agreement, ranging from land and marine mining to telecommunications and consulting services. Share ownership percentages for Australian and Thai nationals vary by the type of business involved. For more information on the benefits and opportunities available under the TAFTA Certificate for your company, feel free to contact us for a FREE first consultation.