Economy, Domestic Economy

Tehran, Bangkok Eye $3b in Annual Trade

Tehran, Bangkok Eye $3b in Annual TradeTehran, Bangkok Eye $3b in Annual Trade

Iran and Thailand have agreed to a preferential trade agreement to rev up bilateral trade to $3 billion by 2021.

"Both sides have agreed to cut import tariffs on 100 goods," Thailand’s Commerce Minister Apiradi Tantraporn said last week after the first meeting of Iran-Thailand Trade Committee co-chaired by her visiting Iranian counterpart, Mohammad Reza Nematzadeh, in the Thai capital Bangkok.

"It was Iran that came up with the PTA and Thailand agreed, as this will help fast-track bilateral trade," Bangkok Post quoted her as saying. "Each country has initially proposed reducing import tariffs on 100 items."

She said, however, that Thailand first needs to consult the private sector on the items to receive the tariff cut under the proposed agreement to study the potential effects. The study is likely to take about six months and is expected to be completed by the middle of next year.

According to the Thai minister, the implementation of PTA also needs prior approval from the country’s National Legislative Assembly.

"The PTA differs from a free trade agreement, as the pact will be much easier to conclude and does not require the need to cut tariffs to zero," she said. "Generally, tariffs will be cut to about 10% or less, depending on [the outcome of] negotiations."

Free trade agreements generally require that talks cover not only access to goods, but also investment and services.

Apiradi said Iran, with a population of more than 80 million, has strong potential to become Thailand's distribution base for both the Islamic Republic's immediate neighbors and the Commonwealth of Independent States.

Iran has already signed PTAs with Pakistan and Turkey, and is in talks with China, India and the Eurasian Economic Union, with Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan as member states. Thailand, the world’s second-largest rice exporter, also aims to resume exports of 700,000 tons of rice to Iran per year, Apiradi told reporters, the same level as before economic sanctions were iintensified against Iran in 2012.

In February, Thailand and Iran signed four memorandums of understanding worth $123 million that would see 300,000 tons of white and jasmine rice shipped to Iran.

"Iran's Health Ministry has yet to finish inspecting the quality of the Thai grain, but the process should be completed within this year," Apiradi said, adding that shipping would begin soon afterwards.

Thailand's rice industry welcomed the agreement.

“Iran is an old market we have always wanted to return to,” Charoen Laothamatas, president of the Thai Rice Exporters' Association, told Reuters.

Thailand aims to export 9.5 million tons of rice in 2016 and has already exported 6.2 million tons until August. Iran is Thailand's ninth largest trading partner in the Middle East.

In 2015, two-way trade totaled $310 million, $217 million of which were exports from Thailand. For the first eight months of this year, their bilateral trade amounted to $264 million.

Thai Airways and Thai AirAsia X started selling direct flights between Bangkok and Tehran this year to attract tourists from the Middle East.

On October 10, Iran’s President Hassan Rouhani wrapped up his three-nation tour of Southeast Asia in Thailand that also took him to Vietnam and Malaysia.

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