A free trade agreement (FTA) with the EU is a top priority for the Thai government, while businesses on both sides support a pact.
Prime Minister Paetongtarn Shinawatra said Thailand aims to sign an FTA with all members of the EU this year.
How important are EU markets to Thailand?
The EU is a vital market for Thailand, as the 27 member countries have significant purchasing power, making it the world's second-largest economic bloc.
The EU ranks as Thailand's fourth-largest trading partner after China, the US and Japan.
In addition, the EU is a major investor in Thailand, particularly in automotive (BMW, Mercedes-Benz, Ducati, Triumph, Michelin, Bosch, Continental), chemicals and pharmaceuticals (BASF, GlaxoSmithKline, Bayer), alcohol importing and distribution (Diageo Moët Hennessy), accounting (Mazars), logistics (Maersk), and finance (Standard Chartered).
In 2024, trade between Thailand and the EU was valued at US$43.5 billion, representing 7.17% of Thailand's global trade, according to the Department of Trade Negotiations (DTN).
Thai exports to the EU tallied $24.2 billion, while imports from the EU totalled $19.3 billion, resulting in a trade surplus of $4.88 billion.
Major Thai exports to the EU include computers and components, gems and jewellery, air conditioners and parts, rubber products, automobiles and auto parts, transformers and components, electronic circuit boards, machinery and parts, motorcycles and parts, fax machines, phones and accessories.
Major imports from the EU are machinery and components, pharmaceutical products, aircraft and aviation equipment, chemicals, electrical machinery and components, medical instruments, electronic circuit boards, automotive components, and plants and plant-based products.
How are negotiations progressing?
Negotiations for an EU-Thailand FTA began in 2013, but were put on hold for seven years following the 2014 military coup in Thailand.
The discussions resumed in 2021, and the fourth round of negotiations was held in November 2024.
The fifth round is scheduled to be hosted by the EU in March 2025 in Brussels. Both sides are keen to conclude the negotiations as quickly as possible, ideally this year, according to the DTN.
The department said the EU recently concluded FTA negotiations with Mercosur (Brazil, Argentina, Bolivia, Uruguay, Paraguay) and is close to a pact with Indonesia, adding competitive pressure for Thailand.
The EU is also negotiating FTAs with the Philippines and is resuming talks with Malaysia.
As a consequence, Thailand is determined to complete its FTA with the EU promptly to ensure its global competitiveness.
What are the opportunities for Thai businesses with an EU pact?
The DTN said an EU-Thailand FTA will enhance trade and investment opportunities by reducing or eliminating trade and investment barriers, including tariff and non-tariff measures.
The pact is expected to stimulate foreign investment and foster growth in key sectors where Thailand excels, such as wholesale and retail, food production and tourism, noted the department.
Thai businesses should gain a competitive edge over countries without FTAs when exporting products such as automobiles and auto parts, electronics, textiles, and food products, said the DTN.
This is crucial for Thailand to reclaim market share lost to competitors such as Vietnam, which benefits from an FTA with the EU, and can help offset losing Generalized System of Preferences benefits in 2015, according to the department.
Key export products likely to benefit from the FTA include agricultural and processed products (such as rice and canned pineapples), seafood (shrimp and squid), electronics (computers and circuit boards), and industrial goods (automobiles, motorcycles and components), noted the DTN.
However, the department cautioned that certain Thai industries must prepare for increased competition from EU imports, such as machinery and equipment, chemicals, dairy products, financial and insurance services, telecom, environmental services, and professional services.
To compete effectively, Thai exporters will need to enhance their standards to align with EU regulations, which highlight safety, environmental sustainability, labour rights and energy efficiency.
What are the key issues for negotiation and monitoring?
Chotima Iemsawasdikul, director-general of the DTN, said the Thai-EU FTA is expected to be a modern and comprehensive agreement, building on Thailand's previous FTAs while addressing new trade issues such as intellectual property, trade, sustainable development, government procurement, competition, subsidies, energy and raw materials.
If effectively executed, the FTA will enhance domestic competition and align Thailand's regulations and standards with international standards, improving the country's business environment, she said.
The Commerce Ministry and DTN emphasised the importance of stakeholder engagement to ensure a thorough and balanced negotiation process.
What are the goals for the first year of the Thai-Efta FTA?
As Thailand continues negotiations on the pact with the EU, it signed an FTA with the European Free Trade Association (Efta) on the sidelines of the World Economic Forum in Davos, Switzerland on Jan 23.
Efta comprises four member states: Switzerland, Norway, Iceland and Liechtenstein.
An implementation date for the Thai-Efta FTA has not been announced yet, but Commerce Minister Pichai Naripthaphan said early 2026 is likely following the signing and ratification process, as well as necessary regulatory adjustments.
The DTN said once effective, trade should expand noticeably during the first year of the Thai-Efta pact. The value of exports from Thailand to Efta member countries will increase, including both agricultural and industrial goods, noted the department.
Efta committed to eliminate tariffs on about 90% of Thai goods from day one, including industrial and agricultural products. Key Thai exports to Efta members expected to increase include rice, sweet corn, fresh and processed fruit and vegetables, sauces, beverages, seafood (fresh and processed), gemstones and jewellery, watches and components, electrical appliances, computer components, clothing, chemicals, rubber, plastic products, and automobiles and auto parts.
For its part, Thailand is lifting tariffs on some goods from Efta members, such as gold, watch components, cheese, butter and chocolate.
These imported materials are essential for major Thai industries, allowing for value addition that enhances export potential, noted DTN.
The tariff exemption is expected to reduce production costs for Thai businesses, creating a competitive edge and lifting exports of Thai products such as gems and jewellery and processed food to global markets, said the department.
The DTN said Thailand intends to use this FTA to draw investment from Efta members in sectors that utilise advanced technologies and innovations that are crucial for Thailand's industrial development, such as R&D, environmental management, ICT, and aircraft component maintenance.
Within a year of the FTA's launch, Thailand and Efta plan to hold a joint committee meeting to review and monitor the agreement's implementation, aiming to ensure smooth trade relations while addressing potential challenges and exploring enhanced cooperation, particularly support for small businesses on both sides to maximise the benefits of the FTA.
Efta is Thailand's second-largest trading partner in Europe.
Last year trade between Thailand and Efta totalled $11.8 billion, accounting for 1.94% of Thailand's total trade, up 19.2% year-on-year. Thailand exported $4.23 billion to Efta nations and imported $7.56 billion.