Singapore is one of the most important partners of Thailand, having a strong economic relationship through direct trade and especially regional association known as ASEAN (Association of Southeast Asian Nations). The AEC leads a sustainable economic growth in ASEAN countries through the FTA subsequently signed among the member countries, and this agreement already signed by the 6 founder members which Thailand and Singapore are one of them.
What is FTA?
As defined by World Trade Organization (WTO), Free Trade Agreements (FTAs) are treaties between countries, forming for removing all significant obstacles preventing trade development among countries and creating a strong economic relationship between contracting states.
FTA between Thailand and Singapore are not directly made in the form of the bilateral treaty as both countries are the member of ASEAN association, where AFTA already has been established since 1993. Accordingly, the concepts of AFTA should be emphasized to understand correctly the FTA between Thailand and Singapore.
After the formation of the ASEAN Free Trade Area (AFTA), all member countries adopted essential trade policies to break down all trade barriers by eliminating import quotas and reducing import tariffs.
According to AFTA, the CEPT scheme (Common Effective Preferential Tariff) used to be a crucial mechanism to reduce internal tariffs among the member countries. However, this scheme had been developed and then finalized the latest version being known nowadays as “ATIGA” (ASEAN Trade in Goods Agreement) replacing CEPT since 17 May 2010.
ATIGA obligates member states to eliminate all import duties which now broadly covers all goods traded between countries subject to zero-rate tariffs. However, there are limited specifics products exempted from such measures where the member counties deem some product necessary to protect public, morals, or to preserve national cultural treasures.
To cut out all unnecessary trade obstacles, FTA also presents the non-tariff measure ensuring the member countries shall freely enjoy this economic integration for instance, to requires each member state not to introduce Tariff Rate Quotas (TRQs) on the importation of any goods originating in other member states or on the exportation of any goods destined for the territory of the other member states, to issue a legal enactment in accordance with its laws and regulations to give effect to the implementation of the tariff liberalization schedules committed under AFTA.
How to get benefit tariff concessions in Thailand or Singapore?
Even the privileges under FTA are highly attractive to the entrepreneurs; there must be some step before enjoying the tariff benefit which the exporters should be aware.
1-Check the listed product.
If you are an entrepreneur who wants to export your product from Thailand to Singapore or from Singapore to Thailand, you need to check whether those products to be exported are on the list of preferential tariff treatment of the destination country or not, which you can easily access this information from the importing country’s government. In Thailand, there are numerous products eligible for zero rate tariffs such as agricultural products, food, and beverages, energy materials, machinery, and equipment, etc.
2-Obtain Form D.
Once your product qualifies for the preferential tariff treatment of the destination country, you need to obtain the Certificate of Origin (Form D) as crucial requirement for FTAs.
The fundamental principle of the Rule of Origin is that exported products must conform to the origin requirements under ATIGA including; a good wholly obtained or produced in the exporting member state as set out and defined in Article 27; or a good not wholly obtained or produced in the exporting member state, but eligible under Article 28 or Article 30 of the ATIGA.
Certificate of Origin (Form D) allows the exporter’s client to be free from customs duty when you export the product. You can obtain this certificate from the respective organization in your country which will be different in each country. In Thailand, the exporter can obtain the certificate of origin from the Department of Foreign Trade, Trade Preference Division which enables exporters to request From D through its website.
Nowadays, although many governments open up the market for all enterprises and there are already many exporters looking for new opportunities implemented by the FTA, we cannot deny that the lack of information is still substantial and this can prevent you from obtaining the benefits. Therefore, no matter you want to undertake your business in Thailand, Singapore or other ASEAN member countries, the information and legal advice from professionals is always essential for you.
If you require legal advice on the FTA between Thailand and Singapore, please talk to H&P lawyers at [email protected]