Could Chinese bicycles and fish scupper Thailand-EU free trade deal?

Such a deal could save the kingdom US$1 billion a year on import tariffs to the European bloc, experts say

But Chinese bicycle manufacturers relabelling their products ‘Made in Thailand’ and an EU-led crackdown on the Thai fishing industry look to be stumbling blocks

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An electric bicycle factory in China’s central Anhui province. Chinese manufacturers are shipping their bicycles to Thailand for relabelling in a bid to dodge European Union tariffs. Photo: AP

Published: 5:00pm, 20 Jul 2019Updated: 5:23pm, 20 Jul 2019

Free trade talks between Thailand and the European Union are set to resume, now that the kingdom’s new cabinet has been installed, but analysts warn that negotiations could be hampered by issues surrounding Chinese exporters using the country as a base to avoid tariffs, and the fisheries sector’s demand for the government to amend its compliance with EU fishing regulations.

Thailand has a lot to gain from a free trade deal, to the point Siwat Luangsomboon, economic analyst at Kasikorn Research Centre, thinks such talks should be a top priority for Prime Minister Prayuth Chan-ocha’s cabinet. “If the deal is signed, Thailand could save US$1 billion a year on import tariffs to the EU, or 4.2 per cent of Thai exports to the EU in 2018,” he said.

“Thailand could be a magnet for a new wave of hi-tech investment, and new markets will be available to products from Thailand such as processed foods, electronics and auto parts.”

The first potential roadblock to any deal is in the bicycle sector. Since the beginning of the year, trade officers at the Thai commerce ministry have been on the trail of mainland manufacturers after being alerted by the EU’s European Anti-Fraud Office to investigate the origins of bikes and e-bikes made by 13 companies registered in mainland China and one from Hong Kong.

The chase proved fruitless. The officers went to the companies’ registered addresses in and around Bangkok but found no one. “Two to three companies were registered to the same address, and the other three or four companies had another address,” said Adul Chotinisakorn, director general of the department of foreign trade who heads the investigation. “We went to the addresses but they were abandoned offices.”

Trade officials at the Thai commerce ministry are investigating the origins of bikes and e-bikes made by 13 companies registered in mainland China and one from Hong Kong. Photo: Sidney Leng

This practice, known as transshipment, sees manufacturers relabel Chinese-made products as “Made in Thailand” in a bid to get around trade restrictions. The Thai authorities and analysts fear it could escalate and see Thai manufacturers of other types of goods, in addition to bikes and electric bikes, hit with EU tariffs.

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