In a decisive step towards deepening bilateral economic ties, Bhutan and Thailand have signed a historic Free Trade Agreement (FTA), following four rounds of intense negotiations. The accord, inked today at a high-profile ceremony in Bangkok’s Government House, is set to transform the trade landscape between the two nations.
The signing event was graced by the presence of Bhutan’s Prime Minister Tshering Tobgay and Thailand’s Prime Minister Paetongtarn Shinawatra, underscoring the significance of this move. The treaty, which is expected to be presented for parliamentary ratification later this year, promises to facilitate a smoother exchange of goods by eliminating customs duties on products traded between the two countries.
Industry, Commerce, and Employment Minister Namgyal Dorji of Bhutan, alongside Thailand’s Minister of Commerce Pichai Naripthaphan, formalized the agreement just ahead of the Sixth BIMSTEC Summit set to commence tomorrow. The pact aims to grant Bhutanese products duty-free access to the Thai market—a significant development given that Bhutan currently faces customs duties ranging from 5 to 60 percent on exports such as Cordyceps, fruits, vegetables, and spices.
Under the new agreement, Bhutan’s exports to Thailand will be exempt from the taxes that have long hindered competitiveness. Conversely, while goods imported into Bhutan from Thailand—ranging from smartphones and medical equipment to household appliances—will continue to incur customs duties as stipulated by the nation’s Customs Duty Act of 2021, the streamlined trade process is anticipated to boost overall economic cooperation.
The removal of these trade barriers is expected to create a more seamless commercial environment, further cementing Thailand’s role as Bhutan’s fourth largest trading partner. Last year’s trade volume between the two countries reached approximately USD 31 million, a figure that both governments are hopeful will grow substantially under the new framework.
While other levies such as the Goods and Services Tax and Value-Added Tax will remain in force according to each country’s domestic regulations, the elimination of customs duties marks a pivotal shift towards increased market access and economic integration.
As Bhutan and Thailand embark on this new chapter of economic partnership, stakeholders in both nations are optimistic that the agreement will not only bolster bilateral trade but also pave the way for future collaborations across various sectors. With parliamentary approval on the horizon, the new FTA stands as a promising beacon of economic progress in the region.
