Bhutan and Thailand Begin Free Trade Agreement Negotiations

In a significant step towards enhancing bilateral trade and economic cooperation, Bhutan and Thailand have initiated negotiations for a Free Trade Agreement (FTA). The first round of discussions took place last week in Thimphu, where both governments finalized the structure and outline of the FTA, identified various working groups and focal points, and agreed on a comprehensive workplan for the negotiations.

The director of the Department of Trade, Sonam Tshering Dorji, highlighted that the FTA would encompass ten chapters and establish eight working groups between the two countries. “We aim to complete all negotiations on the FTA within two years,” said Dorji, adding that the second round of negotiations is scheduled to commence in three months.

As part of the agreement, the working groups will meet virtually every three months to discuss progress and address any issues. One of the primary focuses will be on product exports, with approximately 4,000 to 4,500 products proposed for liberalization. Dorji noted that while there might initially be a small list of protected products, these will be liberalized after a few years to foster greater market access.

Bhutan boasts over 5,000 tariff lines, providing a substantial foundation for expanding trade under the new FTA. The next round of negotiation meetings will be hosted by the Government of Thailand.

Trade between Bhutan and Thailand has shown steady growth, with total trade in goods reaching USD 23 million (Nu 1.7 billion) in 2023. Thailand has emerged as Bhutan’s fourth-largest trading partner in recent years, underscoring the significance of this new agreement.

Currently, Bhutan enjoys a Free Trade Agreement with India and is on the brink of finalizing a Preferential Trade Agreement (PTA) with Nepal. Under the PTA, selected items will be permitted for trade, with about 85 to 90 percent of negotiations already completed. Bhutan has proposed around 200 products for market access under this agreement.

Additionally, Bhutan has a preferential trade arrangement with Bangladesh, allowing market access for 100 products from Bhutan and 34 products from Bangladesh.

The FTA with Thailand represents a strategic move for Bhutan as it continues to diversify its trade partnerships and expand its economic horizons. With the framework now in place, both countries are poised to benefit from enhanced trade relations and economic cooperation.

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