Alarm bells over shift to trade war

The Thai National Shippers’ Council (TNSC) has highlighted the risk of trade protectionism intensifying around the world and flags this as casting a shadow on its otherwise optimistic outlook for export growth.
The council expects exports will expand 5.5 per cent this year, believing the global economic recovery will continue and increase demand for Thai exports, said Ghayapad Tantipipatpong, chairwoman of the TNSC, an exporters group, yesterday.

Exports rose 17.6 per cent in January. The TNSC expects imports will rise 24.3 per cent this year as manufacturers buy more raw materials and capital goods to produce their finished products. The estimate for the rise in exports is based on an assumption that the baht will stay at around Bt31.5 to the US dollar.
Positive factors includes rising demand in all Thailand’s export markets and expectations of higher prices for farm products boosted by rising crude oil prices, Ghayapad said. 
However, she cited the council’s concerns over a number of risk factors, including the trade barriers announced by the United States and the retaliatory actions that its trade partners could likely take. Trade protectionism could intensify in the future, she said. 
Her comments came after Trump announced his plan to impose a 25 per cent tariff on steel and 10 per cent on aluminium imports. The US leader’s announcement on Thursday night sent stock markets down around the word, including the benchmark index in Thailand yesterday. 
Previously, the US had increased tariffs on washing machines and solar cell panels and these actions had affected Thailand’s exporters, Ghayapad said. The US is likely to increase levies on other imports in the future, she noted. 
The baht’s strengthening trend against the US dollar is also a concern. The dollar’s weakness is expected to continue, she said. The congestion in the Laem Chabang and Bangkok ports and a shortage of good containers would also have a negative impact on international trade, Ghayapad said.
The TNSC chief is further troubled by government policies that increase the cost of production and has marked them as another threat to the country’s export performance.
 Policies to support farm products, such as maize, will increase the costs for animal feed production, Ghayapad said.
Free trade pacts in which Thailand is not a member - such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Eurasian Economic Union - may put Thailand at a disadvantage relative to trade rivals, she said. The government needs to address trade protectionism, including the various forms of trade barriers, more closely. Ghayapad highlighted Trump’s America First policy as a particular concern.
The TNSC is urging the government to focus on trade negotiations with the European Union under the EU-Thai FTA scheme and trade liberalisation with members of the Regional Comprehensive Economic Partnership. As for the baht’s strength, they want the authorities to stabilise the currency, citing its gains compared with the currencies of export competitors in the region.
Kongrit Chantrik, executive director of the TNSC, said the baht has risen 2.51 per cent this year, and was trading at around 31.46 to the dollar yesterday. This represents an increase of 10-11 per cent year on year.
The strong baht has hurt manufacturers that largely depend on domestic materials to produce finished goods, according to the exporters. Exporters are also demanding access to a currency hedging tool for small and medium-sized enterprises. 
Meanwhile, Chaicharn Charoensuk, secretary general of the TNSC, identified a promising export market as the Commonwealth of Independent States, led by Russia, as that country will host the 2018 FIFA World Cup.
In a separate interview, Soraphol Tulayasathien, the Fiscal Policy Office’s director of the economic stability analysis division, said that should the US go ahead with raising import taxes on steel it would not have not much affect on Thailand’s exports, as steel exports to the US market are low.