Three pillars reshape global trade as Commerce boosts FTA push and competitiveness

New era of volatile global trade rules

Kirida Bhaopichitr, Assistant Commerce Minister, said the world has entered an era of a “new global order” in which international trade rules are becoming increasingly unstable and less anchored to the traditional framework of the World Trade Organization (WTO).

She noted that policies from major powers, geopolitical conflicts, and even announcements made via social media can now have an immediate impact on global trade conditions.

Kirida outlined four key trends shaping the next phase of global trade:

1. Rising economic fragmentation

The global economy is moving away from traditional globalisation and free trade towards clearer economic blocs driven by geopolitical tensions.

She said global trade is now broadly divided into four groups:

1. The United States bloc
2. The China bloc
3. Traditional US allies including the European Union, Japan, South Korea, Australia and New Zealand
4. Neutral countries such as Thailand, Indonesia, Singapore and India

For Thailand, she said its neutral positioning provides an advantage, allowing it to trade with all blocs while also attracting investment from countries seeking to diversify supply chain risks.

2. New forms of trade alliances

Kirida said countries are increasingly forming new economic partnerships through both multilateral and bilateral frameworks.

One example is the Facilitate Investment Partnership (FIP), initiated by Singapore and New Zealand, which aims to improve investment facilitation.

Thailand has been invited to join the framework and is currently studying the benefits it could bring to Thai businesses.

3. Economic security becomes central policy

Economic security is now a core pillar of global policy following multiple conflicts and crises around the world.

Countries are placing greater emphasis on energy security, food security and critical minerals.

She said global production systems are shifting away from the “Just in Time” model towards a “Just in Case” approach to prepare for future disruptions.

4. Trust as a trade currency

Trust is becoming a decisive factor in global trade, Kirida said.

Countries and businesses that are trusted by their partners will gain competitive advantages even if their prices are higher.

Buyers are increasingly prioritising product reliability, supply continuity and protection from potential trade barriers over cost alone.

Global supply chains undergoing major restructuring

Kirida said these four trends are driving a major restructuring of global supply chains, as multinational companies diversify production bases to reduce geopolitical risk.

Thailand is benefiting from this shift, reflected in rising investment promotion applications submitted to the Board of Investment (BOI), with total value reaching trillions of baht annually.

She added that Thailand holds advantages in infrastructure, logistics systems and energy stability, having maintained consistent energy supply even during global energy crises.

Thailand urged to reduce reliance on US market

Kirida warned that Thai exporters should avoid over-reliance on the United States market due to increasing trade protectionism.

She noted that the US Section 301 measures are expected to announce new rates in July, while Thailand is actively engaging in negotiations to preserve competitiveness.

She added that this may not be the last trade action taken by the United States against Thailand, stressing the need to diversify export markets and strengthen resilience.

Thailand expands FTA network

The Ministry of Commerce is continuing to expand Thailand’s free trade agreement (FTA) network.

At present, Thailand has 14 FTAs in force covering 18 countries.

By 2027, two additional FTAs are expected to come into effect:

• Thailand–EFTA (Switzerland, Norway, Iceland and Liechtenstein)
• Thailand–Bhutan

Thailand is also negotiating an FTA with the European Union, currently in its 10th round, with a target to conclude negotiations by the end of 2026.

Additional negotiations are ongoing under ASEAN frameworks with Canada and South Korea, aimed at expanding trade opportunities for Thai businesses.

Three forces reshaping global trade

Arada Fuangtong, Director-General of the Department of Foreign Trade, said the global order is being reshaped by geopolitical tensions, energy crises, climate change and supply chain volatility, making economic forecasting increasingly difficult.

She outlined three structural shifts:

1. From globalisation to fragmentation

The world is moving away from integrated globalisation towards economic fragmentation, with countries increasingly trading within trusted blocs.

2. From efficiency to resilience

Economic systems are shifting focus from cost efficiency to resilience, with greater emphasis on risk management and supply chain stability.

3. From free trade to strategic trade

Countries are increasingly adopting strategic trade policies, using tariffs and non-tariff measures as tools of national economic strategy.

Impact on Thailand’s economy

Arada said these changes are highly significant for Thailand, as exports account for more than 60% of GDP.

She warned that Thai businesses remain exposed to energy costs and global supply chain volatility, requiring structural adaptation.

Economic strategy, she said, can no longer be based purely on economic factors, but must also consider national security, geopolitics and evolving trade rules.

Call for business adaptation

Arada stressed that adapting to the new global trade environment is not optional but essential for survival.

Businesses must comply with evolving regulations and standards or risk losing competitiveness in global markets.

ESG becomes a new trade standard

She highlighted Environmental, Social and Governance (ESG) standards as an emerging global trade requirement.

Competition is no longer based solely on price, but also on product quality, production standards and value creation.

Strategic alignment and trust in business

Arada added that strategic alignment and trust are becoming essential in global business relationships.

Companies are increasingly required to work with partners that are reliable and credible, as trust is now a key determinant of trade success.

Private sector calls for agricultural reform

Poj Aramwattananont, Chairman of the Thai Chamber of Commerce and Board of Trade of Thailand, said Thailand is viewed internationally as a safe investment destination, particularly for Japanese investors balancing exposure to China.

However, he said Thailand must develop stronger negotiation strategies, including increasing regional value chain participation (RVC) and local content production.

He also called for major agricultural reform, noting that nearly half of Thailand’s population, or around 11 million farming households, remain economically vulnerable.

Without stronger rural purchasing power, domestic economic growth will remain constrained despite foreign investment inflows.

Poj also urged regulatory reform through a “regulatory guillotine” approach to remove outdated laws, as well as stronger anti-corruption measures, which remain a concern for European investors.

He further supported SME upgrading through access to advanced technologies such as AI and robotics.

AI and geopolitical competition reshape investment

Burin Adulwattana, Managing Director and Chief Economist at Kasikorn Research Centre, said the world is entering a new phase of AI-driven competition that is reshaping trade and investment.

He said data centres are becoming core infrastructure for both economic and civilian systems, with computing power now a key determinant of global competitiveness.

Thailand, he said, has opportunities in energy infrastructure and AI applications.

However, he stressed that Thailand must shift from being a passive land-leasing incentive provider to a “picky landlord” model, selecting investors that generate jobs and build supply chains.

Thailand enters new investment cycle

Satha Vanalabhpatana, Managing Director of Amata City Rayong Co., Ltd., said global investment is entering a new cycle driven by geopolitical uncertainty and technological transformation.

He estimated global investment rising to US$1.6 trillion, compared with a historical average of US$1.4 trillion.

Southeast Asia is expected to receive around US$230 billion, or 15% of global investment flows.

Investment is shifting towards advanced industries such as data centres and semiconductors, away from traditional manufacturing.

He added that ESG standards are becoming unavoidable in both trade and investment decisions, forming a new global rulebook.

Outlook

Speakers broadly agreed that Thailand stands to benefit from global supply chain realignment and increased investment flows.

However, they warned that the new global order is more fragmented, strategic and selective, requiring Thailand and its businesses to adapt quickly or risk losing competitiveness in global markets.

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