WORLD TRADE  
ORGANIZATION  WT/REG185/5 
10 May 2007 
 
 (07-1961) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN THAILAND AND AUSTRALIA 
 
 Questions and Replies
 
  
 The following communication, dated 9 May 2007, is being circulated at the request of the 
Delegations of Thailand and Australia.   This document reproduces the questions addressed to the Parties and the responses submitted.    
_______________ 
 
 
Questions from Japan 
 
 
Import duties and charges, and quantitative restrictions  
 
1. With respect to the descriptions in Paragra ph 20, Page 9 of the Factual Presentations 
(WT/REG185/3), in the year 2025, will Thailand eliminate tariff-rate quotas completely? Will 
Thailand eliminate out-quota duty as well as in -quota duty regarding those 23 agricultural 
products by the year 2025?  
Thailand will completely eliminate tariff-rate quotas by the year 2025.  Both out-quota and in 
quota duties on 23 agricultural products will also be eliminated by 2025. 
2. With respect to provisions in Article 204, were there any “acceleration of tariff 
elimination” which occurred after th e entry into force of the agreement?  
 No. 
 Anti-dumping and countervailing measures  3. With respect to the provisions in Article 206, could the Parties clarify the meaning of 
“reasonable consideration” and “positive cons ideration?” May “reasonable consideration to 
price undertaking” and “positive consideration to the investigating authority’s 
recommendation” include more favorable treatments  to the other Party compared to other 
WTO Members? 
No more favourable treatment is accorded to the other Party compared to other 
WTO Members. The acceptance of price undertak ings is discretionary under WTO rules.  
Undertakings need not be accepted.   
 
 Under Australia’s arrangements, it is the Mini ster who decides whether or not an undertaking 
should be accepted and not the administering authority.  Nevertheless, at any time following the making of a preliminary affirma tive determination, exporters may suggest to the administering WT/REG185/5 
Page 2  
 
  authority the terms of an undertaking.  Fair and reasonable consideration is given to undertakings 
requested by exporters from all WTO Members.     The timeframes, procedures and documents n ecessary for the offering of an undertaking are 
advised to all exporters by the Australian anti-dumpi ng authority (the Australian Customs Service).  
Australia’s practice is to advise each exporter during the verification visit its rights, including the 
offering and accepting of price undertakings.     Under Thailand’s system exporters may sugg est price undertakings to the Department of 
Foreign Trade, Ministry of Commerce.  The Comm ittee of Anti-Dumping is the body that makes the 
decision to accept an undertaking or not.  Safeguards 
 
4. With respect to the provisions in Article 508, Paragraph 1, when a Party excludes 
originating goods of the other party from the application of global SG measures, in the process 
of investigation, is import of the originating goods of the other party excluded from the total 
increase of imports?  
Yes.  Paragraph 1 of Article 508 reinforces th at Parties are to apply the WTO Agreements 
with respect to global safeguards.  Consideration would be given to the treatment of imports from the 
other Party in a decision to initiate safeguard inv estigations.  If imports from the other Party were 
excluded from the injury phase, the requirements of Article 4.2(b) of the WTO Safeguards Agreement 
are relevant.  That is, if imports from the other Party were excluded from a determination of whether 
increased imports have caused, or threatened to ca use, serious injury, such imports need to be 
examined as a factor “other than increased imports ” which is causing injury within the meaning of 
Article 4.2(b) of the WTO Safeguards Agreement. 
 
5. With respect to the provisions in Article 508,  Paragraph 2, could the Parties clarify the 
relationship between the consultations stipulated  in the paragraph and those stipulated in 
Article 12, Paragraph 3 of the WTO Agreement on Safeguards? Is there any opportunity of 
consultations provided in addition to the consultations stipulated in the WTO Agreement? 
When a Party imposes a global safeguard on orig inating goods of the other Party, is there any 
chance that a Party provides the other Party with more favorable treatments than those to other 
WTO Members, as a result of the consultations between the Parties?  
As noted above, Parties must apply the WTO Ag reements with respect to global safeguards.  
Article 12 of the WTO Safeguards Agreement requir es the immediate notification to the Safeguards 
Committee of a decision to apply a safeguard measur e.  Paragraph 3 of Article 12 requires Members 
to provide adequate opportunity for prior consul tations and is relevant to considerations under 
Article 8, paragraph 1 of the WTO Safeguards Agreement.  No more favourable treatment is accorded 
to the other Party compared to other WTO Members.   
6. With respect to the questions (3) to (5) above , if more favorable treatments are provided 
only between the Parties, what are the legal just ifications on those? In the viewpoint of the 
Parties concerned, is it WTO consistent?  
Not applicable.  No more favourable treatment is accorded to the other Party compared to 
other WTO Members.  The global safeguard procedures and the application of the TAFTA are in compliance with the Parties’ WTO obligations.   WT/REG185/5 
 Page 3 
 
 
  7. With respect to the Provisions in Article 509, or the descriptions in Paragraph 42, 
Page 14 of the Factual Presentations (WT/RE G185/3), was there any case where SSG measures 
were imposed? 
See answer to EC question 7.  
Government procurement 
8. With respect to the provisions in Article 1502 and the descriptions in Footnote 26, 
Page 18 of the Factual Presentations (WT/REG185/3), could the Parties tell us about the progress of the negotiation in this regard?  
 Thailand and Australia have agreed to ne gotiate a substantive government procurement 
chapter but formal negotiations are yet to commen ce.  The parties are presently consulting on timing 
for the commencement of these negotiations.  
 
~ Services ~ 
 
Liberalization commitments 
 
9. With respect to the negotiations on trade in services within three years from the entry 
into force of the Agreement, which is provided in Article 812, will there be any specific service 
areas where the negotiations will focus? 
Thailand and Australia will enter into negotiations  on the issues set out in the Services Side 
Letter to the Agreement which are as follows: 
 
(1)  Financial services; 
 (2)  Telecommunication services; 
 
(3)  Provision on emergency safeguard measures; 
 (4)  Possibility of eliminating management needs test requirements for Australian 
intra-corporate transferees and contractual service suppliers; 
 (5)  Possibility of extending the initial period of work permits granted to Australian 
 intra-corporate transferees; 
 (6)  Possibility of extending the initial period for Australian business visitors who do not 
 hold an APEC Business Travel Card; 
 
(7)  Developing a qualification evaluation scheme for Thai masseurs and Thai massage 
 therapists. 
 
General provisions on Trade in Services  
 
10. With respect to the descriptions in Paragra ph 24, Page 12 of the Factual Presentations, 
why did the Parties adopt a “positive list” approac h rather than a “negative list” approach?  In 
the negotiations referred to in question (9) above, will there be any discussions on this positive/negative approach?   WT/REG185/5 
Page 4  
 
  The Parties agreed that a positive list approach would best meet the Parties’ mutual objectives 
for the FTA to liberalize trade in services between the Parties in accordance with Article V of the 
General Agreement on Trade in Services (GATS).  The Parties have not yet addressed whether this 
approach might be revisited as part of the revi ew of commitments provided in Article 812(1) of 
TAFTA.   
 
Scope and definitions 
 
11. With respect to the descriptions in Par agraph 18 of the Factual Presentations 
(WT/REG185/4), we understand that the measures a ffecting Mode 3 of the trade in Services are 
covered by Chapter 9: Investment, with respec t to the promotion and the protections of 
investments.  As for the general relationship be tween the Chapter on Trade in Services and the 
Chapter on Investments, we understand that Aust ralia, in its other Free Trade Agreements, set 
a different kind of provisions.  Could Australia clarify its general view in this regard?  Could Australia also explain the background of it s decision to have these provisions in the 
Australia-Thailand FTA? In particular, we are interested in how Australia thought about the 
merit to have these provisions in the Australia-Thailand FTA.  
Paragraph 18 is an accurate description of the coverage of Chapters 8 (trade in services) 9 
(investment) of the TAFTA.  The respective covera ge of these chapters in the TAFTA best met the 
Parties’ mutual objectives in this case to liberalize trade in services on this occasion in their respective 
countries.   
 
 While TAFTA includes mode 3 in the Servi ces Chapter, a decision was made that the 
investment protections in the Investment Chapter Part IV should apply to all investments, including 
mode 3 type investments.   
Questions from the European Communities
 
~ Goods ~ 
 
Scope and coverage 
 
12. How many Australian exports items that recei ved preferential entry into the Thai 
market have benefited from an increase in trad e (in value and volume terms) since entry into 
force of the Agreement? What are these products, and what has been the increase in value and 
volume terms? What percentage of tariff lines do they represent? What percentage of total 
current trade (value and volume) they account for? 
 The table below sets out in volume and Austra lian dollar terms Australia’s largest exports to 
Thailand (i.e. those with a value greater than A$10 million in CY 2006) that received preferential 
treatment under TAFTA.  49.4 per cent of Thailand’s tariff lines were reduced to zero on entry into 
force and a further 41 per cent will phase to zero by 2010.  In Australian dollar terms, the items 
receiving a TAFTA preference accounted for 51 per cen t of exports in 2004, 45 per cent in 2005, and 
60 per cent in 2006. 
   
   WT/REG185/5
 Page 5 Measure 2004 2005 2006 % 2005 to 
2006 2004 2005 2006  
Total exports      1,569,022 1,840,057 2,574,722 39.90% 
760110 Unwrought aluminium, not alloyed * kilogram 79382228 124424884 140592976 13.00% 186,974 316,544 484,274 53.00% 
740311 Unwrought refined copper cat hodes  tonne 52634 64311 52701 -18.10% 186,035 312,718 460,090 47.10% 
760120 Unwrought aluminium alloys * kilogram 54986371 61860442 56355154 -8.90% 135,876 162,827 198,292 21.80% 
300490 Medicaments kilogram 213660 387919 370348 -4.50% 119,747 156,805 182,008 16.10% 
270112 Bituminous coal * tonne 0 0 1885170 nm 0 0 118,254 nm 
720410 Waste and scrap of cast iron * tonne 25000 0 212108 nm 9,775 0 65,303 nm 
260800 Zinc ores and concentrates t onne 0 34796 46292 33.00% 0 19,082 61,471 222.10% 
040210 Milk kilogram 8391380 21025365 22758250 8.20% 21,257 61,124 60,804 -0.50% 
720839 Products of iron or non-alloy steel t onne 72868 47594 78688 65.30% 39,849 30,036 44,623 48.60% 
110710 Malt, not roasted tonne 47793 86052 106220 23.40% 22,223 37,039 43,059 16.30% 
760612 Aluminium alloys kilogram 8841616 12349080 7938097 -35.70% 35,225 53,147 40,964 -22.90% 
510121 Degreased shorn wool kilogram 7462 280 5353534 4487528 -16.20% 64,581 40,661 39,618 -2.60% 
320611 Pigments based on titanium dioxide kilogram 17120400 12339000 14520000 17.70% 40,719 30,219 35,995 19.10% 
780110 Unwrought refined lead * tonne 13984 25762 20310 -21.20% 15,648 32,382 33,740 4.20% 
840734 Reciprocating piston engines number  9366 14948 13851 -7.30% 17,121 29,592 29,999 1.40% 
040221 Milk and cream kilogram 7791481 5478829 7545080 37.70% 27,709 20,637 26,196 26.90% 
410411 Tanned or crust hides and skins number 0 40270 401600 897.30% 0 2,750 25,118 813.40% 
760200 Aluminium waste and scrap * kilogram  1211624 3621097 7444228 105.60% 2,000 7,863 18,727 138.20% 
300420 Medicaments kilogram 130561 90873 89948 -1.00% 17,610 15,542 18,416 18.50% 
870839 Brakes  not recorded 0 0 0 nm 685 7,296 17,122 134.70% 
720429 Waste and scrap of alloy steel * t onne 138900 24009 53500 122.80% 45,334 7,217 15,580 115.90% 
281830 Aluminium hydroxide * kilogram 28500000 31200000 41160648 31.90% 5,212 6,256 14,699 135.00% 
790111 Unwrought zinc, not alloyed tonne  1840 1713 3053 78.20% 2,646 2,939 13,832 370.60% 
100190 Wheat (excl. Durum) and meslin tonne 338667 574215 417263 -27.30% 8,388 7,996 13,416 67.80% 
230910 Dog or cat food, put up for retail sale k ilogram 8721189 7344765 7016374 -4.50% 10,857 10,562 11,392 7.90% 
040590 Fats and oils derived from milk kil ogram 5487387 3575683 4259754 19.10% 14,996 12,230 10,969 -10.30% 
080610 Fresh grapes kilogram 2415145 3411984 3863290 13.20% 4,971 7,486 10,379 38.60% 
 
* Thailand reduced its MFN rate on these lines from  one percen t to zero on 1 April 2006, matching  the TAFTA preferential rate.  
 
 WT/REG185/5 
Page 6  
 
  13. How many Thai exports items that received preferential entry into the Australian 
market have benefited from an increase in trad e (in value and volume terms) since entry into 
force of the Agreement? What are these products, and what has been the increase in value and 
volume terms? What percentage of tariff lines do they represent? What percentage of total 
current trade (value and volume) they account for? 
Since the agreement entered into force on 1 Ja nuary 2005, bilateral trade between Thailand 
and Australia has incr eased considerably from US$4.66 billion in 2004 to US$6.43 billion and 
US$7.74 billion in 2005 and 2006 respectively.    Thailand’s total exports to Australia am ounted to US$3.18 billion and US$4.35 billion in 
2005 and 2006 respectively. In 2005, US$2.1 billion wo rth of these exports (66.15 per cent of the total 
Thailand’s exports to Australia) received pref erential tariff treatment.  While in 2006, 
US$ 2.74 billion worth of Thailand’s exports ( 62.25 per cent of the total Thailand’s exports to 
Australia) benefited from the preferential treatment.   
 In terms of trade value, motor cars (71.22 pe r cent) and air-conditioners (36.15 per cent) are 
the major products that have significantly benefited from the preferential treatment.  
14. Do the Parties consider the Agreement to be WT O-plus in terms of its coverage of trade-
related issues (including government procurement, intellectual property and competition policy)? 
The Thailand-Australia Free Trade Agreement includes commitments which go beyond the 
WTO agreements, in areas such as intellectual pr operty and some services sectors.  TAFTA also 
includes provisions on investment, an area where th ere are only limited WTO disciplines.  In relation 
to government procurement and competition policy, the TAFTA Joint Commission agreed at its first 
meeting that detailed negotiations in both areas s hould commence.  The agreement’s in-built agenda 
also envisages further negotiations on services. 
 
15. In light of the ongoing negotiations on  a free trade agreement between Australia, 
New Zealand and ASEAN, could the Parties indica te how they intend to ensure full consistence 
and coherence between the FTA and the CEPA? If any, what would be the added value of keeping both Agreements into force? How would the Parties ensure the creation of genuine 
building blocks? Do the Parties anticipate any potential burden or confusion that exporters 
could face caused by the multiplicity of bilatera l agreements within the area? If so, how do the 
Parties plan to tackle them?  
The relationship between a regional ASEAN-Au stralia-New Zealand Free Trade Agreement 
(AANZFTA) and related bilateral FTAs, including the Thailand-Australia FTA (TAFTA), has been 
an issue in the AANZFTA negotiations.  Australia considers it important to achieve consistency and 
coherence between its regional bilateral FTAs and AANZFTA.   
 
 The Guiding Principles for the AANZFTA  negotiations, agreed by Leaders in 
November 2004, contribute to this objective by cl early stating that AANZFTA and related bilateral 
FTAs, such as TAFTA, “will continue to exist as di stinct, functioning agreements” and that “no 
provision in the [AANZ]FTA will detract from the te rms and conditions of bi lateral and plurilateral 
FTAs between ASEAN Member Countries,  Australia and New Zealand.”  
 
 Australia expects AANZFTA to provide ne w commercial opportunities which may include 
outcomes more advantageous to particular exporte rs than TAFTA.  For example, once AANZFTA is 
concluded, Australian goods exporters  to Thailand will be provided w ith the commercial flexibility to 
choose whether it is more advantageous to seek  entry for their exports under the AANZFTA or 
TAFTA regimes.  In making this d ecision they will look at issues such as the respective tariff rates for  WT/REG185/5 
 Page 7 
 
 
  their products and the rules of origin (ROO).  In particular, AANZFTA will allow exporters to use 
originating materials from the other 11 parties to wards meeting ROO requirements.  Australia does 
not expect these new opportunities to create burdens or  confusion for exporters.  It will continue to 
provide clear and accessible advice to Australian i ndustry about the new opportunities offered by 
FTAs, including advice provided online (see, for example, the information provided 
to Australian industry regarding rules of origin negotiations, available at 
http://www.dfat.gov.au/trade/050921_roos.html).   In order to ensure that they act as building blocks towards multilateral trade liberalization, 
Australia remains committed to negotiating comprehensive, WTO-consistent FTAs.  
 
 Thailand believes that the AANZFTA will prov ide yet another useful channel of trade 
between Thailand and Australia in addition to TAFTA.   Thailand does not anticipate that any potential burden or confusion to exporters and importers 
will arise from the introduction of the AANZFTA and it plans to organize a number of outreach 
activities to promote the understanding and the utilization of the AANZFTA.   
SPS measures 
 16. Could the Parties elaborate on the state of play of the discussions on equivalence? 
Which products have been covered in these discu ssions? Which other products may become the 
object of discussion?  
The Parties have discussed proposed equivalent risk management measures for some 
horticultural products.   Export policy exists for pineapple exports from Thailand to Australia, with measures 
including decrowning and methyl bromide fumigation.  In December 2006, Thailand proposed 
exporting chilled pineapple pulp as an alternative risk mitigation measure for arthropod pests of 
concern.  Australia is currently considering Thailand's proposal.   In December 2006, Thailand proposed that Aust ralia consider its market access submission 
for pomelo on the basis of peeled, segmented fruit, as a potential measure against several pests of 
potential concern including citrus canker (as an altern ative to Australia consid ering Thailand’s market 
access submission for whole pomelo fruit).  Australia is currently considering Thailand's proposal.    Discussions on equivalence between the Parti es also occurred in relation to Thailand’s 
proposed Regulation 11 covering imported food produc ts.  In January 2006 Thailand repealed this 
regulation.   
 
17. Could the Parties provide further information regarding the current state of play of the 
discussions on harmonization of legislation? Which products have been covered in these discussions? Which other products may become the object of discussions?  
 No specific discussions on harmonization of legi slation have arisen between the Parties to 
date.   
 
Safeguards  18. Have any of the safeguards set out in Chap ter 5 of the Agreement been applied by either 
Party? 
Yes.   WT/REG185/5 
Page 8  
 
  2005
 
.  Australia applied safeguards on prepared  or preserved tuna (1604.14.00) from 20 
October 2005. 
 
2006  
.  Australia applied safeguards on pineapples,  otherwise prepared or preserved, canned 
(ex 2008.20.00) from 29 August 2006. 
.  Australia applied safeguards on prepar ed and preserved tuna (1604.14.00) from 
6 September 2006. 
.  Thailand applied safeguards on fresh grapes (0806.10) from 1 April 2006. 
.  Thailand applied safeguards on cheese a nd curd (0406.100 and 0406.200) from 
7 May 2006. 
.  Thailand applied safeguards on cheese and curd (0406.900) from 14 September 2006 
.  Thailand applied safeguards on fresh, chille d and frozen beef products (0201.200, 
  0201.300, 0202.200 and 0202.300) from 27 November 2006. 
  No global safeguard measures as described in  Article 508 have been applied to date.  
 
19. Could the Parties elaborate further on th e purpose of the SSG regime (Article 409)? 
 The purpose of the SSG regime is to provide a mechanism to allow domestic industries time 
to adjust to potentially higher levels of imports  resulting from preferential tariffs agreed under 
TAFTA.  These safeguards are scheduled to be phased out in 2008 and 2020 for Australia and 
Thailand respectively.  
Government Procurement 
 
20. Could the Parties indicate whether they envi sage substantive commitments to be agreed 
in government procurement?  What recommendations did the Working Group established under Article 1502 bring regarding future negot iations on government procurement?  
Australia and Thailand recognize the importanc e of government procurement to their 
respective economies and will accordingly seek to ne gotiate substantive commitments in this area. 
The Working Group established under Article 1502 r ecommended the commencement of negotiations 
on a government procurement chapter and the parties are consulting on the timing of these 
negotiations. 
 
Reviews 
 
21. An annual review of the Agreement is en visaged to be conducted by a "Joint 
Commission".  Have such annual reviews occu rred? If so, what were the outcomes? Were 
substantive new commitments agreed to in any areas? 
The first Joint Commission was held in Ba ngkok on 1 December 2005.  The Commission 
decided to: 
.  Commence detailed discussions on services, investment, business mobility and 
competition issues in early 2006; 
.  Commence negotiations on developing a gove rnment procurement chapter in early 
2006.  WT/REG185/5 
 Page 9 
 
 
  .  Establish a working group on market access issues which would report to the Joint 
Commission 
 
 The Parties are currently consulting on timing of the second Joint Commission to be held in 
Australia. 
 
22. There are also specific provisions written into the Agreement for review of certain 
components, for example, the operation of the SSG regime (Article 509(1)), and the competition policy chapter (Article 1206(2)).  In relation to  these two examples, both reviews are to be 
conducted within three years of entry into force of the Agreement (by 1 January 2008).  Is this 
timetable likely to be achieved? What prepar ations are currently underway? Are substantive 
amendments or new commitments envisaged in these areas?  
No preparations have yet been undertaken for reviews into the operation of the SSG regime 
and competition policy.   
 
~ Services ~ 
 
Denial of benefits  23. According to document WT/REG185/4, Ar ticles 804 and 908:4 allow the denial of 
benefits under the Agreement to services suppliers of other Members that are juridical persons 
constituted under the laws of the Parties and en gage into substantive business operations in the 
territory of the Parties.  To the extent that, according to GATS Articl e V (6), those services 
suppliers are entitled to treatment granted und er the Agreement, could the Parties indicate 
what kind of action is envisaged to ensure compatibility of the above mentioned provisions with GATS Article V (6)?  
Articles 804 and 908.4 are different provisions  addressing different matters.  Article 804 
ensures that non-Parties to the FTA cannot fall with in the scope of the FTA by simply establishing a 
commercial presence in the territory of an FTA Part y.  This is compatible with GATS Article V(6). 
However, Article 908.4 deals with matters not addressed by GATS Article V(6).  Liberalization commitments 
 
24. According to Article 812 of the Agreement, the Parties undertake to enter into further 
negotiations on services within three years after th e entry into force of the Agreement, with the 
aim of enhancing their commitments.  Could the Pa rties indicate whether this timetable is likely 
to be achieved?  If so, what preparations a re currently underway to meet this deadline? Would 
this exercise seek to include sp ecific commitments in some sectors that were not covered under 
the Agreement? Do the Parties aim at including  further commitments in the financial and 
telecommunications services? 
The Parties continue to engage with respect to the commencement of further negotiations on 
services as agreed in Article 812(1) of TAFTA.  Both parties remain committed to conducting these 
further services negotiations.  Under a side-letter to  the TAFTA, both Parties agreed that further 
negotiations on financial and telecommunication se rvices, and developing a qualification evaluation 
scheme for Thai  masseurs and Thai massage th erapists, would be part of these negotiations. WT/REG185/5 
Page 10  
 
  National Treatment, MFN, Standard of Treatment 
25. Have either Article 812(3) or Article 919(1) been invoked by either Party since entry 
into force of the Agreement?  
 No. 
Trade environment 
26. Are there any specific provisions in the Agre ement aimed at facilitation greater two-way 
investment? If so, what are these provisions? Have  they had a discernible impact on the Parties' 
investment relationship since entry into force of the Agreement?  
Article 808 (Cooperation) requires parties to foster  the development of cooperation in various 
services sectors, for instance, education, healthcar e and tourism and to promote the facilitation of 
temporary entry of business people.  
 The Services and Investment Chapters cont ain important market access commitments for 
investments by investors of either Party.  Furt her, the investment chapter contains a number of 
investment promotion and protection provisions co mmitments, including on expropriation, fair and 
equitable treatment, full protection and security and transfers.  The agreement also gives Parties’ 
investors the right to seek consultations with a Party to the FTA in the event they believe a 
commitment in investment chapte r has not been complied with.  Should the investors and the Party 
fail to resolve the matter through consultations, the agreement also allows the investor to have the 
matter heard before an intern ational arbitral tribunal.  
It is too early to assess TAFTA’s impact on foreign investment flows between the parties as 
the agreement has been in force for only two years.  However, we consider the inclusion of the strong 
and legally binding investment protection provisions  and market access obligations referred to above 
provides a secure and open framework for investment between the parties, and that this framework 
has the potential to facilitate increased investment flows. 
 
Questions from the United States
 
 
Rules of Origin   27. Article 403(2) provides, in relevant part: “A nnex 4.1 may specify that the value of non-
originating materials produced in developing countries and places may contribute towards the 
RVC for particular goods.  In that case, the value of those materials, as a proportion of the FOB 
value of the goods equating to no more than the maximum allowable proportion specified in the 
Headnotes to Annex 4.1 for those goods shall be excluded from the VNM for the purposes of 
paragraph 1….” 
• Paragraph 8 in the Headnotes to Annex 4. 1 to the Agreement provides “In accordance 
with Article 403(2), for particular goods of Chapters 50-64, the value of non-originating materials produced in developing countri es may contribute towards the RVC for those 
goods up to a maximum allowable proportion of 25 per cent of the FOB value of the 
goods.”   
 
• Paragraph 8 of the Headnotes to Annex 4.1 appears to extend preferential access to 
materials from a select list of countries, which countries are not
 parties to the RTA.   
How is this provision consistent with the Parties’ MFN obligations under Article I of the 
GATT?   
  WT/REG185/5 
 Page 11 
 
 
   TAFTA is fully consistent with GATT Article XXIV, which provides an exception to Parties’ 
MFN obligations under Article I of the GATT.  As  a result of TAFTA Article 403(2), in accordance 
with GATT Article XXIV:5(b), Members who are not parties to TAFTA do not face more restrictive 
customs regulations applied to trade with the par ties to TAFTA than existed before TAFTA entered 
into force.  
Export duties and charges, and quantitative restrictions   28. Article 209(1) provides that “Except as otherwise provided in this Agreement, a Party 
shall not adopt or maintain any prohibition or rest riction on the import of any good of the other 
Party or on the export or sale for export of any good destined for the territory of the other 
Party, except in accordance with Article XI of GATT 1994.”  Thailand currently maintains 
export duties on a number of products, including  such important products as rice, rubber and 
metal scraps.  Although the export duties on most  of the subject products are currently applied 
at zero, they could be reintroduced up to the statutory rate, as high as 50 per cent.    
• How is the retention of these export duties consistent with the otherwise apparent 
objective of the FTA to eliminate barriers to trade between the parties?   
  The application of the export duties in questi on is consistent with the WTO and does not 
provide protection for domestic industries nor trade barriers. 
Standards  
 29. Article 706.7 of the FTA provides that: “Each Party shall utilise to the maximum 
possible extent existing mutual recognition a rrangements in relation to the acceptance of 
conformity assessment pro cesses and procedures.”  
• What are the mutual recognition arrangements  contemplated by this provision and how 
are third parties restrict ed by these arrangements? 
 
 The purpose of Article 706.7 is to encourage bot h parties to participate in and utilise existing 
mutual recognition arrangements to facilitate trade, be they regi onal, multilateral, sectoral or 
voluntary level arrangements.  Examples of the types of MRAs envisaged include: the APEC 
Electrical and Electronic Products MRA, the APEC  Tele MRA, voluntary level MRAs under the 
auspices of the International Laboratory Accred itation Cooperation (ILAC), the Asia Pacific 
Laboratory Accreditation Cooperation (APLAC), the  
 Global safeguards   30. Article 508 of the FTA appears to distingu ish between “serious injury” and “serious 
damage”.   
• Please describe how “serious damage” might differ from the understanding of “serious 
injury” in the WTO Safeguards Agreement. 
  Chapter 5 of the TAFTA defines the term “serious damage” as “a significant overall 
impairment in the position of a domestic industry” .  Article 4.1(a) of the WTO Safeguards Agreement 
defines “serious injury” “to mean a significant ov erall impairment in the position of a domestic 
industry”.  WT/REG185/5 
Page 12  
 
  ~ Services ~ 
 Trade environment 
 
31. We note that since the agreement between Th ailand and Australia went into effect in 
2005, trade in services has increased considerab ly between the parties, while investment 
between the parties has been small.   
• What could account for this situation?   
 Thailand has not been a large investor in Australia and vice versa (Table below provides 
investment figures).  It is too early to assess TAFTA’s impact on foreign investment flows between the parties as the agreement has been  in force for only two years.  However, we consider the inclusion 
of the strong and legally binding investment pr otection provisions and market access obligations 
referred to above provides a secure and open framework  for investment between the parties, and that 
this framework has the potential to f acilitate increased investment flows.  
 
 
Thailand investment in Aust ralia - Net Capital inflows  
 2001 2002 2003 2004 2005 
 A$m A$m A$m A$m A$m 
Direct 0 n.p. -2 -2 n.p. 
Total n.p. -116 -292 580 -564 
      
Thailand investment in Austra lia - Levels at 31 December  
 2001 2002 2003 2004 2005 
 A$m A$m A$m A$m A$m 
Direct -10 n.p. n.p. n.p. 52 
Total 561 450 161 766 207 
      
      
Australian investment in Thailand - Net capital outflows  
 2001 2002 2003 2004 2005 
 A$m A$m A$m A$m A$m 
Direct -14 -13 180 66 109 
Total -58 -5 169 129 217 
      
Australian investment in Thaila nd - Levels at 31 December  
 2001 2002 2003 2004 2005 
 A$m A$m A$m A$m A$m 
Direct 54 39 218 311 n.p. 
Total 232 256 471 619 867 
 
 
Market Access  
 32. Pursuant to article 809 of the FTA, the pa rties agree to provide “market access through 
the modes of supply identified in Article 802(i) ” to the services sectors listed in Annex 8.  
• Is our understanding correct that, unless otherw ise provided, the parties have granted 
access to the sectors listed in each party’s sch edule of commitments in Annex 8 for all 4 
modes of supply?  
 
 Yes. 
  WT/REG185/5 
 Page 13 
 
 
  Thailand's liberalization commitments 
 
33. Based on the GATS “Services Sectoral Classifi cation List”, Thailand appears to limit its 
sectoral coverage in the following manner:  
 Only 3 of 46 subsectors listed under “B usiness Services” show commitments; 
 Only 3 of 24 subsectors are listed und er “Communications” show commitments; 
 Construction is limited to “public utilit ies or transport requiring special tools, 
machinery, etc”; 
 Distribution subsectors are limited to wholesaling and retailing for Australian 
products, and omits franchising altogether; 
 Education is limited to “tertiary educatio n by institutions specializing in sciences 
and technology, etc”; 
 There are no commitments for any subsector in the “Environment” or “Health” 
sectors; 
 2 of 4 sectors are covered in the “Tourism” sector; 
 “Recreation” commitments are limited to a narrow portion of a few subsectors. 
 Only 4 of 35 “Transportation” subsectors are listed; 
 No financial services are listed.   
  
• Please explain how coverage of this limite d number of subsectors meets the “substantial 
sectoral coverage” requirement of Article V of the GATS.  
 
 TAFTA has no a priori exclusion.  Therefore all services sectors are covered and subject to 
negotiation for progressive libera lization in subsequent rounds.  
 
34. In the horizontal commitments, Thailand’s sch edule of commitments states that “Except 
where majority Australian equity  participation is permitted by this schedule, commercial 
presence is permitted only through an en tity which is registered in Thailand.” 
• Is this registration process a simple notification of operations in Thailand, or is it in fact 
a “screening” process?  
 
It is just a simple registrati on process of operations in Thailand.  
 
• Please describe the “registrat ion” process.  Is disapproval of an investment possible in 
this process?  If so, on what grounds? 
 
 In order to register and set up a commercial presence (in the case of a limited company) in 
Thailand, the following procedures should be followed:   1.  Corporate Name Reservation
  
 
 The name to be reserved must not be the same  or close to that of other companies.  The 
approved corporate name is valid for 30  days.  No extension is allowed. 
 2. File a Memorandum of Association
  
 
 A Memorandum of Association to be filed with the Business Development Office must include the name of the company that has been  successfully reserved, the province where the 
company will be located, its business objectives, the capital to be registered, and the names of the 
seven promoters.  The capital information must in clude the number of shares and the par value.  
 WT/REG185/5 
Page 14  
 
  3. Convene a Statutory Meeting 
 
  Once the share structure has been defined, a statutory meeting is called during which the 
articles of incorporation and bylaws  are approved, the Board of Directors is elected and an auditor 
appointed.  
 
   4. Registration
  
 
 Within three months of the date of the Statutory Meeting, the directors must submit the application to establish the company. 
 
35. Also in the horizontal commitments, Thailand’s schedule states that “Unless otherwise 
specify [specified] in this schedule, equity participation of up to 60 percent by Australian 
investors/services suppliers is allowed from Janua ry 2005 subject to criteria contained in the 
limitations column and non-discrimi natory domestic regulation.”  
• Does this provision mean that (1) a 60 per cent ownership limitation applies to 
Australian investment in sectors in which no commitments are listed anywhere in the 
schedule; or (2) a 60 per cent ownership limitation applies to a sector or subsector specifically listed in the schedule unless that listed commitment provides otherwise (such 
as general management consulting wh ich provides for 100 per cent Australian 
ownership or database access services which limits Australian participation to 25 per 
cent)?  
 
 A 60 per cent ownership limitation applies to a sector or subsector specifically listed in the 
schedule unless that listed commitment provides otherwise. 
 
36. Serious limitations appear to apply to  the commitments made by Thailand:  
 most limit Australian ownership to a minority position;  
 many require minimum “paid-up capital” amounts;  
 many have physical size requirements;  
 twelve of the committed subsectors a re marked by Thailand as only a 
subset of the activities of the subsector listed in the commitment; and  
 an Australian investment is limited in  its ability to purchase real estate.  
 
• Please explain how, in light of these lim itations, this agreement “provides for the 
absence or elimination of substantially all discrimination … between or among the 
parties”.   
 
Thailand’s commitment undertak en under TAFTA is the 1
st package.  Further liberalization 
will be done progressively through subs equent rounds of negotiations.  
 
It should also be pointed out that paragr aph 3 of Article V of the GATS provides for 
developing countries flexibility in the elimination of discriminatory limitations to trade in services.  WT/REG185/5 
 Page 15 
 
 
  Questions from Chinese Taipei  
 Rules of origin  37. According to the tolerance rule in paragra ph 8 of the headnotes to Annex 4.1 (Product-
Specific Rules of Origin), for particular goods of Chapters 50-64, the value of non-originating 
materials produced in developing countries m ay contribute towards the RVC for those goods up 
to a maximum allowable proportion of 25 per cent of the FOB value of the goods. 
(1)  Can the Parties please confirm that this rule is applicable to all the items under 
 Chapters 50-64? 
 
This rule is applicable to items under Chapters  50-64 where this is specified for an item in 
Annex 4.1 to TAFTA.  It is specified for most, but not all, items in these Chapters. 
(2) Why do the Parties limit the product scope to  these chapters and set up a time limit of 
20 years? Would the Parties consider expanding the scope, or abolishing the time limit? 
 
Article 403.2 provides as a general rule th at Annex 4.1 may allow for non-originating 
materials produced in developing countries and plac es to contribute towards the RVC for particular 
goods.  In elaborating the product specific rules as set out in Annex 4.1, it was found appropriate to use this provision in relation to HS Chapters  50-64, covering textiles, clothing and footwear, 
recognising the particular characteristics of the industries covered by those chapters, including their 
importance to developing countries.  This general provision will expire after 20 years recognizing that 
with developments in the TAFTA Parties and the in ternational trading environment over time such a 
provision will become less relevant.   
 
(3) Has the Committee on Rules of Origin, as established in Article 415 of the Agreement, 
started reviewing and modifying the list of de veloping countries? If the Parties intend to 
make revisions to the list, would they hold pr ior consultation with the countries affected 
by their decision? 
 
 Neither of the two meetings of the Committee on Rules of Origin (Sydney, 19 July 2005 and 
Bangkok, 27-28 April 2006) reviewed  the list of developing countries, nor what processes such a 
review might entail. 
 
Safeguards 
 38. Could the Parties please explain how they would ensure that the exclusion requirement 
in the global safeguard section in the Agreement is implemented in a manner that is WTO-
consistent? Assuming the degree of injury caused by the imports of a Party is the same as that caused by a non-Party, would not the exclusion requirement unfairly raise a barrier to the trade 
of the non-Party? 
The Parties’ global safeguard procedures and th e application of the TAFTA are in compliance 
with the Parties’ WTO obligations. 
 
 There is no exclusion requirement as such in the Agreement.  Rather, a Party may exclude 
imports originating from the other Party from safegu ard action if such imports are not the cause of 
serious injury and consistent with the WTO Agr eements.  Consideration would be given to the 
treatment of imports from the other Party in a decisi on to initiate safeguard investigations.  If imports 
from the other Party were excluded from an injury phase, the requirements of Article 4.2(b) of the 
WTO Safeguards Agreement are relevant.  That is, if imports from the other Party were excluded 
from a determination of whether increased imports have  caused, or threatened to cause, serious injury, WT/REG185/5 
Page 16  
 
  such imports need to be examined as a factor “o ther than increased imports” which is causing injury 
within the meaning of Article 4.2(b) of the WTO Safeguards Agreement. 
 
~ Services ~ 
 
Recognition 
 
39. Article 806.2 (Recognition) provides that the Parties shall encourage their relevant 
competent bodies to enter into negotiations on the recognition of qualification requirements and 
qualification procedures.  Could the Parties please inform us of progress made on this 
recognition process to date? Do the Parties intend to set up any mechanism to fulfil the 
obligation under Article VII of GATS regarding the provision of adequate opportunities for other WTO Members to negotiate and join such a mutual recognition arrangement? 
To date, no substantive progress has been made in negotiating mutual recognition of 
qualifications.  In negotiating further liberalizati on on services, the Parties will take full account of 
their rights and obligations under the GATS. 
 
__________