Australian-Thai Trade: Has the Free Trade Agreement Made a Difference?

Abstract

This article examines the impact of the Thailand–Australia Free Trade Agreement (TAFTA) on bilateral trade between the two countries, paying attention to the implications of rules of origin and the utilisation of tariff preferences. It is found that trade has expanded faster since TAFTA came into effect, but the impact has heavily concentrated in a few product lines in Australian imports from Thailand, reflecting the influence of commodity-specific, supply-side factors which have a bearing on the rate of preference utilisation. The findings, inter alia, suggest that the use of officially announced preference rates in trade flow modelling is likely to exaggerate trade flow effects of free trade agreements.

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