Introduction

Since the 1970s, outward-oriented policies have transformed Thailand into a regional production hub and improved economic prosperity. Automobiles and automobile parts and electronics make up a quarter of exports from this upper-middle-income economy as of 2010. From the 1990s, Thailand has emphasized regional trade agreements as a vehicle of commercial policy. It has participated in the Association of Southeast Asian Nations (ASEAN) Free-Trade Area (AFTA) since 1993 and pursed bilateral free trade agreements since 2001. By December 2009, Thailand was one of East Asia's most active free trade agreement (FTA) users, having concluded 11 FTAs and engaged in another six FTA negotiations.

In response to the trend toward FTAs, there is growing academic interest in ex ante and ex post evaluation of Thailand's FTAs. Ex ante studies use global computable general equilibrium (CGE) models to simulate the economic effects of alternative FTA scenarios. Thailand Development Research Institute (TDRI) (2006) suggested that higher welfare effects of tariff reduction were visible from bilateral FTAs with traditional markets (e.g., Japan and the United States [US]) than those with new markets. Kawai and Wignaraja (2009b) found that ASEAN's FTAs generated significantly larger welfare gains for Thailand, especially if the CGE analysis incorporated reductions in tariffs, services barriers, and improvements in trade facilitation.

Ex post studies rely on industry analysis to assess the effect of FTAs. In a study of the automobile sector, Kohpaiboon and Jongwanich (2006) concluded that overall FTA utilization rates were relatively low and that FTA export creation was not significant. In contrast, TDRI (2006) found relatively high utilization rates for the Thailand-Australia FTA and the Thailand-India FTA but relatively low rates for the ASEAN-PRC FTA. TDRI (2006) also found that automobiles benefited more from implemented FTAs than textiles. Using revealed comparative advantage analysis, Sussangkarn (2003) suggested that the full impact of the ASEAN-PRC FTA may be underestimated as the People's Republic of China's (PRC) range of comparative advantages over Thailand was broad.

The few available studies of Thailand's FTAs provide only partial insights. The CGE estimates highlight welfare gains from bilateral FTAs with traditional markets and ASEAN's FTAs. Yet they are unable to clarify how much such welfare gains are realized. Furthermore, industry studies seem inconclusive on FTA utilization rates and effects on different sectors. In the absence of adequate industry information, enterprise surveys can help investigate the impact of FTAs on Thailand's exporters.

This study is the first systematic analysis of how FTAs affect exporting firms in Thailand. The research explores five key issues in current academic and policy debates: (i) awareness of FTA provisions and use of FTA preferences; (ii) the relative importance of different FTAs and net benefits of FTAs; (iii) enterprise responses to FTAs; (iv) the burden imposed by multiple rules of origin (ROO) and the extent of the Asian “noodle bowl” effect¹; and (v) the demand for institutional support for adjustment to FTAs. These issues were investigated using a survey of 221 exporters in three leading Thai exports—textiles/garments, electronics, auto/auto parts—undertaken from April 2007 to May 2008.

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