Potential Gains to Thailand from Joining the Bangkok Agreement

Abstract

Formed in 1975, the Bangkok Agreement (BA) was the oldest preferential trade arrangement
(PTA) in Asia-Pacific that aims to boost trade volumes among developing countries. Currently,
there are six member countries: Bangladesh, India, Lao People’s Democratic Republic, Republic
of Korea, and Sri Lanka. China is the latest member who just acceded to the agreement in 2001.
However, the intra-member trade in the Bangkok Agreement region has remained relatively
small. This, therefore, attributes to the limited number of concessions for success of this trade
bloc. Nevertheless, the decision of Thailand for joining the Bangkok Agreement should be
studied more for its possible outcomes. This paper analyzes the potential gains if Thailand
decides to be a member of the Bangkok Agreement. This paper calculate some indicators and
estimate a pool gravity model to quantify the possible gains to Thailand if it decides to join the
Bangkok Agreement PTA. Due to comparative advantage and potential of trading on “Textile,
Wearing Apparel and Leather Industries”, “Manufacture of Chemical, Petroleum, Coal, Rubber
and Plastic Product”, “Manufacture of Paper and Paper Products, Printing, and Publishing” and
“Basic Metal Industries”, trade creation can be expected to exist in these industries within the
Bangkok Agreement. The Agriculture sector, Mining sector, Manufacture of Food, Beverage,
and Tobacco, and other industries such as Pearls and precious stones, Furniture, and other
accessories are still the below potential industries in which Thailand should aim for further
negotiations.