Most of the states around the universe hold one or more free trade understanding, as the World Trade Organization has grown to 153 member states as of July 2010.

I. what is free trade

When any state opening up economic systems, it is name a “ free trade ” or “ trade liberalisation “ . It is the understanding made between two or more states to non revenue enhancement or add duties to imported and exported goods. Free trade makes companies from other states to merchandise as easy and expeditiously as domestic manufacturers. By making this, any goods and services could come from everyplace to vie with merchandises and services that were produced in their ain state.

Free trade allows the free flow of goods and services among the states that hold understandings. Most of the states in the universe hold free trade understandings. Global trade opens markets for merchandises and services oversea. Every sorts of merchandise such as, agricultural merchandises, nutrient, manufactured goods, natural resources and all sorts of services were imported and exported around the universe as a portion of international free trade.

There are two different sorts of free trade, bilateral trade understandings include a free trade understanding signed between two states. And a multi-lateral understanding refers to an understanding signed by more than two states to liberalise duties and trade barriers among member states.

Free trade is really advantaged for those states that are already rich and developed state such as, United province, Japan, United Kingdom, Germany, France, etc. Free trade besides increases the spread between rich and hapless states that do non exported much and fighting to vie. It about has no consequence on the communism states that does non open their trade with others such as Cuba, North Korea.

II. The history of free trade

We likely think that free trade is a really modern thing that is merely developed in our coevals, it has really begun since the beginning of planetary trade.

A. Ancient Free Trade

Trade was the ground why certain civilisations prospered economically. In the ancient universe, free trade was practiced in many civilisations. Most of them started from utilizing ship to transport their merchandises from one portion to another portion of the universe.

The really first group of people who making this and the most successful civilisation was Phoenicians. In around 1500 BC to 800 BC, they created the large trade paths that covered the full Mediterranean.

Following the Phoenicians, there were Greek, Roman, Islamic society pattern free trade. That made them acquiring rich. After Renaissance age, European states such as Great Britain expand trade through better engineering. They could merchandise across the full universe. Trade of the late nineteenth century lead to the free trade we know today.

B. Contemporary Free Trade

After the Soviet Union fell in 1989, after the terminal of World War II, European states opened up their economic systems once more. Our universe economic system has become more interrelated.

In 1947, 23 states signed the General Agreement on Tariffs and Trade ( GATT ) , a impermanent understanding about cut downing imposts duties. Afterward, it was replaced by WTO understanding.

III. Thailands free trade

Thailand is keeping free trade understanding with many states such as, United State, China, Australia, Japan, Southeast Asia states and many more. Free trade understanding made Thailand an attractive topographic point to put. Some understandings allow alien to put in Thailand straight. Thailand is take parting in many-sided understandings.

A. ASEAN Free Trade Area ( AFTA ) Thailand top trade spouse in 2010

In 1992, Thailand and other member states of ASEAN ( Association of Southeast Asian Nations ) , include Philippines, Indonesia, Malaysia, Singapore, Brunei, Cambodia, Laos, Burma and Vietnam with approximately 580 million combined populations, started to bit by bit extinguish their import revenue enhancements and duties as portion of the ASEAN Free Trade Area. Duties were reduced to 0-5 % on more than 99 % of trade goods.

ASEAN is now Thailand top trade spouse. ASEAN is the biggest export market for Thailand, approximately 23.7 % of entire exports. Because of AFTA, Thai exports to the other 9 ASEAN states in the first five months of 2010 increased by 56 % with the entire trade value at 29.629 billion USD. The most merchandises that Thai exports to ASEAN were sugar, tapioca merchandises, finished oil merchandises, air-conditioners and parts, cars and car parts, , integrated circuit, computing machines and related parts and gum elastic. The major export markets were Singapore, Indonesia, Malaysia and Vietnam.

1. Benefits from AFTA

Many mills are able to import natural stuffs in cheaper monetary value because of the decreases in duties. This will assist cutting their production costs. Consumers in ASEAN states could happen goods in the cheaper monetary value. ASEAN will be united into a individual market and the market will be acquiring stronger and larger with large sum of population.

2. Negative and Positive Effectss

Thai economic system could be affected by AFTA both negatively and positively. The authoritiess will lose income from revenue enhancement and duty aggregations but Thai can exports wider. AFTA would pull more foreign investors to Thailand. And the zero per centum revenue enhancement on agricultural merchandises would profit the state in the long term because 95 % of merchandises are non taxed. But in the short term, some Thai merchandises will acquire higher competition from trade liberalisation. For illustration Vietnam, they have lower production costs in bring forthing the rice. That can impact Thailands rice market portion. There is a opportunity that Thailand can lose a 0.5 % portion of the rice trade to Vietnam.

B. The United States and Thailand free trade

Thailand and United States launched their first Free Trade Agreement in 2004 but it was suspended in 2006. Although FTA dialogue is still suspended, both states continued to discourse bilateral issues. Thailand is the 23rd largest goods merchandising spouse with U.S.

1. Export

The five largest classs that Thailand exports to U.S. are Electrical Machinery, Machinery, Rubber, Prepared Meat, Fish and Seafood.

2. Import

Thailand import agricultural merchandises from U.S. include soya beans, cotton, wheat, provenders and fresh fishs and besides Electrical Machinery, Machinery, Optic and Medical, Plastic, and Assorted Grains ( soya beans ) .

C. Trade Agreement with Japan

Both states have signed the Japan-Thailand Economic Partnership Agreement. And ASEAN besides has a free trade understanding with Japan. Major merchandises that Thai exports to Japan are nutrient and consumer merchandises. Most Nipponese in Thailand operate in engineering industries.