Economists have warned that at least three industries — automotive, electrical appliances and iron and steel — will be hit from low-priced products from China when the new pact, Regional Comprehensive Economic Partnership or RCEP takes effect.
RCEP is an initiative to promote free trade between the 10 Asean members and its six existing Free Trade Agreement (FTA) partners, Australia, China, India, Japan, New Zealand and South Korea. Proposed at the Asean summit in 2012 in Cambodia, it still needs detailed negotiations before being finalised.
According to the study by Thai economists, there are products in seven sectors that would benefit from RCEP. They are food processing, textile and garment, rubber, chemical, petrochemical and jewellery.
Under the RCEP, the market for these products would be not only be Asean, with its more than 600 million population, but also the huge number of consumers from the other six partner nations, said Achanan Kohpaipoon, an economist from the Faculty of Economics at Thammasart University.
The pact will also attract Japanese investors to expand investments in Asean rather than in China, citing their political conflicts.
On the downside, the RCEP may have a significant impact on industries such as automobile, electrical appliances and steel products, which will face fierce competition from rival Chinese products.
Mr Achanan told a seminar last week Chinese manufacturers could dump their products in other countries, which would hurt local industries or hit Thai export markets.
Although China is a key partner in the new FTA, it shares the same market as Thailand. How serious the impact from the RCEP will be clearer when talks finalised sometime next year.