Bhutan, Thailand to finalize free trade agreement within two years

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Bhutan and Thailand launched free trade agreement (FTA) negotiations in Thimphu last week.

During the first round of negotiations, the two governments determined the structure and outline of the FTA, identified the working groups and contact points, and agreed on a negotiation work plan.

The free trade agreement aims to provide better market access and strengthen bilateral trade and economic cooperation between the two countries.

Sonam Tshering Dorji, director of the Ministry of Trade, said the free trade agreement has ten chapters and the two governments will set up eight working groups.

Sonam Tsering Dorje said the second round of negotiations will begin in three months.

Every three months, the FTA holds virtual negotiations and meetings of different working groups.

“We aim to complete all negotiations on the free trade agreement within two years,” Sonam Tshering Dorji said.

Sonam Tshering Dorji said one of the working groups will focus on products and plans to export about 4,000 to 4,500 products.

However, he said the two sides may initially protect a small number of products but then relax them after a few years.

Bhutan has over 5,000 product tariff lines.

The next round of FTA negotiation meeting will be hosted by the Thai government.

Trade between the two countries has grown steadily over the years, with total trade in goods reaching US$23 million (NU1.7 billion) in 2023.

Thailand has been recorded as Bhutan’s fourth largest trading partner in recent years.

Currently, Bhutan has a free trade agreement with India.

Additionally, Bhutan and Nepal have agreed on a Preferential Trade Agreement (PTA), which is about to be finalized. Under the PTA, only selected goods are allowed to be traded between the two countries.

Sonam Tsering Dorje said that about 85% to 90% of negotiations with Nepal have been completed. An agreement between the two countries is expected to be finalized soon.

He said Bhutan has offered to open its market to about 200 products.

Bhutan has signed a preferential trade agreement with Bangladesh, in which Bhutan provides market access for 100 products and Bangladesh provides market access for 34 products.