Thai-EU FTA opens doors, but Thailand must raise its standards
Thailand is stepping up efforts to strengthen economic ties with Europe by racing to finalise the free trade agreement with the European Union by the end of 2026, the Thai-EU FTA. Experts say, however, that Thai businesses doing trade with the bloc need to prioritise the traceability of their exported goods.
-Catalyst for competitiveness-
Thai trade representative, Werapong Prapha, describes the Thai-EU FTA as a catalyst to increase Thailand's competitiveness, particularly against other ASEAN nations that already have such deals with the EU. This includes eliminating tariff barriers on some Thai exports, particularly agricultural products.
“For Thailand to remain competitive, compared to our ASEAN neighbours, I think we need to be able to enjoy some of these tariff eliminations and the ability to attract higher investment between the EU and Thailand,” he explains.
Thailand’s trade deal negotiations with the EU began in 2013, but were put on hold a year later following the military coup. It was not until 2023 that negotiations resumed. 15 of the 24 chapters, or two-thirds of the trade deal have been finalised, following the 9th round of negotiations in Brussels in late June. This, Werapong says, is a significant milestone in trade negotiations.
“We have been able to make really significant progress since then, coupled with the need to diversify for Thailand amid geopolitical tensions and the trade war. So, we need to do that very, very quickly because we don't want to miss this train,” Werapong says.
The next round, scheduled for late September in Phuket, Thailand, will cover other aspects of the agreement. The aspects, which he describes as the six clusters, include agricultural market access, manufacturing goods, digital trade, energy and raw materials, intellectual property and government procurement - the latter being the first time for inclusion in FTA negotiations.
These areas, he says, are significant for Thailand's future economy and how the country wants to position itself in the next 5-10 years.
“There’s obviously competition at the regional level, but what is our competitive advantage on the global stage? What kind of economy do we have? What is our new growth story that we want to project to the world? I think that conversation is going to be very, very crucial as we lead up to the 10th round of negotiations,” Werapong explains.
-Unlocking trade opportunities-
The European Union is Thailand’s fourth-largest trading partner, behind China, the United States, and Japan. The total bilateral trade between Thailand and the EU reached over 45 billion US dollars in 2025. Thai exports to the bloc stood at 26 billion US dollars, while the imports were recorded at 18.5 billion US dollars, giving Thailand a 7.8 billion US dollars of trade surplus with the EU.
The Thai-EU FTA will be of significant benefit for Thailand, as the country will have enhanced access to 27 markets in the EU. The bloc itself remains the world’s second-largest economy, with a GDP exceeding 21 trillion US dollars, which is about 18% of global GDP.
According to Thailand’s Department of Trade Negotiations, key Thai exports to the EU include computers, jewellery, air conditioners, rubber products and car parts, while major imports from the EU include machinery, pharmaceuticals and aircraft parts. These are the products that are likely to enjoy the most benefits once the FTA is finalised.
Tunyathip Saengsuwan, a researcher at TDRI, listed a few the potential benefits of the EU FTA for Thailand. These include enhanced market access, increased investment opportunities from Europe and strengthened competitiveness for Thai products.
Most of all, the Thai-EU FTA will also reduce Thailand’s dependency on certain markets, as the global trading environment remains unpredictable. Thailand itself is directly exposed to geopolitical tensions.
“The Thai-EU FTA could support this by reducing tariffs and other trade barriers, reducing the cost of Thai products entering the EU market and helping them compete more effectively with products from countries that already have EU FTAs,” says Tunyathip.
Countries in the ASEAN region that already have EU FTAs are Singapore and Vietnam, while negotiations are still ongoing for Thailand, Indonesia, Malaysia and the Philippines.
Without the EU FTA, as Tunyathip explains, Thai products would be at a disadvantage, as products from countries that have free trade agreements with the EU in place are already enjoying zero or very low tariff rates.
“So, the agreement would help narrow this gap and make it easier for Thai companies to increase their exports to the European market,” she says.
-Traceability for sustainability-
Signing the Thai-EU FTA is one thing, implementation is another.
Thai economist Pavida Pananond highlighted one aspect over which Thai exporters must be vigilant once the agreement with the EU is signed.
“Trading with the EU is not just about reducing tariffs or increasing market access, it is also about the process with which Thai firms have to comply in terms of sustainability, supply chain visibility and transparency,” Pavida commented.
That also includes traceability, as the EU prioritises how products are made throughout the supply chain. The bloc itself is also committed to contributing to the circular economy.
This is supported by various regulations that are already in place, namely the Carbon Border Adjustment Mechanism (CBAM), EU Deforestation Regulation (EUDR) and the Packaging and Packaging Waste Regulation (PPWR), with the latter taking effect on August 12th this year. These are the regulations that require close attention from Thai businesses, from manufacturers to exporters.
“The EU doesn't just ask for a final product to be exported to their market, they also want to know how we do things before we export to them,” she explains.
“That would push Thai suppliers to think more about the issue that has become very significant in today's geo-economics. That is, for example, visibility of the supply chain, traceability of the input, where things come from and where things go into the final product. That should be an external factor that pushes Thailand to think about compliance, visibility and how they can improve their entire supply chain.”
-Substance over speed-
Noel Clehane, Vice-Chair of the EU-ASEAN Business Council, who led a group of European business leaders to Thailand in mid-July, explains that the EU business people remain interested in Thailand as a trade and investment destination and are enthusiastic about the FTA negotiations.
Eagerness to do business with Thailand aside, what remains a constraint are the existing regulations, particularly the Foreign Business Act, making Thailand not a conducive environment for further investment.
“There are apparently 7,600 ministerial regulations in place in Thailand. Many of them are redundant, out of date, inconsistent with each other and need to be rescinded or modernised,” Noel commented.
“So, in terms of competitiveness, trade facilitation practices, customs practices, digitisation of imports and exports, they're not tariffs obstructing market access as such, but they are in totality not conducive to driving trade in both directions, but particularly imports and further investment by European companies,” said Noel
He also questioned the government’s end-of-2026 aim to finalise the Thai-EU FTA, stating that the goal seems a bit ambitious. Despite that, he remains optimistic that the trade deal will eventually be concluded, with clarity of the trade rules and regulations.
“We don't want speed. We want a substantive high-quality trade agreement with existing (regulatory) issues resolved and predictability about standards. Similarly, we would hope that Thai demands would be resolved as well on the European side,” Noel says.
-Final hope-
While there are high hopes that the Thai-EU trade deal will become a reality, these experts think that Thai businesses must also keep up with EU market demands, especially its product and sustainability standards.
They also advised the government to provide support and helpful resources for Thai businesses, particularly SMEs, in adjusting to these new standards, which will help increase opportunities for them in the EU market.
“The Thai government should not just look at the final product that is being exported, but make a whole global value chain analysis of where we can do things better and how to help those along the supply chain to comply with the higher standards that would be required,” Pavida commented.
“Even if Thailand negotiates a lower tariff, Thai products may still face higher costs or even lose access to the European market. If they cannot meet the EU environmental and sustainability requirements, Thai products might still face higher costs or even lose access to the European market,” says Tunyathip.
Werapong promised, however, that the government will ensure that Thai SMEs can understand and get full access to the benefits that this FTA will bring for them, making sure that these businesses are not excluded from global supply chains and opportunities, but are an integral part of this opportunity going forward.
“My key take away from that is that we need to do it quickly, we need to do it fast, but we also need to ensure that the substance of it really resonates with the context and the business types and the dynamics of Thai companies and supply chains,” he concluded.