Thailand expects to take about two years to conclude talks with the European Free Trade Association (Efta) after the two parties agreed to launch negotiations over a potential free-trade deal on Monday.
According to Commerce Minister Jurin Laksanawisit, who participated in the start of negotiations with Efta in Iceland on June 20, the deal, once implemented, is expected to help double two-way trade between Thailand and Efta.
Efta comprises Iceland, Liechtenstein, Norway and Switzerland.
Mr Jurin said the planned free-trade agreement (FTA) with Efta will cover not only trade in goods, but also trade in services, investment, trade facilitation and environmental issues, and will reduce bilateral export and import tariffs.
Efta was Thailand's 17th-largest trading partner in 2021. The Thailand-Efta trade volume last year stood at US$7.5 billion, representing 1.39% of Thailand's total trade.
Important exports included gems and jewellery, watches and parts, automobiles and auto parts, travel appliances, accessories and components, machinery and mechanical components, air conditioners and components, cosmetics, soaps and skin care products, and canned and processed seafood.
Prominent imports included jewellery, gems, silver bars, gold, clocks and components, edible meat, pharmaceuticals, and medical products.
Thailand has 14 FTAs with 18 countries, including the Regional Comprehensive Economic Partnership, which came into force earlier this year.
FTA negotiations with Efta were initiated from 2005 to 2006, but then came to a halt.
Efta has expressed interest in reopening talks on an FTA with Thailand since 2019, and the Trade Negotiations Department under the Commerce Ministry commissioned the Institute of Future Studies for Development to conduct a study on possible impacts.
The study concluded that an FTA with Efta would help boost Thailand's leverage and competitiveness for Thai products and services in the bloc, as well as attract investors specialising in high technology and innovations to Thailand.
The study projected that Thai exports to Efta would increase by 38% to $262 million, while imports from Efta would increase by 14.8% to $210 million.
Thailand's overall GDP is expected to increase by 0.179 percentage points, or $898 million.
Thordis Kolbrun Reykfjord Gylfadottir, Iceland's foreign affairs minister, said Efta members expected the FTA with Thailand to substantially increase trade, investments and services between the two sides.
He said it would also reduce business costs.
"An FTA will be good and benefit people and the environment if we can finish FTA talks as planned," said Mr Gylfadottir.
Efta has FTAs with 29 countries and territories, including South Korea, Hong Kong, Canada, Peru, Chile, Panama, Mexico, Turkey, Singapore, Indonesia and the Philippines. Malaysia and Vietnam are currently negotiating FTAs with Efta.
