Australia-Thailand trade: has the FTA made a difference?

This paper examines the impact of the Australia-Thailand free trade agreement on bilateral trade, paying attention to the implications of 'rules of origins' and the utilization of tariff preferences.

It is found that trade has expanded faster following the Australia-Thailand free trade agreement (TAFTA) came into effect, but the impact has heavily concentrated in a few product lines in Australian imports from Thailand, reflecting the influence of commodity specific, supply-side factors which have a bearing on the rate of preference utilization. The findings, inter alia, suggest that the use of officially announced preference rates in trade flow modeling is likely to exaggerate trade flow effects of FTAs.