Thailand unveiled a memorandum of understanding with the United Kingdom on negotiations towards a free trade pact between the two kingdoms in March. The unveiling of the AUKUS security pact between the UK, US and Australia has shifted the power dynamics in the region which is growing increasingly alarmed by developments over Taiwan and growing hostility between China and western powers.
Britain’s Foreign Secretary will be in Bangkok this week as the UK resumes its former role as an independent world power after Brexit while also trying to drum up more trade. It is understood that she will meet with Minister of Foreign Affairs, Don Pramudwinai. It comes as tensions in the region are rising with an announcement by US President Joe Biden on September 15th of a security pact between the superpower, the former colonial power in Southeast Asia and Australia which is becoming increasingly perplexed by China’s assertiveness and belligerence towards it.
British Foreign Secretary, Liz Truss is due in Bangkok this week where she will meet Thailand’s Minister of Foreign Affairs Don Pramudwinai for talks on trade, partnerships and closer cooperation on security.
The tour by the senior UK cabinet minister also includes visits to Indonesia and Malaysia where Ms Truss arrived on Sunday.
It comes as the UK’s relationship with the European Union is currently fraught with tension as it battles with France over fishing rights and Ireland over Article 16 of the Northern Ireland protocol in its Brexit deal with the 27 member bloc.
Britain, like the United States, is pivoting to the Asia Pacific as tensions with China reach alarming levels
Britain is seeking to establish a stronger presence in the Asia Pacific as it moves back to establish itself independently on the international stage.
This has led, quite naturally, to deeper ties between the United Kingdom and its long time allies, the United States and Australia. It has also led to its engagement with the region to counter an increasingly assertive and indeed alarming posture by China.
In September and October, a UK battle flotilla including the aircraft carrier HMS Queen Elizabeth joined US and Japanese naval assets as well as craft from Canada, New Zealand and the Netherlands as it carried out exercises in the Philippine Sea and later in the South China Sea despite warnings from Beijing.
New AUKUS trilateral security pact means business and changes the power dynamics of the region
This all follows a trilateral security pact between Australia, the United Kingdom and the United States unveiled on the 15th September 2021 which many analysts see as a game-changer in the balance of power in Southeast Asia and the region’s interdependent relationships as it signals the fact that western powers have finally accepted the need to stand up to China.
That deal also involves the sharing of American nuclear technology with Australia whose relationship with China had become problematic from 2016 over a range of issues including the activities of Chinese security services down under and China’s ‘coercive’ trade policies.
AUKUS deal puts Australia front and centre as a bulwark while making a neutral policy more difficult
However, most analysts feel it was the gung ho attitude pursued by Australia in support of former US President Trump’s criticism of Beijing, particularly from April 2020 as the world faced the shocking reality of the COVID-19 pandemic, that led to increased friction with China and growing hostility from the Chinese Communist Party.
The AUKUS deal, which involves the US and the UK contracting to supply Australia with advanced nuclear-powered submarines and a security co-operation pact, was welcomed by Australian Prime Minister Scott Morrison in September as a ‘historic opportunity to protect shared values and promote security and prosperity in the Indo-Pacific region.’
The pact highlights both the vulnerability of Australia and its new role as a bulwark against the perceived potential for Chinese aggression.
For Thailand, the historic pact makes the region even more polarised therefore challenging its unwritten or undeclared foreign policy of maintaining balance and stability between the greater powers.
Britain’s new role means she seeks new partners
In advance of her trip this week, Ms Truss spoke about Britain’s new position in the world in the post Brexit era.
‘I want to position Britain where the future growth is and to think about who our major partners will be in 2050 and beyond,’ she said.
The United Kingdom has already signed trade pacts with Japan, Singapore, Australia, Vietnam and New Zealand and is currently negotiating or in talks with other countries in the region including Thailand.
UK and Thailand unveiled trade talks in March after Britain applied to join the CPTPP trade pact
In March, it was announced that Thailand and the United Kingdom had agreed a memorandum of understanding to set up a joint committee on trade and economic cooperation as a precursor to a free trade deal between the two countries.
The United Kingdom sees Thailand as an important partner in Southeast Asia as it seeks to also become a key partner of the ASEAN bloc in which the kingdom plays a lead role.
The United Kingdom applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in February and was followed by China in October.
Thailand, in recent weeks, commenced the process of joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
In the meantime, the Ministry of Commerce is pursuing both a trade deal with the European Union and the United Kingdom simultaneously.
Vietnam steals a march on Thailand with both the United Kingdom and European Union, two significant trade and investment partners for the kingdom
However, it has been beaten to both goals by the kingdom’s key rival for international investment, Vietnam, which signed a free trade deal with the United Kingdom in December 2020 which came into effect in May this year.
At the same time, Hanoi inked a free trade deal with the European Union in June 2020 which came into effect in August 2020 intending to eliminate 99% of tariffs between the bloc and Thailand’s fellow ASEAN member within 10 years.
In 2018, Thailand exported €13.5 billion in goods to the European Union but had a negative trade balance with the bloc of €6.1 billion which widened in 2020 during the pandemic to €6.3 billion as exports slipped to €11.4 billion.
The country’s exports to the United Kingdom hit a recent high of $4.08 billion in 2017 before falling back to $3.08 billion in 2020, also with a significant negative trade balance of $1.31 billion.
Thailand has recorded deficits with both the UK and European Union when it comes to services.
EU is the kingdom’s second-largest investor
UK inward investment into Thailand for 2019 was $3.38 billion while the European Union, which is Thailand’s fourth-largest trading partner with a combined bilateral trade of €29 billion, invested €19.8 billion in the kingdom, making it the second-largest investor after Japan.
Policy experts and analysts in Thailand are increasingly concerned by the deepening tensions and potential for conflict between China and western powers.
Credible fears of an armed conflict between 2023 and 2024 over Taiwan are growing not only in Australia
The fears of an armed conflict between China and the United States have grown in the last six months with the Taiwanese Minister of Foreign Affairs Joseph Wu telling Australian TV audiences in October that his country was ready to repel an invasion if it comes.
‘The defence of Taiwan is in our own hands, and we are absolutely committed to that,’ he said on a TV show broadcast on Australia’s popular ABC News channel. ‘If China is going to launch a war against Taiwan we will fight to the end, and that is our commitment.’
A senior Australian official, the former Head of the Department of Foreign Affairs and Trade, Frances Adamson, last year, warned of her concerns about a ‘crisis’ brewing over the Taiwan Strait.
Key to a war over Taiwan will be airpower
A defence analyst at the University of New South Wales, 50-year-old Professor Clinton Fernandes, however, has expressed scepticism about the ability of western powers to counter a Chinese invasion if it comes.
‘The military centre of gravity is China’s air defence system in the south, it has the ability to deny the United States control of the air. If the United States cannot control the air, it cannot win either at land or at sea,’ he explained last month.
The expert warns of the danger of a Chinese blockade of the island.
‘The defence of Taiwan is predicated on a Chinese invasion but if China’s main effort is not an invasion but a blockade, then what? Taiwan doesn’t have a Plan B. That’s the big problem.’
Professor Hernandez believes the danger point for any potential Chinese strike will come before the 2024 US General Election and after the Beijing Winter Olympics in 2022.
Australian Defence Minister warns about the need to brief the public about the threat from China in June
The AUKUS pact which also involves cooperation with the United Kingdom in nuclear power technology as well as the US, and will see American troops increasingly stationed in Australia with Australia’s Defence Minister Peter Dutton warning the public, in June, that they needed to be made aware of the threat from a security situation in the Asia Pacific that was ‘far less predictable’ than at any time since World War Two.
While seen by the United Kingdom, the United States and Australia as a deterrent to China’s growing assertiveness particularly since the outbreak of the COVID-19 virus, analysts in Bangkok also feel that the pact has alienated or reduced the more nuanced position of the European Union which is seen by Thailand as more in keeping with its policy of strengthening unilateral ties and fostering trade engagement throughout the region particularly in the context of ongoing trade talks between the ASEAN bloc and the European Union.
Alarm in Bangkok and regional capitals over the growing rift between China and western powers
There is alarm in Bangkok and other regional capitals at the growing rift particularly at the overtly hostile nature of the ongoing spat between Australia and Beijing which is also linked to the outbreak of the COVID-19 virus, which Australia lays squarely at China’s doorstep while China has reacted with bellicose rhetoric as well as tariff and trade sanctions aimed at Canberra.
However, this anxiety and rift existed even before the COVID-19 outbreak and was seen clearly at the ASEAN summit in Bangkok hosted by Thailand in November 2019 when the Secretary-General of the United Nations, Antonio Guterres warned of a ‘fractured world’ after the summit and what transpired when both American and Chinese delegations taking part could not disguise their hostility towards each other.
UN Secretary-General warns of a fractured world at the ASEAN summit over US-China split
‘I see now the concern emerging on the horizon, the possibility of a great fracture with the world’s largest economies splitting the globe into two, each with its own dominant currency, trade and financial rules, its own internet and artificial intelligence capacities and its own zero-sum geopolitical and military strategies,’ Mr Gutteres declared then.
France strikes a sour note over AUKUS
Already, the relationship between France, a key European Union member and the parties to AUKUS has begun on a very sour note after France was left stunned and blindsided by the announcement on September 15th.
It had a long-running but problematic contract to supply nuclear-powered submarines to Australia which has now been taken over by the United States and the United Kingdom.
Thailand gears up for the world’s largest free trade pact from January comprising 30% of the world’s GDP
The visit by Ms Truss comes as Thailand prepares to participate in the launch of the Regional Comprehensive Economic Partnership (RCEP) free trade pact which goes live on January 1st 2022 after being among the initial 10 members to ratify the deal which was agreed in Hanoi in November 2020 and which the current Minister of Commerce, Jurin Laksanawisit, played a key role in bringing to fruition.
World’s biggest free trade deal just signed will be a huge boost for the Thai economy and exports
To the United States and western analysts, that trade deal appears to be more China-centric as it prioritises trade over regulation or uniformity of market conditions.
However, the trade deal will be the biggest in the world, representing 30% of the world’s GDP, and will eliminate no less than 91% of tariffs on trade between countries in the region.
It will be particularly beneficial to Thailand as it will encourage stronger trade ties between Japan, South Korea and China and make the Asia Pacific more stable in terms of supply chains and logistics.
Chance for trade to diminish tensions among parties to the RCEP including China and Australia
Bangkok will also be hoping the involvement of Australia and New Zealand in the trade pact will help diminish tensions by elevating trade between the countries while Japan has issued a statement that it will monitor China’s compliance with the new trade pact’s terms with a view to its admission to the more demanding Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which would see over 99% of tariffs eliminated within participating countries.
Over the weekend, China announced that it had enacted over 700 provisions to comply with the Regional Comprehensive Economic Partnership (RCEP) trade pact as it held seminars and briefings for no less than 166,000 officials and business executives.
More ambitious CPTPP pact would take it further but it may be a step too far for Thailand right now
That Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) trade agreement, if it saw China and the United Kingdom join its ranks, would strike a stronger blow for free trade and integration between the world’s economies but would pointedly exclude the United States which was a key partner to the deal as the Trans-Pacific Partnership up to when President Trump withdrew America from it after taking office in 2017.
Thailand starts CPTPP application process driven by fears for inward investment and the economy
Although Thailand has taken steps to join the pact in recent weeks, it presents the government, economic planners, farmers and small to medium-sized businesses in Thailand with a serious challenge as its more demanding terms would have deep and wide-ranging impacts on Thailand’s economy and society as it strengthens intellectual property rights further which would make generic drugs more expensive while also posing a threat to Thailand’s still very much under developed agricultural sector.
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Further reading:
Trade pact with Hong Kong as Thailand negotiates both Chinese and new western trade relationships
US Ambassador resigns as Biden Presidency starts with growing tensions with China over Taiwan
RCEP deal agreed as India opts out – busy Bangkok ASEAN summit concludes on a low key
Chinese FM to visit Thailand in a Covid battered world of raised tensions and potential conflict
Prime Minister indicates that the cabinet reshuffle will be complete very shortly with no problem
Thailand’s economy has become dependent on government expenditure to stay above water
Thailand and US aim for a new more ‘proactive’ trading relationship as ambassador meets Prayuth
Rice price spike but drought conditions to recede – security concern for the Mekong river
US suspension of Thai preferential trade partner status part of Trump’s ongoing trade war
