Thailand and Bhutan Sign Free Trade Agreement, Aiming to Boost Exports
Landmark deal opens new south Asian market, targeting $120 million trade volume
Thailand and Bhutan have signed a landmark Free Trade Agreement (FTA), Thailand's 17th, aimed at expanding export markets and fostering stronger economic ties.
The agreement, witnessed by Prime Ministers Paetongtarn Shinawatra of Thailand and Dasho Tshering Tobgay of Bhutan at Government House, opens a new avenue for Thai goods in South Asia.
Commerce Minister Pichai Naripthaphan announced the signing, highlighting that the FTA, concluded within nine months, marks Bhutan as the third South Asian nation, after India and Sri Lanka, to establish such an agreement with Thailand. This new market is expected to significantly boost Thai exports.
The agreement focuses on the liberalisation of trade in goods, with Bhutan immediately eliminating tariffs on nearly all Thai products.
Key beneficiaries for Thailand include the automotive sector, agricultural and food products (such as dried fruits, fruit juices, and instant noodles), textiles, chemicals, rubber and plastic goods, and electrical appliances.
In return, Thailand will remove tariffs on 94% of Bhutanese goods, notably potatoes, green tea, jams, and fruit juices.
Bhutan's growing economy, which transitioned to developing nation status in 2023, presents a promising long-term export market for Thailand. The FTA targets an increase in bilateral trade to $120 million.
It is expected to enhance the competitiveness of Thai products in Bhutan and provide Thai businesses with access to valuable raw materials from Bhutan, including minerals, cordyceps, matsutake mushrooms, and temperate fruits like apples.
The Ministry of Commerce will conduct public consultations to disseminate information about the FTA, covering market access, rules of origin, and economic cooperation, before presenting it to Parliament for approval.
Implementation is targeted for January 1st, 2026. Thai businesses are encouraged to explore the opportunities presented by the FTA to maximise its benefits.
In 2024, trade between Thailand and Bhutan reached 460.47 million baht, with Thailand exporting 457 million baht and importing 3.47 million baht. Thailand's primary exports include vehicles and components, processed wheat products, microwave ovens, beverages, and canned fruits. Key imports from Bhutan include vegetables, fruits, aircraft components, timber products, and mineral water.
