The Trade Policy and Strategy Office (TPSO) has urged Thailand to fast-track its Free Trade Agreement (FTA) negotiations with the European Union, warning that the kingdom risks falling behind regional competitors such as Vietnam and Singapore, which already enjoy preferential tariff access to the bloc.
Speaking today, TPSO Director General Nantapong Chiralerspong said the EU’s aggressive push to secure global trade deals in early 2026 presents a double-edged sword for Thailand.
“On the one hand, it offers a strategic window to integrate into global supply chains, but on the other, it could threaten Thailand’s market share if domestic businesses fail to adapt,” he said.
In the first quarter of 2026, the EU concluded three major FTAs covering six nations, signing a pact with the Mercosur bloc — Brazil, Argentina, Uruguay and Paraguay — and finalising negotiations with India and Australia, reflecting a broader effort to diversify economic risks amid geopolitical and global economic uncertainties.
Nantapong said the EU’s shifting trade dynamics present significant opportunities for Thailand to become a key manufacturing and export hub for high-potential sectors such as processed food, modern automotive components, electronics and high-value agricultural goods, as European firms seek to diversify sourcing.
“The EU’s expansion reflects a strategic policy shift to diversify economic risks, reduce reliance on traditional markets and build a resilient trade network amid geopolitical and global economic uncertainties,” he said.
Furthermore, multinational corporations, particularly from the EU, are prioritising investments in countries with robust infrastructure and extensive FTA networks, giving Thailand a distinct advantage as a regional logistics hub with an established supply chain.
Engaging in these FTA negotiations could also act as a catalyst for Thailand to raise the standards of its products, environmental regulations, labour laws and transparency protocols to meet international expectations, boosting long-term investor and consumer confidence.
Despite the optimism, the TPSO chief warned that Thailand faces fierce competition from regional peers such as Vietnam and Singapore, whose earlier access and tariff advantages through existing FTAs could cause Thai products to lose price competitiveness and market share in the short term.
Moreover, increasingly stringent EU regulations on environmental sustainability and carbon emission reductions present a significant barrier for local operators, especially small and medium-sized enterprises (SMEs), many of which have yet to adapt to the new trade landscape.
To mitigate these risks, the TPSO recommends that Thailand accelerate Thai-EU FTA talks, upgrade green manufacturing standards, support SMEs in adopting digital and eco-friendly business practices, and strengthen domestic logistics networks.
The Ministry of Commerce has set an ambitious goal of concluding Thai-EU FTA negotiations by the end of this year, building on momentum from the eighth round of talks held in February, during which negotiators successfully closed three additional chapters covering trade remedies, exceptions and national treatment.
This brings the number of completed chapters to 11 out of 24, with the ninth round of official negotiations scheduled to take place in Brussels next month.
The EU is currently Thailand’s fourth-largest trading partner, behind China, the United States and Japan. Total trade with the bloc in the first quarter of 2026 reached US$12.22 billion, a 13.55% increase year-on-year.
Thai exports to the EU surged by 20.14% to US$7.67 billion during the quarter, while imports from the bloc grew by 3.93% to US$4.55 billion, resulting in a trade surplus of US$3.12 billion for the kingdom.
Key Thai exports to the EU include computers, jewellery, air conditioners, rubber products and electrical transformers, while major imports from the bloc consist of machinery, pharmaceuticals, chemicals and integrated circuits.
The EU remains the world’s second-largest economy, with a GDP exceeding US$21 trillion, representing roughly 18% of global GDP. It has a population of 450 million and an average GDP per capita of US$47,000, which is 3.2 times the global average.
Securing the FTA would reduce tariffs on Thai goods to low or zero levels, enhancing competitiveness, attracting foreign direct investment, creating jobs, and ensuring long-term economic stability and sustainability for the kingdom, Nantapong concluded.
