Thai govt pushes US tariff deal to parliament, prepares origin rule negotiations

This move follows the United States’ announcement on July 31 to impose a 19% reciprocal tariff on imports from Thailand, Malaysia, and Cambodia—after previously declaring similar rates for Indonesia (19%) and Vietnam (20%).

Finance Minister Pichai Chunhavajira said the negotiating team is preparing detailed terms to present to parliament. The proposed deal includes a phased tariff reduction framework:

• Immediate liberalisation: Some US goods will receive a 0% import tariff, particularly items already covered under Thailand’s FTAs with other countries.
• Phased liberalisation: Certain goods will be reduced to 0% tariff over 3–5 years to allow domestic adjustment.
• Exemptions: Products for which Thai producers are not ready will remain protected and not subject to 0% tariffs.

Pichai noted that while the US tariff rate has been announced, the detailed rules for regional value content (RVC)—a key criteria in determining a product’s origin—are still under negotiation. 

For now, both sides may use a general threshold of 40% local content as a baseline, but the Thai side aims to finalise clearer terms soon.

RVC rules are critical under rules of origin frameworks, which define how much value must be added domestically or regionally to qualify for preferential tariff treatment.

US-Thai talks on origin compliance

Poj Aramwattananont, Chairman of the Thai Chamber of Commerce, stressed that clearly defining RVC percentages for each product category is essential and remains under negotiation.

The US has also set a transshipment threshold of 40%, with potential penalties for goods suspected of circumventing origin rules by passing through third countries. Some Thai products may be flagged under this scrutiny, prompting a need for tighter RVC definitions to ensure compliance.

Chanintr Chalisarapong, Vice Chairman of the Thai Chamber of Commerce, said the local content requirement is crucial in protecting Thailand’s supply chains, particularly small and medium-sized enterprises (SMEs), by incentivising the use of local materials. This issue, he added, must be addressed in the ongoing talks.

Visit Limlurcha, also a vice chairman of the Thai Chamber, stated that while a 40% local content threshold is standard in most FTAs, the US has not yet agreed on this percentage in detail. Thailand has proposed this figure, but the US may request stricter measures to prevent Chinese products from exploiting Thai origin privileges.

The US has reportedly begun investigating potential origin fraud involving exports from both Thailand and Vietnam. Inspections of Thai factories to verify actual manufacturing activities may follow. The Thai negotiation team is expected to work with various trade associations to determine appropriate RVC levels for each industry.

US deal to be scrutinised by parliament

A report from the Ministry of Commerce confirmed that the agreement, which cuts the US tariff on Thai goods from 36% to 19%, requires parliamentary approval. This is because the agreement has long-term implications for Thailand and involves multiple stakeholders.

While not a formal free trade agreement (FTA), the deal resembles one in scope and substance. Under Section 178 (paragraph 2) of Thailand’s 2017 Constitution, any international agreement that significantly affects the economy, society, or national security must be approved by parliament before becoming binding.

This includes treaties involving border changes, those requiring domestic laws for implementation, and those broadly impacting trade and investment. 

The Constitution also mandates that the government disclose information and consult the public before engaging in such agreements, and present its negotiating framework to parliament for prior approval.

Once signed, the full details of the agreement must be made publicly accessible.

Legal amendments to follow parliamentary approval

Pornsil Patchrintanakul, President of the Thai Feed Mill Association, said that while this deal differs procedurally from past FTAs, he believes parliament will endorse it, possibly with comments for the government to consider.

He noted that several Thai laws will need amendment, especially those governing customs tariffs, import quotas, and sanitary standards. 

For instance, Thailand currently imposes a 0% tariff on soybean imports and 2% on soybean meal—down from a 10% WTO-bound rate 30 years ago. Once parliament endorses the deal, these rates may be revised by ministerial regulation.

Non-tariff barriers (NTBs), such as sanitary measures, have also been a focus of negotiations. 

Pichai said Thailand will grant a small quota of US pork imports—less than 1% of local consumption—for market testing. While Thai law prohibits the use of ractopamine (a feed additive used to boost lean meat), US exporters may opt to supply pork that meets Thai standards.