Page 32 - FoodFocusThailand No.164 November 2019

SEE TH
SEE THROUGH MARKETROUGH MARKET

Why Brexit? 5. Negotiate for individual bilateral trade agreements with countries
1. British PM Boris Johnson made his first speech to the for example Malaysia and Thailand to minimize the impact of Brexit.
Parliament on July 25, 2019 to make Britain “greatest place on It seems only option 3 and 4 are possible so far according to
earth” (Source: www.gov.uk, EIU, FitchSolutions) Chancellor of the Exchequer Sajid Javid.
2. A call from the British people to leave EU significantly
increased. Weak Pound vs Tom Yum Kung Crisis: Same Same
3. Political campaign by former British PM David Cameron but Different
(2010-2016) to hold a public referendum and decide whether the The ongoing weak pound due to unstable economy and lacking trust
UK should leave or remain resulted in his landslide victory. He in Brexit situation could result in similar situation Thailand faced during
thought of persuading British people to agree with an idea of UK the Tom Yum Kung Crisis. UK pound is equal to THB 37.3 as of August
remaining with the EU. But his plan was to no avail. Mr.Cameron 8, 2019 compared to THB 75.8 in 2004 (Source: Kimproperty). In
later resigned from the position on June 23, 2016. spite of weak currency, UK is positioned as creditor, not debtor like
4. The issue of immigrant policy: EU member countries are Thailand. Unlike Thailand shouldering more debt payment during
obliged to open the border for immigrants seeking asylum from the crisis, weak currency could be a boon to the UK. Debts will be paid
Middle East and eastern Europe, resulting in high cost and burden. more, meaning more money flowing into the UK.
5. The issue of terrorism: UK is a target for terrorism and does
not want to take risk of opening the border to immigrants seeking Will Brexit affect Thailand?
asylum from the Middle East. It is likely that Britain will leave the European Union as the October
6. Avoid shouldering country facing economic downturn. Greece 31 deadline draws close without any sign of further deal. In terms of
is an example that UK has to pay huge sum of money to assist the economy, Thailand may not be much affected by Brexit. The volume
EU country’s financial situation. of Thai exports to the United Kingdom was at 1.6%. Meanwhile the
7. Over £8,500 million has to be allocated to EU member volume of UK imports to Thailand was at 1.2%. Of the total tourists
countries facing economic downturn each year, but UK financial visiting to Thailand, only 2.5% were British. However, the Thai
situation is not taken for consideration. economy may be indirectly impacted from contraction to growth in the
8. UK power is reduced in the EU. Germany, France and Italy EU. Nevertheless, Thai financial market is likely to feel the impact of
have stronger power to decision making than the UK. There are unstable global financial market (Source: Bank of Thailand)
many times that the final decisions do not meet the UK’s needs. How Thailand should Adjust to Brexit
9. Single market policy makes it difficult to solve domestic 1. UK will focus more on bilateral trade agreements, similar to a
economy. Boosting UK economic cannot independently be done case of Australia. After UK joining EU, Australia implements bilateral
as the policy needs to be approved by European Central Bank. trade agreement with ASEAN nations. The Thai-Lao PDR Friendship
10. The policy on free movement of labour in EU affect domestic Bridge is a sample of bilateral relations between ASEAN and Australia
labour market and demand in the UK. as well as Thailand, Australia and New Zealand. UK cannot afford
to overlook ASEAN regarded as one of the world’s fastest growth
UK Choices economy. UK-based high-tech, innovative industries for example
What will happen next for UK after Brexit? (Source: Rolls-Royce engine tailor-made for airliners worldwide and e-car
moneyandbanking) battery could benefit from ASEAN development.
1. Former British PM Theresa May (July 13, 2016-July 24, 2. After leaving EU, UK has shown interest in developing bilateral
2019) vowed that UK will not be a permanent member of the EU’s trade agreement with Thailand. Mr.Johnson also made his first
single market or the customs union. speech to the Parliament on July 25, 2019 to make Britain “greatest
2. UK-EU Free Trade Agreement: Surely trade between the place on earth” by developing environmentally friendly innovation for
two will be less and could be reduced by 6% by 2030. The UK example e-car and e-plane. Bilateral trade agreement is essential and
government expected to see the reduction of GDP by £4,300/ will be positive for Thailand’s policy on Eastern Economic Corridor
household. leading to development of e-vehicle and drone for agriculture in the
3. Similar to Norway, becoming a member of the European industrial scale.
Economic Area will enable UK to continue trading in the European 3. Weak pound currency is an opportunity to uplift technology and
Economic Area but has no rights to draft EU policies. England may expand cooperative investment particularly purchasing new UK-made
lose about £2,600/household. innovative engine such as e-battery and food processing machineries.
4. UK-EU trade within the World Trade Organization framework Thai service sector can use this opportunity to extend cooperation to
will result in UK loss of GDP about £5,200/household. develop human resources, hotel services and international education.

32 FOOD FOCUS THAILAND NOV 2019

30-32_See through_Brexit.indd 32 23/10/2562 BE 14:45