Thai Government Sets Clear Conditions to Safeguard State Procurement in FTI-EU Negotiations

On January 16, 2024, the Thai Cabinet outlined five conditions to regulate state procurement projects exceeding one billion Baht, safeguarding national industries. This decision comes ahead of the second round of negotiations between Thailand and the European Union (EU) scheduled for January 22-26, 2024.

During a press briefing at the Government House, Chaiwat Wachirakun, the spokesperson for the Prime Minister’s Office, announced the Cabinet’s approval of the Ministry of Higher Education, Science, Research, and Innovation’s (MHESI) proposal. The proposal focuses on policy measures concerning science, research, and innovation resulting from foreign state procurement, aligning with international trade agreements, specifically Free Trade Agreement (FTA) negotiations with the EU.

“Thailand must have a clear Offset policy before engaging in FTI-EU negotiations for the second time. In the first round of negotiations in September 66, procurement conditions with EU member states were exempt from specific requirements, but now we have pre-established Offset conditions”, stated Chaiwat.

MHESI proposed five Offset conditions: investment in Thailand, research and technology development, training and skill development for Thai personnel (excluding overseas training), collaboration in production with Thai entities, and assistance in various aspects such as utilizing Thai labor and materials domestically.

“These five conditions apply to all state procurement projects or Public-Private Partnerships (PPP) involving state budgets exceeding one billion Baht,” Chaiwat emphasized.

The proposed conditions cover a range of industries, including materials, digital, aerospace, national security, healthcare, transportation and logistics, and energy. Technology sectors such as genomics, biotechnology, digital and artificial intelligence, green technology, and clean energy are also included.

Chaiwat highlighted the anticipated benefits of these Offset conditions, emphasizing the potential for industrial development, technological advancement, increased investment, and an estimated boost of 105 billion Baht to Thailand’s GDP within five years.

While other ministries have yet to specify their negotiation start dates, concerns have arisen about the potential variations in approach. Chaiwat acknowledged the ongoing nature of the negotiations but stressed the urgency of finalizing the Offset conditions early to signal preparedness and gain a competitive advantage.

“Understanding that negotiations are ongoing, we must swiftly define these Offset conditions to showcase our readiness before finalizing the FTI-EU agreement. The Offset serves as our guiding principle, and we are working closely with the Ministry of Finance to announce it promptly. Although the second round of negotiations is not concluded, we need to be proactive to enhance Thailand’s position”, Chaiwat concluded.

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