Thailand-U.S. FTA of Table Grape: The Impact on Related Sectors

Thailand imports a large volume of table grapes from the United States of America. The Thai – U.S. Free Trade Agreement (FTA) will reduce tariff on imports and thus import value changes which will affect related sectors of Thai economy system. The objectives of this study are to estimate trend of importing quantity and value of table grapes from the U.S. caused by the reduction of import tariff under the FTA, and to evaluate the impact of the tariff reduction on related sectors of the Thai economy. The result found that the relative price of grape and real capita income elasticities of demand are -1.1 and 4.7, respectively. The relative price was expected to decrease while the real capita income increases. This would raise the import value and lead to the accumulation of 19,520.4 million baht from 2007 to 2017. The sectors related to the fruit orchard sector as an intermediate input users were least affected by 13.62 million baht decrease of the economic value. In contrast, the intermediate input sectors would be most affected by 6,587.80 million baht decrease of the economic value. These sectors were agricultural services sector, fertilizer, pesticide and insecticide sector, wholesale trade sector, basic chemicals sector, banking service sector, cutlery and hand tools sector, petroleum refinery gas separated plant sector, retail trade sector, and plastic wares sector. The government and related organizations should develop measures to reduce the impacts that may occur. An efficient restructuring of the agricultural production system of affected sectors is also recommended.