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13 Feb 2019

International Economy

EPA, Effective February 1, 2019, to Bolster Thai Eco/Hybrid and Parts Exports Ahead (Current Issue No.2966)


​           From February 1, 2019 onward, Japan's car and auto-parts exports to the EU will enjoy gradual cuts in import tariffs under the EU-Japan Economic Partnership Agreement (EPA). KResearch views that since the EU will likely have to import more vehicles and auto-parts from Japan, Japanese carmakers may no longer need to further invest in the EU ahead, especially if the UK leaves the EU. On the contrary, they may increase investment in Japan or other countries having car production bases, such as Turkey, for export to the EU instead. Over the subsequent phase of their investment in car production for export to the EU, it is expected that Japanese carmakers will focus on electric vehicles after EU introduced measures to curb diesel-fueled cars, which have been blamed for creating air pollution.

            Regarding Thailand, which is another car and auto-parts production base for export to the EU, since the country has not been granted any tariff privileges from the EU, Thailand is being seen at a disadvantage position. KResearch, on the other hand, views that Thailand may have opportunities to ship certain car categories, namely eco/hybrid cars and related auto-parts, to the EU and Japan more in the future. Meanwhile, the EPA prompted Japanese carmakers to accelerate investment in electric vehicles in Thailand over past few years in line with their production and marketing strategies to achieve economies of scale and enjoy tariff privileges from the Board of Investment of Thailand.   

International Economy