Free Thai trade

THE head of the Australian vehicle importers' group has hit back at claims that local manufacturers are being disadvantaged by the free-trade deal with Thailand.

Lindsay Smalley, who is also the senior director of Honda Australia and therefore benefits from cheaper Thai imports under a free-trade agreement, said that Australian car-makers would have more success exporting cars to Thailand if they built cars that suited the country.

He defended Thailand’s right to take strong anti-pollution measures and rejected suggestions by Ford Australia president Bill Osborne that such moves violated the spirit of the FTA.

Furthermore, Mr Smalley was surprised that federal industry minister Kim Carr had taken a narrow view on trade balance with Thailand and did not recognise that the benefits of the FTA were heavily in favour of Australia overall.

“If you look at the total picture of the Australia-Thai free-trade agreement, trade is running very heavily in Australia’s favour, particularly favouring dairy, agricultural exports, services industries. The trade flows very heavily in Australia’s favour,” Mr Smalley told GoAuto.

“(Senator Carr) has clearly formed a view based on the best information available to him and we respect that, but it doesn’t reflect the reality or intent of improved environmental outcomes in Thailand. I think he’s missed that point and he’s missed the point of the broad benefits of the FTA to Australia’s economy.”

Left: Senior director of Honda Australia, Lindsay Smalley.

Mr Smalley said that Thailand’s excise tax rates – which are viewed by the likes of Senator Carr and Mr Osborne as non-tariff barriers designed to disadvantage foreign car-makers – are simply part of an air pollution program has helped to clean up the country.

Thailand, which is phasing out two-stroke motorcycles and has converted all its famous tuk-tuk taxis to LPG, applies an excise on cars according to their engine capacity. Consequently, under 2.0-litre cars attract a 30 per cent tax (25 per cent if E20 compatible) while those over 3.0 litres get hit with a 50 per cent (with no E20 reduction).

“In the automotive industry, trade could be in our favour as well if we were selling and making cars that were required by that market,” Mr Smalley said.

“They might want large cars, but the Thai government has made a decision to have a more stringent arrangement on environmental outcomes and they have a long history of changing regulation in transport industry to achieve those outcomes.

“For a few years now there’s been a noticeable improvement in smog levels in Bangkok (and) a tax excise regime has been put in place to encourage smaller, more fuel efficient cars.

“The issue is that the cars that some Australian manufacturers make don’t fit within the environmental requirements of the Thai government. That’s the issue.

“If you look at the excise arrangement, even cars manufactured in Thailand, such as V6 Accord, are caught in that 50 per cent excise umbrella. We sell very few V6 Accords in Thailand (so) we’ve fitted a 2.0-litre four-cylinder engine to our wide-bodied Accord to meet that requirement. So there are technical solutions to exporting into Thailand to come within the lower tax brackets.” Asked if Mr Osborne had got it wrong by accusing the Thai government of violating the spirit of the FTA, Mr Smalley thought long and hard before answering diplomatically: “I can understand why local manufacturers would want to export more cars to Thailand – and they can do that if they make cars that are relevant to that market.” As for concerns about cheap import flooding in as a result of a future FTA with China, Mr Smalley noted that many major global manufacturers were building “exceptionally high quality” cars in China “that would be welcome into the Australian market”.

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