Thailand and Iran yesterday agreed to a preferential trade agreement (PTA), a move intended to rev up bilateral commerce to US$3 billion by 2021.
Both sides have agreed to cut import tariffs on 100 goods, Commerce Minister Apiradi Tantraporn said yesterday after the first Thailand-Iran Joint Trade Committee meeting.
"It was Iran that came up with the PTA and Thailand agreed, as this will help fast-track bilateral trade," she said. "Each country has initially proposed reducing import tariffs on 100 items."
She said, however, that Thailand first needs to consult the private sector on the items to receive the tariff cut under the proposed agreement to study the potential effects.
The study is likely to take about six months and will be completed by the middle of next year.
According to Mrs Apiradi, implementation of the PTA also needs prior approval from the National Legislative Assembly.
"The PTA differs from a free trade agreement (FTA), as the pact will be much easier to conclude and does not require the need to cut tariffs to zero," she said. "Generally, tariffs will be cut to about 10% or less, depending on [the outcome of] negotiations."
An FTA generally requires that talks cover not only access for goods, but also for investment and services.
Mrs Apiradi said Iran, with a population of more than 80 million, has strong potential to become Thailand's distribution base for both the Islamic Republic's immediate neighbours and The Commonwealth of Independent States.
Iran has already signed PTAs with Pakistan and Turkey and is in talks with China, India and the Eurasia Economic Union, which groups Russia, Armenia, Belarus, Kazakhstan and Kyrgyzstan.
The Thai minister said Iran is also keen to resume Thai rice imports after suspending them several years back due to United Nations sanctions.
But with Iran beginning to open up, the countries signed a memorandum of understanding earlier this year to resume sales of 300,000 tonnes of rice worth 4.3 billion baht.
Mrs Apiradi said Iran is in the process of inspecting the quality and standards of Thai rice, with that process expected to be finished by the end of this year.
Iran is Thailand's ninth largest trading partner in the Middle East. In 2015, two-way trade volume totalled $310 million, $217 million of which were exports from Thailand.
For the first eight months of this year, bilateral trade amounted to $264 million.