The impetus for this CEPA negotiation originates from a confluence of domestic pressures within Thailand. Following a protracted period of low growth, exacerbated by global economic headwinds and domestic political instability, the government, led by Prime Minister Somchai Witthayasat, is facing mounting pressure to stimulate economic expansion. Thailand’s manufacturing sector, a traditional driver of growth, has increasingly struggled against competition from China and Vietnam, making diversification and access to new markets a paramount concern. Official data released by the Bank of Thailand in November 2025 indicated a 1.8% GDP contraction, with exports remaining stubbornly weak. This situation, coupled with ongoing concerns regarding investor confidence, has created a strong incentive to secure a significant trade agreement. Furthermore, Thailand’s existing Free Trade Agreements (FTAs) with the European Union and ASEAN have yielded mixed results, demonstrating the need for a more targeted and commercially driven approach.
Historically, Thailand’s economic relationship with the ROK has been characterized by a significant reliance on Korean investment and technology transfer, particularly during the country’s rapid industrialization in the late 20th century. The 1998 Economic Cooperation Agreement, while limited in scope, laid the groundwork for deepening bilateral ties. However, the current CEPA proposal – envisioned as a “deep and comprehensive” agreement – moves beyond traditional investment promotion, aiming to integrate Thailand’s economy more fully into the ROK’s broader economic sphere, a move viewed by some as overly ambitious given Thailand’s relatively smaller size and economic capabilities. According to Dr. Lee Min-ho, a senior economist at the Korea Institute for International Economic Policy, “Thailand’s attempt to emulate the ROK’s economic model, while laudable in its ambition, risks over-dependence and vulnerability to shifts in the Korean economy.” This reflects a common sentiment within the broader Southeast Asian economic community, where nations are increasingly wary of replicating models developed by larger, more dominant economies.
Key stakeholders in this negotiation include, beyond Thailand and the ROK, the United States, China, Japan, and ASEAN member states. The United States, under the Biden administration’s “Indo-Pacific Economic Framework,” has expressed a desire to see Thailand deepen its economic ties with its regional partners, potentially creating friction with the ROK’s own strategic interests. China, as the world’s largest trading nation, exerts considerable influence across Southeast Asia, and any significant trade agreement with the ROK could further tilt the regional balance of power. Japan, a major investor in Thailand, will undoubtedly be observing the negotiations closely, seeking to maintain its access to the Thai market. The ASEAN Regional Forum (ARF) is likely to play a monitoring role, ensuring the agreement adheres to established trade rules and doesn’t unduly disadvantage smaller member states.
Data from the International Monetary Fund (IMF) projects a 3.5% growth rate for the ROK in 2026, significantly outpacing Thailand’s projected 2.2%. This disparity highlights the economic dynamism driving the ROK’s trade agenda and underscores the potential imbalance of power in the negotiations. Moreover, recent developments, including a softening of the Korean won against the US dollar and increased Korean investment in Vietnam, are suggesting a strategic recalibration of Korean economic priorities. According to a report by the Peterson Institute for International Economics, “The ROK’s shift towards diversifying its trade relationships, while retaining a strong presence in Southeast Asia, suggests a diminished commitment to a solely Thailand-centric trade strategy.”
Looking ahead, the short-term (next 6 months) outcome of the CEPA negotiations remains uncertain. A rushed agreement, prioritizing immediate economic gains, risks creating unsustainable trade imbalances and neglecting crucial safeguards. A protracted negotiation could further delay much-needed investment and exacerbate Thailand’s economic woes. Long-term (5-10 years), the success of the CEPA hinges on Thailand’s ability to adapt its economic strategy, foster innovation, and diversify its export base. The agreement could potentially serve as a catalyst for broader economic reform, but only if accompanied by significant structural changes. The increased integration with the ROK economy raises questions about Thailand’s future role within the Association of Southeast Asian Nations (ASEAN), potentially creating divisions and reinforcing existing inequalities amongst member states. The core keyword here is ‘integration,’ reflecting the deepening ties that carry significant geopolitical ramifications.
Ultimately, the CEPA gamble represents a crucial test of Thailand’s economic resilience and strategic foresight. The decision to prioritize a bilateral agreement with the ROK over strengthening regional cooperation within ASEAN reveals a certain level of risk-taking – and potentially, a lack of broader strategic vision. As Professor Evelyn Wong, a specialist in Southeast Asian geopolitics at Stanford University, notes, “Thailand’s pursuit of this CEPA highlights a concerning trend – a prioritization of short-term economic gains over long-term regional stability. The nation’s future prosperity depends on its ability to navigate this complex landscape with prudence and a commitment to inclusive growth.” The current situation demands careful observation and a profound reflection on the long-term consequences of Thailand’s choices.