The Bhutanese Leading the way.
Negotations for the Free Trade Agreement (FTA) between Bhutan and Thailand has been completed and is awaiting the completion of Thailand’s internal ratification process before it can enter into force. Bhutan has already fulfilled its mandatory requirement by completing its own internal ratification procedures, according to the Ministry of Industry, Commerce and Employment (MoICE).
The ministry said negotiations, led by the Department of Trade, were concluded over a period of nine months through four rounds of in-person negotiations and four virtual meetings among the respective working groups. It described the completion of negotiations within this timeframe as a significant milestone in Bhutan-Thailand economic and trade relations, noting that bilateral trade agreements are typically complex and require mutually beneficial outcomes across a wide range of sectors.
Throughout the negotiations, the Royal Government of Bhutan conducted extensive consultations with the private sector and relevant government agencies to ensure the agreement reflects national business interests and sector-specific requirements.
Under the agreement, Bhutan secured duty-free market access for 10,731 tariff lines in the Thai market. Thailand also granted zero-tariff access for all 131 export-potential products identified by Bhutan’s private sector, creating significant opportunities for Bhutanese exporters and improving the competitiveness of key industries, including agro-processing, textiles and steel.
In the agricultural sector, Bhutan obtained a Country-Specific Quota (CSQ) for 11 sensitive agricultural products, allowing duty-free exports to Thailand while providing scope for future quota expansion through further negotiations.
Another key outcome was Bhutan’s success in securing more flexible Rules of Origin requirements for 138 products. The revised requirement lowers the minimum local content threshold to 30 percent for products to qualify for preferential zero-tariff treatment. According to the ministry, the more flexible Rules of Origin, together with special concessions for iron and steel products, are expected to improve the competitiveness of Bhutan’s iron, steel and ferroalloy industries in the Thai market.
The agreement also includes provisions to strengthen cooperation between the two countries’ technical agencies through capacity-building, knowledge sharing and institutional linkages in areas such as Sanitary and Phytosanitary (SPS) measures, Technical Barriers to Trade (TBT), and customs procedures. MoICE said these measures are expected to strengthen standards and certification systems, facilitate greater mutual recognition and improve Bhutanese exporters’ ability to meet market requirements.
The ministry also highlighted that the FTA covers the Gelephu Mindfulness City (GMC), describing its inclusion as a significant milestone under the agreement.
MoICE confirmed that there are no outstanding issues requiring further negotiation. All negotiations were completed in 2025, and implementation now depends solely on Thailand completing its internal ratification procedures. Once that process is complete, the ministry expects the agreement to enter into force in the first quarter of 2027.
Under the FTA, Bhutan will eliminate tariffs on 5,867 tariff lines, while Thailand will eliminate tariffs on 10,731 tariff lines, covering about 94 percent of products. According to the ministry, the combination of tariff liberalization, improved market access, more flexible Rules of Origin requirements and enhanced technical cooperation is expected to create new opportunities for Bhutanese exporters and businesses once the agreement takes effect.
