EU Industrial Policy to Favor 'Trusted Partners'

- The EU's Industrial Accelerator Act is part of a broader "Clean Industrial Deal" that aims to have manufacturing account for at least 20% of EU gross value added. A draft of the act specifically restricts foreign direct investment from countries that hold more than 40% of the global manufacturing capacity in key sectors, a move clearly targeting China. - As the EU pivots, Thailand's position is strengthened by the relaunch of Free Trade Agreement (FTA) negotiations with the bloc in March 2023 and a signed Partnership and Cooperation Agreement (PCA) from December 2022. The EU is Thailand's fourth-largest trading partner, with bilateral trade in goods reaching €42 billion in 2024. - Recent volatility in the global rice market was driven by India, the world's largest exporter, which banned non-basmati white rice exports in July 2023, pushing Asian rice prices to a 15-year high. India lifted these restrictions in late 2024 and early 2025, causing prices for 5% broken rice from Vietnam and Thailand to drop by as much as 38-45%. - Currency fluctuations are a key operational risk; the Thai baht to euro exchange rate has seen significant movement, with a high of 38.28 THB to 1 EUR and a low of 35.06 THB over the past year. The average exchange rate over the last six months was approximately 1 EUR to 37.37 THB. - The EU mandates strict "one step back-one step forward" traceability for all food imports under its General Food Law (Regulation EC 178/2002). This requires importers to have systems that can identify the immediate supplier of a product and the subsequent customer, with all information readily available for competent authorities. - There is a growing market for certified organic rice in Europe, with the EU implementing a new organic regulation (EU 2018/848) to harmonize standards for imports. In 2021, Thailand was the third-largest supplier of organic rice to the EU, behind only Pakistan and India, indicating a significant branding and export opportunity. - All organic products imported into the EU must be accompanied by an electronic certificate of inspection (e-COI) managed through the Trade Control and Expert System (TRACES). For countries like Thailand without a formal equivalency agreement, certification must be handled by control bodies recognized and supervised by the European Commission. - European food safety standards include some of the world's strictest limits on pesticide residues, known as Maximum Residue Levels (MRLs). If a specific limit has not been set for a substance, a default MRL of 0.01 mg/kg applies, which is the lowest level detectable by standard lab equipment.