Thailand and Japan should carefully consider their proposed free trade agreement (FTA) so as not to hurt other trading partner, visiting European Union (EU) Trade Commissioner Peter Mandelson has said in Bangkok.

"The Thai government will have to keep in mind that the FTA with Japan should not affect other people's interests," he was quoted by Friday's Bangkok Post as saying.

Mandelson made the remarks Thursday at a forum when answering a question of Andreas von Stechow, German ambassador to Thailand.

Stechow raised his concern that the ongoing FTA talks with Japan could wipe out the European automotive industry in Thailand once implemented.

Thailand is considering phasing out steel tariffs in order to facilitate Japanese investment under a framework of the currently negotiated FTA, which is expected to finish in a few months.

The proposal has raised concerns from European automobile producers having local investments, who threatened to move out if Thailand yields to the demand because their cars would then be three times as expensive as Japanese products.

Mandelson said he had been in dialogue with top Thai officials, stressing that Thailand should be mindful of long-standing relations with Europe and of European business interests, which are extensive in the automotive industry as well as other manufacturing sectors.

"Thailand has encouraged European companies to invest here and encouraged strong economic ties and partnership between Thailand and Europe. We would like to see there are no setbacks," he said.