Thailand, US inch ahead on trade
accord By Tony Allison
HUA HIN, Thailand - The sixth round of
talks between Thailand and the US to hammer out a
free-trade agreement (FTA) that was to conclude on
Friday was just another step in an arduous
process, although the two sides are at the
critical stage of clarifying many important
specifics.
Despite vociferous protests on
Tuesday that briefly interrupted the five-day
talks in the northern Thai city of Chiang Mai, the Thai
government insists that an
agreement will be reached by the end of this year.
Negotiations opened in 2004.
Prime
Minister Thaksin Shinawatra, in an address to
local and foreign business leaders, said, "On the
Thai-US FTA, if we don't trade with the US, we
will lose. Right now, our greatest surplus with
any country is with the US. We will be at a huge
disadvantage to others if we lose our access to
the US market, as other countries will pursue
their own deals. We need to move now, before we
have no more room to move."
If
negotiations for an FTA are successful, the
current US-Thai bilateral trade total of more than
US$24 billion could rise considerably. Thailand is
the United States' 19th-largest trading partner,
with Thailand enjoying a surplus.
Thai
Senator Kraisak Choonhavan, chairman of the Senate
Committee on Foreign Affairs, has said he would
ask representatives from the US negotiation team
to suspend the talks. He said his committee would
file a petition with the Constitution Court as the
agreement may breach the Thai constitution. A
similar move has been made against the
already-concluded Thai-Australian FTA.
The
talks are part of US efforts since 2002 to forge
trade accords with six Southeast Asian countries -
Malaysia, Indonesia, the Philippines, Thailand,
Singapore and Brunei. The US team will visit Kuala
Lumpur next week to try to open trade talks with
Malaysia. Of the six countries, an FTA has been
concluded only with Singapore.
Thailand
has been aggressively pursuing FTAs with countries
other than the US in its campaign to expand
trading opportunities. Agreements have been signed
with Bahrain, China, Peru, Australia and India;
the largest FTA to date is all but sealed with
Japan. Further deals are possible with New
Zealand, South Korea, Chile and the European
Union.
The US is concentrating on those
aspects of the proposed deal with Thailand it
finds most important, namely intellectual property
rights (IPR) and pharmaceutical patents.
Another sensitive issue that has been
ignored at earlier rounds and is expected to be
addressed regards foreign investment in Thailand.
Many Thai citizens are opposed to giving the US a
freer hand in investing because it could alter
Thailand's economic, social and political balance.
According to the American Chamber of
Commerce, the US is second only to Japan in
foreign investment in Thailand, with cumulative
investment at $20 billion and more than 200,000
Thai nationals on the payrolls.
Nit
Phibunsongkhram, head of Thailand's negotiating
team, said the IPR and investment issues "are very
significant to the US, so much so that if Thailand
avoids discussing these issues, there might not be
an FTA between the two countries at all".
Other issues to be taken up include
opening up of the financial-services sector and
the lucrative telecommunication industry.
On Thursday, negotiators, in their first
concrete achievement, reached a tentative
agreement on tariff cuts for more than 204
categories of industrial goods. The US side has
agreed to reduce tariffs equivalent to a 78% cut
of overall tariffs, worth more than $933 million
annually.
In exchange, Thailand has agreed
to a 75% cut in the value of overall tariffs. The
two countries agreed to reduce tariffs to zero for
electrical goods, electronic products, ceramics,
plastics and jewelry.
There is also
progress regarding tariff reduction for "sensitive
goods". The sides agreed on the targets of
reducing the items in the sensitive list from 6.9%
of all types of goods to 2.7%; and the list of
"most sensitive goods" from the current 4.9% to
3.1% of all kinds of goods under the FTA pact.
Sugar and rice, two key Thai agricultural export
commodities, will be included as sensitive
products for the US.
Also, the sides have
"accepted in principle" that the terms "jasmine
rice" and "Thai silk" can only be used for
products that originate from Thailand. This would
increase the protection status of Thai rice and
silk to the same status of wine products
"protected" by the World Trade Organization.
Intellectual property covers many topics,
including patents for HIV/AIDS drugs and creating
genetically modified foods. Social activists are
vigorously opposed to any changes to the patent
regime, arguing that if Thailand agrees to respect
US patents for HIV/AIDS drugs, more than a million
Thai patients would lose access to treatment. The
drugs would become prohibitively expensive for
poor people.
An
agreement on IPR alledgedly could also
prevent Thailand from creating its own inventions
and technologies, leaving it at the mercy of the
United States. Some academics
have warned that by giving up so much control of
Thai markets through the FTA, the country is in
effect relinquishing its sovereignty.
Back on the farm Critics of the
proposed FTA largely concentrate on the effects it
is likely to have on Thai farmers, who they say
took a beating after similar bilateral trade deals
that the government signed with China, Australia
and New Zealand.
Cheaper imports of garlic
and onions from China have put 40% of Thai farmers
out of business, said Witoon Lianchumroon,
coordinator of FTA Watch, a nationwide coalition
of anti-FTA non-governmental organizations. "About
50,000 farming households have been affected."
Likewise, an estimated 100,000 Thai
farmers who raised cattle for meat have been
unable to compete against cheaper imports from New
Zealand that followed the FTA pact with that
country.
Witoon estimates that nearly 6.5
million farmers will be affected if Bangkok signs
a similar trade deal with Washington, resulting in
US agriculture products flooding the local
markets.
Farmers make up a substantial
slice of Thailand's labor force - some 60% of the
country's 65 million people - yet they remain
among the lowest wage earners. The average monthly
income for agriculture-sector workers hovers
between 2,500 and 3,000 baht ($63-$76).
However, a report by the Thailand
Development and Research Institute, a
Bangkok-based think-tank, estimates that in
respect to agriculture, both the US and Thailand
would enjoy significant economic gains from an
FTA.
According to their analysis,
agricultural exports to the US would increase by
5-22%, while US exports would also increase by
4-67%. The gains for Thailand's agricultural
sector would result in a 2.3% increase in gross
domestic product, according to the
report.
Beyond business Thailand
is a longtime military ally of the US and a key
country in the "war against terror" in Southeast
Asia.
Despite differences on Myanmar
policy and human-rights issues, shared economic
and security interests have long provided the
basis for US-Thai cooperation.
Bangkok and
Washington coordinate closely on law enforcement,
intelligence and security. Thailand contributed
troops and support for US military operations in
both Afghanistan and Iraq and was designated as a
major non-North Atlantic Treaty Organization ally
by President George W Bush in December 2003.
This allows Thailand more access to US
foreign aid and military assistance, including
credit guarantees for major weapons purchases. An
agreement concluded with the US in July 2001
allows Thailand to purchase advanced medium-range
air-to-air missiles for its F-16 fighters, a first
for a Southeast Asian state.
Thailand's
airfields and ports play a particularly important
role in US global military strategy, including
having served as the primary hub of the relief
effort for the Indian Ocean tsunami of late 2004.
With its favorable geographic location and
broad-based economy, Thailand is poised to play a
major leadership role in Southeast Asia and has
been an aggressive advocate of increased economic
integration in the region.
A founding
member of the Association of Southeast Asian
Nations, Thailand maintains close ties with China,
has reached out to India, and is pursuing FTAs
with a number of other countries.
Given its ties with the US,
Thailand's stature in the region may affect
broader US foreign-policy objectives and prospects
for further multilateral economic and security
cooperation in Southeast Asia. The proposed FTA is just one of the
building blocks in this process.
Tony Allison is a Thailand-based
correspondent.
(Additional reporting
by Marwaan Macan-Markar of Inter Press Service)
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