CalTrade Report, California, USA
July 18, 2005
Benefits of US, Thai free trade agreement examined
A free trade pact ’’would generate solid economic benefits’’ for both countries, says Washington
GREAT FALLS, Montana - 07/18/05 - Representatives from the US and Thailand have concluded the fourth round of free trade agreement (FTA) negotiations at a series of intensive meetings held in Great Falls, Montana.
According to press reports, Washington was "pleased" with the progress that was made at the negotiations and hopes to conclude an FTA with the Southeast Asian country early next year.
"A US-Thailand FTA will generate solid economic benefits for both the United States and Thailand," said a Department of Commerce statement issued at the conclusion of the talks.
Removing existing trade barriers "will create new opportunities for US businesses in both goods and services, spurring economic growth, boosting American living standards and supporting higher paying jobs," it said.
This, it continued, "would also help to ensure that US businesses and workers are not put at a disadvantage with their key competitors from countries such as China and Australia, which already have preferential trade agreements with Thailand."
Of particular interest during the negotiations were the perceived opportunities for US-produced agricultural commodities in the Thai market.
Currently, Thailand’s average tariff on agricultural imports is 23.6%. A free trade agreement could reduce or end the tariffs, Washington has said.
The US is currently the top supplier to Thailand of agricultural products and the FTA is expected "to further open and diversify sales for these and other products, such as beef and pork, to this major market for US farmers and ranchers," the statement said.
In 2004, Thailand was the 17th largest export market for US agricultural products, excluding fish and forestry products.
US agricultural exports to Thailand have increased 67% since 1999, from $409 million to $685 million in 2004 with cotton, wheat, soybeans and soybean meal, hides and skins, prepared animal feeds, dairy products, tobacco, processed fruit and vegetables, and fresh fruit leading the list of US exports.
The US and Thai teams made progress on the range of issues covered by the FTA, the statement said.
"Like other US free trade pacts, a successfully completed US-Thai agreement will be comprehensive in its coverage, while taking into account the sensitivities on both sides with the progress made during this round positioning the United States and Thailand well for further progress in the next round to be held in late September," it said.
In 2003, President Bush announced his intent to enter into free trade negotiations with Thailand.
"This FTA reaffirms the President’s commitment under his Enterprise for ASEAN Initiative, which offers the possibility of FTAs to ASEAN members with which the U.S. has a bilateral Trade and Investment Agreement (TIFA), that are WTO members, and are committed to economic reforms and openness," the statement said.
The first round of US-Thailand FTA negotiations was held in July 2004, with successive rounds held in October 2004 and April 2005.
Negotiating groups also held meetings between rounds to lay the groundwork for the just concluded fourth round of talks.
Total two-way trade between the US and Thailand has nearly doubled over the last decade and totaled $24 billion in 2004, up nearly 11% from the previous year.
US goods exports totaled $6.4 billion last year, an increase of 10.3% since 2003.
The US is Thailand’s largest export market with sales of a variety of goods and commodities - primarily rubber, textiles and footwear, seafood products, computers and parts, electronics, electrical appliances, jewelry, rice, tapioca products, and integrated circuits — climbing 15.8% last year to $17.6 billion.
US services exports to the Southeast Asian country totaled $1.1 billion in 2003, according to the latest available data, while Thailand’s exports of services to the US States reached $739 million.
According to a study conducted by the Thailand Development Research Institute (TDRI) in Bangkok, a free trade agreement between the two countries could be expected to boost Thai exports to the US by 5.4% and US exports to Thailand by a full 5% over their current levels.
Thailand ranks as California’s 16th largest global trading partner having bought nearly $1.5 billion worth of manufactured goods, electronics, computer software, processed foods, and other agricultural products from California companies in 2004.
The stock of US foreign direct investment (FDI) in Thailand in 2003 amounted to $7.4 billion, making the US the largest foreign investor in the country.
The US "will also will use the FTA to seek to address concerns on Thailand’s intellectual property (IP) regime, including strengthening enforcement and measures against the production of illegal optical discs," the Commerce Department statement said.
A Friends of Thailand Caucus has been established in the US House of Representatives to provide a base of support for the Bush Administration’s efforts to finalize a free trade pact.
Under the co-chairmanship of Rep. Jim Ramstad (R-Minnesota) and Rep. William Jefferson (D-LA), the Caucus "will help promote US-Thailand friendship and understanding, both of which are crucial for the passage of the FTA," said a spokesman for the new group.
A similar caucus has also been established in the US Senate spearheaded by Sen. Gordon Smith (R-Oregon) and Sen. Max Baucus (D-Montana), whose outspoken support for the proposed pact lead to the latest round of negotiations being held in his home state.