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BoT expert wary over TPP

Bangkok Post, Thailand

BoT expert wary over TPP

Free trade deal ’risks hindering capital flows’

15 November 2012

Thailand’s negotiations with the US for the opening of the goods and services market under the Trans-Pacific Strategic Economic Partnership Agreement (TPP) could hamper the Bank of Thailand’s regulations on capital flows and financial services, a central bank economist says.

The US, which brokered the TPP agreement, has negotiated the opening of this market with Asean countries plus some dialogue partners.

The TPP now has 11 members, namely Brunei, Chile, Singapore, New Zealand, the US, Australia, Peru, Vietnam, Malaysia, Mexico and Canada.

Sources say the TPP is among the key issues Thailand and the US are scheduled to discuss during the visit of US President Barack Obama to the kingdom on Sunday and Monday.

Harit Rodprasert, a senior Bank of Thailand (BoT) economist, wrote in his research paper that the US tended to negotiate for free movement of capital under TPP which would restrict the central bank’s policy instruments to handle foreign capital inflows. Leading world economists have submitted protest letters to the US and other members of the TPP against this restriction, he said.

"The TPP tends to limit the policy space of members in implementing a capital account policy to preserve economic stability, although the instrument has been a precedent for free trade pacts in most countries and is accepted worldwide," he said.

Although capital inflows promote investment and economic development, they could lead to volatility and a bubble in the property sector or a liquidity shortage during capital flight, he said.

Items on the agenda that Thailand plans to negotiate with the US under the TPP have remained confidential thus far. But issues are expected to include the liberalisation of finance and banking, service businesses, and intellectual property.

Deputy Commerce Minister Nattawut Saikuar said Prime Minister Yingluck Shinawatra is expected to raise the issue that the US has kept Thailand on its priority watch list (PWL) for violations of intellectual property rights for five years since 2007. Ms Yingluck will inform Mr Obama of Thailand’s progress in suppressing counterfeit products and in protecting intellectual property rights to convince the US leader to remove Thailand from the list.

Opposition leader Abhisit Vejjajiva yesterday called on the government to clearly specify the negotiating framework it planned to have with the US over the controversial TPP.

Mr Abhisit said he was not against the government’s plan to become a part of the TPP but wanted to ensure clarity of the negotiating framework because the trade agreement would have a substantial impact on Thailand.

In the past, the lack of a clear TPP negotiating framework was blamed for it failing to win parliamentary endorsement, Mr Abhisit said.

Clear advantages and disadvantages of becoming a TPP member could not be determined unless a clear negotiating framework is prepared, he said, adding that even Japan and South Korea which have been considering joining the TPP for a while were still reluctant to make a final decision.

The US president will arrive on Sunday afternoon at Don Mueang airport and travel directly to the Grand Palace where US Secretary of State Hillary Clinton will be waiting for him, a city police source said.

They will travel on to Siriraj Hospital where they will have an audience with His Majesty the King, the source added.

Mr Obama would then travel to Government House to have dinner with Prime Minister Yingluck Shinawatra, said the source, adding that after the dinner, he would have a meeting with about 600 US embassy staff at Chulalongkorn University’s sport complex.

At the end of the day Mr Obama would check in at the Four Seasons Hotel on Ratchaprasong Road.

Snipers will be deployed along the routes Mr Obama travels from the day he arrives until he leaves, the source said. The only place Thai security officials will have sole charge is at Siriraj Hospital where His Majesty the King is staying. Security there is already at a maximum.

The US president is scheduled to leave Bangkok for Myanmar on Monday.

In addition to Mr Obama, US Secretary of Defense Leon Panetta is also due to arrive in Thailand today as part of a three-country tour to strengthen alliances with partners in the Asia-Pacific region.

During the visit, Mr Panetta will meet Defence Minister Sukumpol Suwanatat to discuss closer cooperation between Thailand and the US.