CRS report for Congress: US-Thailand FTA negotiations

Order Code RL32314

CRS Report for Congress, Library of Congress, Washington DC

U.S.-Thailand Free Trade Agreement Negotiations

Updated November 3, 2005

Raymond J. Ahearn and Wayne M. Morrison
Specialists in International Trade and Finance
Foreign Affairs, Defense, and Trade Division

Summary

President Bush and Thai Prime Minister Thaskin on October 19, 2003, agreed
to negotiate a bilateral free trade agreement (FTA). The Bush Administration notified
Congress on February 12, 2004, that it intends to begin the negotiations, prompting
a 90-day consultation period with Congress and the private sector. Five negotiating
rounds have taken place to date, the most recent September 26- September 30, 2005,
in Hawaii. U.S. trade officials hope to conclude the negotiations by early 2006.

In the notification letter sent to the congressional leadership, then-U.S. Trade
Representative Robert Zoellick put forth an array of commercial and foreign policy
gains that could be derived from the agreement. The letter states that an FTA would
be particularly beneficial to U.S. agricultural producers who have urged the
administration to move forward, as well as to U.S. companies exporting goods and
services to Thailand and investing there. Mr. Zoellick also alluded to sensitive issues
that will need to be addressed: trade in automobiles, protection of intellectual
property rights, and labor and environmental standards.

As in most FTA negotiations, competing viewpoints on the desirability and
nature of the provisions of the agreement are likely. As background for congressional
oversight of the negotiations, this report examines Thailand’s economy and trade
orientation, discusses the scope and significance of the U.S.-Thai commercial
relationship, and summarizes key negotiating issues.

Thailand’s economy has recovered strongly from the 1997 Asian financial crisis.
In 2004 the Thai economy grew at 5.2% in real terms and yielded a per capita income
of $2,490. With around 20% of Thai exports destined for the U.S. market, the United
States is Thailand’s largest export market. In 2004, Thailand was the United States’
19th largest trade partner, accounting for $23.5 billion in trade turnover ($17.5 billion
in U.S. imports and $$5.8 billion in U.S. exports).

Countries that form FTAs agree at a minimum to phase out or reduce tariff and
non-tariff barriers (NTB) on mutual trade in order to enhance market access between
the trading partners. The U.S.-Thailand FTA is expected to be comprehensive,
seeking to liberalize trade in goods, agriculture, services, and investment, as well as
intellectual property rights. Other issues such as government procurement,
competition policy, environment and labor standards, and customs procedures are
also likely to be on the negotiating table.

The U.S.-Thailand FTA negotiations are of interest to Congress because (1) an
agreement would require passage of implementing legislation to go into effect; (2)
an agreement could increase U.S. exports of goods, services, and investment, with
particular benefits for agricultural exports; and (3) an agreement could increase
competition for U.S. import-competing industries such as textiles and apparel and
light trucks, thereby raising the issue of job losses. This report will be updated as
events warrant.

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