Falling into a spaghetti bowl: A review of the impact of FTAs on Thailand
Falling into a Spaghetti Bowl:
A Review of the Impact of FTAs on Thailand
Sajin Prachason*
May 2007
In the spaghetti bowl of Free Trade Agreements (FTAs), a growing number of strands have Thailand at one end of them. In Southeast Asia, Thailand is second only to Singapore in pursuing bilateral FTAs. Thailand’s FTA network grew intensively after the country hosted the 2003 Asian Pacific Economic Cooperation (APEC) Summit, less than a month after the implementation of the first of these agreements, the Early Harvest Scheme (EHS) with China. During the APEC Summit, former Prime Minister Thaksin Shinawatra rushed to sign an FTA with India and sounded out the possibility of starting FTA negotiations with other countries, including the United States . The Ministry of Finance declared at the time, “this is a very good chance to transform Thailand into a strong nation...No time is better than now. ”
The recent increase in FTA negotiations is generally thought to arise from the failure to reach a multilateral agreement at the World Trade Organisation (WTO). However, the impetus for FTA negotiations in Thailand comes also from domestic factors. Thailand’s FTA policy is a realization of the vision driven by the offensive business strategy of PM Thaksin Shinawatra, who was famous for imagining himself as the CEO of Thailand Inc.: "All my life, I have hated to take a defensive position when an offensive stance can dominate the game" . In his mind, an FTA is an express train which Thailand has no choice but to take, and the earlier, the better. No matter social and environmental cost they may have, FTAs are anticipated to do more good than harm. In 2004, the country had ten ongoing negotiations to deal with.
At present, Thailand has concluded seven FTAs and four have gone into effect. The latest FTA to be signed is the one with Japan, expected to go into effect in September 2007. Three FTAs await further negotiations (see Table 1). The concluded FTAs with developing countries at the time of conclusion are partial agreements, which cover only trade in goods.. The FTAs with developed countries are comprehensive, covering trade, investment, services, government procurement, intellectual property rights, etc. Although some FTAs have been in effect for some time, a more comprehensive assessment of FTAs’ impact other than a simple calculations of export and import volumes is limited. This paper is an attempt to bring together and review the few pieces of information on the effect of FTAs in Thailand. Due to the limited information available, the paper will focus only on the impacts of trade liberalisation. While the paper touches on the macro economy, industries and other sectors, it will put a particular emphasis on the agricultural sector.
*Sajin Prachason is an associate researcher at Focus on the Global South in Bangkok, Thailand.
Full article, see http://www.ftawatch.org/download/files/spaghetti%20bowl-FTA-%20LAST%20version%2025-05-07%20ARSA.pdf
