Free trade could cost plenty

Bangkok Post - PERSPECTIVE - 12 February 2006

Free trade could cost plenty

SUPARA JANCHITFAH looks at the rules of the Thai-US FTA negotiation process and finds them more favourable to the American side

Civic groups and locals offer gratitude to Mother Earth and warn she will be exploited if the government allows unfair free trade agreements to go ahead.

The new imperialism is unlike what happened in 1893, when French sailing vessels blocked the Gulf of Siam. It is taking place in different forms and is much harder for Thais to see than gunboats on their waters.

In the new world order the threats to Thai sovereignty are more likely to take shape as international agreements which are made on an unequal footing. While the ruling Thai Rak Thai Party always emphasises the positive side of Free Trade Agreements (FTAs), the serious consequences they have for local people go unaddressed.

During the sixth round of the Thai-US FTA negotiations in Chiang Mai, many of those locals took to the streets in protest, and observers to the talks and even some Thai negotiators themselves have made public complaints about the way they are being conducted.

"Actually, we are to read whatever the Americans propose; they are the ones who prepare the written agreements and we are the ones who have to follow them," said Dr Lawan Thanadsillapakul, director of the Institute of Economic and Business Law who observed the trade negotiations.

Pimchanok Vornkorporn, of the Department of Trade Negotiations (DTN), expressed her concerns that the negotiations were so complicated, but she looks at it as a challenge.

Bantoon Sretthasirote, director of the Resources Strategy Project of the National Human Rights Commission Office, said he is aware that many Thai government officials are trying hard to negotiate for the benefit of all Thais, but that as an observer he expressed his concern that Thai officials may not have much power. "They are smart people, but they cannot amend or propose anything as they wish. The US representatives often say they cannot be flexible and cite the TPA (US Trade Promotion Authority Act)."

While the American representatives adhere to their TPA, Thai representatives only get last-minute instructions.

"We were given the policy guidelines only one day before leaving for Chiang Mai," said Pimchanok, one of the Thai representatives in the sixth round trade talks.

Bantoon expressed his concern that while the US team is upholding national regulations, such as the Guidelines for Implementation of Executive Order 13141, which allows public participation and the appointment of some representatives from the public sector to participate in the trade negotiations, Thailand has done nothing of the kind even though it is required by the 1997 Constitution.

He said the FTA negotiations were not in line with Article 76, which says the government shall promote and encourage public participation in laying down its policies (see box).

"Actually there have been a number of requests that the government conduct public hearings in order to decide the direction of the negotiation process before any signing or ratification of the international agreement. But the government hasn’t paid much attention to the requests; it only appointed some officials to handle the agreements," he said.

He added that public hearings would actually be very useful for the government, as they would help protect the public interest and could be used as a directive to negotiate with trade partners.

NEGOTIATING NATIONAL INTERESTS

Many ranking officials have said that they are willing to listen to the Thai public, but they simultaneously emphasise the need to accommodate the Americans. Said Deputy PM Somkid Jatusripitak: "The US is our most important trading partner. If we do not do it (the FTA), some countries will immediately benefit," meaning that Thailand might suffer from competition with other nations that are more willing to make concessions.

Late last month, Dr Somkid told participants who attended a seminar on the Thai-US FTA that many high-level officials have been working very hard. "They have devoted themselves, as they all know that the negotiations will affect Thailand in the future. But in the negotiations, we won’t only gain. If we only gain they (our trading partners) won’t accept it. If they gain and we lose we will not accept it as well. Every government official is paid by the people’s taxes, so that they will stand with the people," he assured.

"I told the negotiation team that they have to try their best and their negotiations must be based on national interests," he added.

Dr Somkid said the proviso of the negotiation must based on reciprocation between the parties involved, while ensuring that sensitive matters that affect quality of life cannot be exchanged for trade benefits. He said that nobody would want to put the country in a disadvantaged position. "People can voice their concerns to the negotiation team," he said.

The new head negotiator for Thailand, Karun Kittisataporn, also said he will listen to the public. The permanent secretary of the Commerce Ministry succeeded Nitya Pibulsonggram who resigned last month. But neither Karun nor Somkid would elaborate on what channels are open for public input. When she was asked about this, Pimchanok said people can send her information relevant to the negotiations.

But some activists and other members of the public are wondering how the negotiating team will use their information, and also about the terms "national interests" and "public interests" that are being used. When they have to listen to demands from the government, will the negotiators keep the concerns of the general public as a priority?

"I wonder if the government will listen to us and take our matters seriously," said a businesswoman who participated in an FTA seminar concerning the service sectors organised by the DTN.

Bantoon said the trade negotiations were being conducted from a perspective of gain-and-loss on a macro economic scale, and expressed scepticism that they would benefit the majority in the country. "The economic model does not calculate farmers’ souls and hearts, their culture and way of life."

He pointed out that depreciation of the country’s natural resources also is not included in the price for foreign investment. "This is a sophisticated issue, that is why we want the government to listen to ordinary people, to farmers, not only officials."

He added that another weakness is that many negotiations are underway simultaneously or almost simultaneously and there might not be enough officials to handle them all effectively.

Bantoon suggested that Thailand should weigh carefully the costs of participating in the FTA, and made this analogy:

"PM Thaksin is afraid of what will happen if we cannot get on the last train, but he is unaware of the total cost of riding on such a train. It’s dangerous to have only a ticket, without knowing the details of all costs that must be paid to sit and use the facilities on the train."

A SERIOUS COMMITMENT

Since the beginning of the international trade deal, there have been many questions as to whether the FTA negotiations are lawful, some of them raised by the Senate Foreign Affairs Committee. Early this month Senator Kraisak Choonhavan submitted a petition to the Constitutional Court through its ombudsmen saying that the committee considers that the agreement may violate Article 224 of the Constitution (see box).

"The government cannot act alone in approving a bilateral agreement like the FTA. The agreement should pass Parliament approval and must also be royally endorsed," he said.

The government has often said that if it becomes apparent there are problems with the agreement that it can always propose an amendment to the Parliament after the trade negotiations. It may not be as easy as that, however, as the topic of bilateral agreements is also addressed by the 1969 Vienna Convention, particularly Article 29 (see box), to which Thailand is a party.

Dr Lawan warns that Thailand must be serious about what its trade representatives commit to. "We cannot say that the representatives that we sent for trade negotiation are not legally appointed ....We cannot claim what we have signed is not legally binding," she warned. Anything that Thailand signs will have long-term ramifications, as most FTAs require that investors have to be able to harvest benefits for at least 10 years after dismissal or termination of their investment deals.

"So you may be able to revoke the law or the agreement, but you still must accept the long-term consequences," she said.

To help alleviate any adverse consequences, Dr Lawan advocates public participation.

"Members of the public who may be directly and indirectly affected from the implementation of the agreements should be allowed to give their input during the process of negotiation," she said.

The government should pay more attention to the treaty, as it involves national interests and will affect the national economic structure. It may affect locals who have less funds and technology to compete with foreign investors. Apart from the government officials, there should be some representatives of the people who would be affected from the trade deal.

Dr Lawan said that most of the time the government has no chance to see the full text, or Authentic Text, of an agreement. She suggested that the government should not immediately bind itself by its signature, but should instead put the agreement through a ratification process after having a chance to read the Authentic Text, and that "the government should allow the public to scrutinise the advantages and disadvantages of the agreement before ratification and should not stipulate the time frame for the ratification. We should give the people time to consider."

However, it is no secret that the US wants to conclude the trade deal very soon. This leads people to be suspicious. It took more than four years for Singapore to conclude their deal with the US, and in the case of Australia and the US, it actually took about 13 years.

Dr Nalinee Thaveesin, a member of National Economic and Social Advisory Council, said that the US first approached Australia in 1946 about a trade deal but Australia refused. In 1992 the US initiated new talks, but they failed.

The US approached Australia again in 2001; a free trade agreement was finally concluded in February 2004, and it officially went into force in January 2005, Dr Nalinee explained.

"One year after, Australia has found that it has a trade deficit with the US," she said.

Dr Lawan said that the reason for the US’s hurry is that the TPA 2002, also known as fast track, is set to expire soon. "The US needs to conclude the agreement under the TPA, which will be terminated by July 2007."

After the expiration of the TPA the negotiation team must take any agreement to Congress for a more thorough consideration, and Congress must be notified 90 days before consideration of a treaty by the Office of the US Trade Representative.

She said this urgent atmosphere is very dangerous for Thailand, as we have unequal power to negotiate. "According to my observations, Thailand must accept whatever the US proposes. The US representatives have often said ’take it or leave it’."

"This is not a negotiation based on the principle that both countries have equal sovereignty. For example, if we accept the US patent law, we have to amend our internal laws to facilitate and follow what we have signed. To me this means we have lost our sovereignty," she said.

It may be hard to start over from the beginning, especially as the new chief negotiator, Karun, claims so many positive sides of the deal. But at least the government should begin to listen to proposals from the people.

"We should actually issue a new act of law for the international trade agreement, as a guideline for the negotiations. It should consist of the steps in negotiating; the structure, composition and and proportions of those who will attend the negotiations; the selection of the negotiation teams; the roles of the public sector, other stakeholders and Parliament; and the issues for negotiation," suggested Bantoon.

He added that the government should conduct serious studies on the ramifications of trade deals before the real negotiations begin.

Moreover, the government should allow the stakeholders from all sectors to take part in the negotiations and allow them to make adjustments and increase their efficiency which is the basic requirement of Articles 84 and 87 of the Thai Constitution.(see box)

"The government must increase the potentiality of internal systems, prevent monopoly and encourage just competition. It’s not only about free trade, it must be fair," he said.

One of the most crucial considerations that the government needs to listen to the people is to regulate the rules in the Thai-US FTA negotiation.

"We must revoke the confidential nature of the trade agreement negotiations with the US. The government must reveal the contents of the deal so that members of the public will have a chance to scrutinise them. Ultimately we (the civic groups) want the Thai government to stop the trade talks with the US," said Bantoon.

This is the first in a series on Free Trade Agreements and their ramifications.


From the Thai Constitution BE 2540 (1997)

Article 76: The State shall promote and encourage public participation in laying down policies, making decisions on political issues, preparing economic, social and political development plans, and inspecting the exercise of State power at all levels.

Article 84: The State shall organise the appropriate system of the holding and use of land, provide sufficient water resources for farmers and protect the interests of farmers in the production and marketing of agricultural products to achieve maximum benefits, and promote the assembling of farmers with a view to laying down agricultural plans and protecting their mutual interests.

Article 87: The State shall encourage a free economic system through market forces, ensure and supervise fair competition, protect consumers, and prevent direct and indirect monopolies, repeal and refrain from enacting laws and regulations controlling businesses which do not correspond with the economic necessity, and shall not engage in an enterprise in competition with the private sector unless it is necessary for the purpose of maintaining the security of the State, preserving the common interest, or providing public utilities.

Article 224: The King has the prerogative to conclude a peace treaty, armistice and other treaties with other countries or international organisations.

A treaty which provides for a change in the Thai territories or the jurisdiction of the State or requires the enactment of an Act for its implementation must be approved by the National Assembly

The 1969 Vienna convention on the law of the treaties

Article 2: Use of terms :

(a) treaty means an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation;

Article 29: Territorial scope of treaties

Unless a different intention appears from the treaty or is otherwise established, a treaty is binding upon each party in respect of its entire territory.

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source: Bangkok Post