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FTA talks with US to start in June

Bangkok Post

19 March 2004

FTA talks with US to start in June

Critics say Thailand must bargain hard

Woranuj Maneerungsee

Washington has made another step toward the Thai-US free trade area by
convincing its Bangkok counterparts that the first round of negotiations
can start in the next three months.

The message from the Bush administration came amid growing concerns
among local groups, including senators, academics and non-governmental
organisations, who have cast doubts over the real benefits and losses
from the deal, which by law does not need to be endorsed by legislative

The US recently informed Thailand that it wanted to discuss the
bilateral FTA on June 21 after US Trade Representative Robert Zoellick,
had reported the agreement’s goals to Congress in mid-February.

The cabinet recently appointed Nit Pibulsonggram as chief of its
negotiating group. Mr Nit is an adviser to Foreign Minister Surakiart
Sathirathai and former Thai ambassador to Washington.

Chutima Bunyapraphasara, deputy director of the Trade Negotiations
Department, said no concrete outcome was expected in the first round of
talks but the subjects and timeframe of the negotiations could be made

``Of course, we (Thailand) will sit down and tell them that the
negotiations should be based on mutual benefits,’’she said.

Academics and non-governmental organisations (NGOs) have called on the
government to not rush into completing the talks and cautioned about
comprehensive demands by the US, including trade in goods, services,
investment and even intellectual property.

In the US, Mr Zoellick had said when he reported to Congress that his
country would gain huge benefits from establishing an FTA with Thailand,
from the farm sector to the services sector.

Also, the Bush administration has anticipated that the FTA will help
reduce intellectual property violations in Thailand.

In addition to Thailand and Singapore, with which Washington signed an
FTA agreement on May 6 last year, the US plans bilateral FTAs with other
Southeast Asian countries.

Thai garment exporters hope to export more clothing to the US market.
However, Washington will likely require high local content for Thai-made
products as it did under the FTA with Singapore.

Under the Singapore-US FTA, Washington imposes a so-called ``yarn
forwarding’’ requirement on Singaporean garment exports, which demands
that only garments made of Singaporean-made yarn or yarn imported from
the US will be able to enjoy low import tariffs.

Chavalit Nimla-or, vice-chairman of the Federation of Thai Industries
and a veteran clothing exporter, said such a requirement was fine for
Singapore, as it was not a major garment player.

But Thailand, which is among the world’s top 20, still needed to import
lots of raw materials due to the inferior quality of local products.

Mr Chavalit said Thai exporters were happy with the current rule of ``substantial
transformation’’ in which they were allowed to import raw materials but
had to transform the end products substantially before exporting them.

But Suchart Chantranakaraj, president of the Thai Garment Manufacturers’
Association, insisted: ``The Thai negotiators must insist that that
condition (yarn forwarding) is impractical for Thai exporters.’’