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Lobbying by Japanese irks industrialists

Bangkok Post

Lobbying by Japanese irks industrialists

Trade pact in danger if issues not faced


5 April 2005

Free-trade negotiations between Thailand and Japan could collapse if Japanese negotiators continue to lobby Thai politicians instead of dealing with the country’s trade negotiators, business executives warn.

At the seventh round of the free trade area (FTA) talks at Khao Yai last week, the Japanese negotiators gave no response on the steel issues proposed by the Thai side, but bargained instead for other products, according to Pornsilp Patcharintanakul, chairman of the international trade committee of the Board of Trade.

Thailand has proposed to maintain a tariff of around 5% on Japanese hot-rolled steel for the first 10 years of the agreement, and to gradually reduce the rate to zero by the 15th year.

However, Commerce Minister Thanong Bidaya last week suggested that the country could make concessions on steel, given the importance of Japan’s auto industry to Thailand, a move that Thai trade negotiators said had undermined their bargaining authority.

Mr Pornsilp said the Japanese side had also avoided discussions of Rules of Origin issues at the most recent meeting.

"This is tantamount to no progress, as the pact could not be put into real practice, despite the fact that tax issues were agreed on by the two sides," he said.

Korrakod Padungjit, a Board of Trade director who monitors FTA agreements, said the Rules of Origin issue should be settled before the tax issues, and the agreement should be flexible and not create new types of non-tariff barriers.

Rules of origin are important, he said, since imported raw materials account for 60% of the content of industries including steel, wheat flour, aluminium, chemicals, jewellery, canned tuna and furniture.

"We are afraid that Japan may lobby certain politicians instead of having direct talks with Thai FTA negotiators," he said. "The outcome of the lobbying would put Thai industries in serious jeopardy."

The Thai negotiating team is headed by Pisan Manawapat, the deputy permanent secretary for Foreign Affairs.

Thailand is seeking greater access in the Japanese market for agricultural products, while Japan wants greater market access and lower tariffs for a wide range of industrial products, particularly steel.

Mr Korrakod said that Mr Thanong, who is scheduled to visit Japan this coming weekend, had complicated matters with his comments about steel.

"We have asked for 10 years to improve our steel industries. But Japan wants immediate cut of steel import tariffs to zero, despite the fact that we have already cut tariff on certain steel products that could not be produced locally to 1%," said Mr Korrakod.

At the meeting last week, Japan has agreed to cut its current 6% tariff on Thai cooked chicken in half, increase annual tapioca starch quotas to 200,000 tonnes from 70,000, and end the current 9.6% tariff on canned tuna within five years.

Other concessions include an immediate elimination of tariffs on Thai fruit imports and an increase in molasses quotas to 4,000 tonnes in three years and 5,000 tonnes in the fourth year. Japan has also increased its banana quota to 3,000 tonnes in the first year, and 6,000 tonnes in the fifth year, while Thailand promised to exclude Japan’s sensitive items such as sugar, canned pineapple,and rice.

According to Mr Pornsilp, Tokyo’s agreement on certain Thai products might result in only an "insignificant" increase in Thai export values as those Thai products were already competitive in the Japanese market.