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North Korean goods pose local threat

Bangkok Post

North Korean goods pose local threat

Traders don’t want Kaesong in FTA deal

By Woranuj Maneerungsee

24 April 2006

Cheaper products from North Korea’s Kaesong special economic zone, which is a part of the proposed Asean-South Korean free trade agreement, may flood into Thailand and hurt local producers, according to executives of the Board of Trade.

’’In fact, we don’t want to take Kaesong as part of the deal, but our leader showed the political will to support South Korea’s proposal. Well, we cannot oppose the government’s policy,’’ said Pornsilp Patcharintanakul, the board’s deputy secretary-general.

The governments of 10 Southeast Asian nations have virtually agreed to treat the Kaesong products as ’’Made in Korea’’ under the deal.

Seoul proposed the idea as part of its policy to promote peace on the divided Korean peninsula by supporting the communist country’s economic development.

South Korea submitted about 100 Kaesong product items for consideration for lower tariff rates under the free trade pact. They include light industrial and technology products, apparel, metal goods, organic chemicals, televisions, leather products, furniture and jewellery.

The Kaesong industrial park was set up with Hyundai of South Korea as the major investor, and light industries from South Korea moved to the special zone for its lower labour costs.

A Thai Commerce Ministry official said that the ministry acknowledged serious concerns from the private sector.

Thailand has been discussing proposals for tighter regulations regarding product origins to screen Kaesong products seeking market access to the Asean. Trade negotiators are scheduled to meet next month in Korea to iron out the differences.

The Board of Trade last week proposed to the ministry an idea to overcome complicated rules of origin. Its members would see the rules used to facilitate rather than impede trade, according to Mr Pornsilp.

The idea is to propose a tariff quota system for products from North Korean. ’’It is really difficult to design a specific rule for every single product,’’ he said. ’’With the FTA, we should have trust and honesty, so we proposed to the ministry to treat products from North Korea the same as from South Korea, but to limit the exports to within a certain period.

’’But South Korea must open up its market for Thai products such as rice,’’ he said.

In Korea, farmers stage regular protests against moves to expand the local market for foreign rice.

The Thai government declined to sign a trade in goods agreement between the Asean and South Korea last December because Seoul insisted rice be left out.

Thailand is waiting for policymakers to decide whether the country will sign the deal with Seoul next month.

The framework of a trade in goods agreement signed in Malaysia last year specifies the way goods should be traded and how tariffs would be phased out.

It will free trade in up to 97% of all items, while tariffs for 90% of them will be eliminated in stages by 2010 for South Korea and by 2012 for Asean nations.