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Rice remains biggest hurdle to trade pact in Korea talks

Bangkok Post | 26 May 2006

Rice remains biggest hurdle to trade pact in Korea talks


Thailand has reaffirmed that it did not sign the Asean-South Korean free trade agreement on goods because of rice.

South Korea insisted on excluding rice under its sensitive list, but Thailand, the world’s largest rice exporter, demanded that it open up its local market.

The Asean-Korea pact was signed two weeks ago at a two-day meeting in Manila.

Rice is a highly sensitive issue in South Korea and also in Japan, which asked to exclude rice as well as sugar from its bilateral free trade talks with Thailand.

’’Discussions [with South Korea] are still ongoing, we have exchanged lists. Everything is on the table. We are not looking at one item in isolation, there are other agricultural items and goods as well,’’ said Uttama Savanayana, a vice-minister of the Commerce Ministry, who attended the Manila meeting.

At the moment, businessmen and trade negotiators do not think the FTA delays will significantly affect the Thai economy.

Although South Korean businesses have become more important, they are still far from becoming major partners like those of the United States and Japan.

South Korea was Thailand’s 13th largest export market last year, while Japan was the second largest, as well as the largest contributor of foreign direct investment to the country.

’’Apparently, Thailand has not missed this train yet. I would say it is good for the country that we have more time for a better deal,’’ said Pornsilp Patcharintanakul, deputy secretary-general of the Board of Trade.

He was disappointed, though, when the Thai Rak Thai-led government excluded rice from the trade talks with Japan without consulting local businesses.

Mr Pornsilp said the Thai government not only had an economic motivation for a deal with Japan, but also strong political motivation to move negotiations forward.

But, he said rice and other farm products had been left out of the deal because Thai policymakers had close personal relationships with Japanese politicians.

The Thai-Japanese pact is expected to generate more investment in automobiles and electronics. However, the signing has been put on hold because of the local political stalemate.

However, in the case of the Asean-South Korea trade agreement, a Commerce Ministry source said simply that the deal was not good enough.

’’That will enable the government to send a message to public _ for instance, to NGOs _ that we will only sign a deal that is beneficial to the country as a whole,’’ said the source.

The Thai Rak Thai government’s FTA policy has been widely criticised in some circles. A proposed deal with the United States has drawn fire for including sectors in which Thailand cannot hope to compete with huge American players. These include intellectual property, telecommunications and financial services.

Mr Pornsilp noted that it was unusual for Thailand not to side with Asean, as South Korea would become a more valuable trade partner and investor. It could even help reduce the risk associated with relying too heavily on Japan, he said.

Under the trade in goods deal, South Korea will eliminate tariffs on agreed products by 2010.

 source: Bangkok Post