logo logo

Steel goes on back burner at FTA talks

Bangkok Post

Steel goes on back burner at FTA talks

Japanese compromise on table at a later date


18 June 2005

Tokyo _ The Thailand-Japan free trade area (FTA) negotiations will resume in July, with discussions over liberalising steel imports postponed until later rounds, even though Tokyo has come up with a new proposal on the controversial issue, according to Finance Minister Somkid Jatusripitak.

The FTA talks from now on will be carried out in various phases, with the talks in July to centre on issues that are close to agreement. The more contentious issues will be negotiated at a later date, said Dr Somkid, who has held talks this week with officials in Japan’s Economy, Trade, and Industry Ministry and business executives.

He said yesterday that officials in Tokyo had come up with a proposal with compromises for liberalising trade in the industrial sector.

However, the Japan Business Federation (Keidanran), has maintained its stance in favour of pushing Thailand to open up industrial trade substantially.

Both countries have agreed on the agricultural liberalisation after Thailand withdrew rice from the list of items to be freely exported.

Steel and automobiles have been key issues in negotiations regarding liberalising the industrial sector.

Dr Somkid said he had passed Japan’s new proposal on steel to the Commerce Ministry for consideration.

’’We’ve asked Japan to conclude talks on the issues that we can agree upon by July. Talks on issues where there are wide differences will be postponed until the next phase of the negotiations. But that does not mean that Thailand wants to prolong the negotiation process. Some local industries would need time to adjust.’’

Thailand has asked Japan to focus on the proposed economic partnership programme that would result in broader co-operation between the two countries, apart from the FTA. agreement.

Dr Somkid said the FTA agreement would represent symbolic co-operation between the two countries.

The government will consider Japanese investment in the Thailand from the viewpoint of what is best suited to the demands of the two countries. The Board of Investment will co-invest in businesses which will also benefit Thailand such as food processing.

Such investments will be carried out in a comprehensive way covering stages of processing to logistics and distribution.

Thailand’s private sector needs to prepare for the changes in the global economy, especially the free trade system, Dr Somkid maintains.

An important upcoming challenge for local businesses is the planned cut in import tariffs to 0% in Asean by the 2010 deadline, as set under the Afta agreement.

Dr Somkid also said in an address to top Japanese executives at a luncheon that Thailand was seeking Japanese investment that would provide value added such as improving textile designs instead of just exploiting cheap labour.

The Japanese automobile sector has already moved in this direction by setting up research and development units in Thailand.

’’I have never discussed this issue (value-added) with the United States and China. I am doing it first with with Japan because the country has played an important role in Thailand’s industrial development over the past three decades,’’ Dr Somkid pointed out.

Also at the luncheon, Dr Somkid indicated that Thailand would establish a unit for food safety development as well as set up a special committee to look after the issue to ensure close co-operation with Japan.

He announced it after Koki Ando, president of Nissin Food Products, suggested that Thailand set up such a centre as food safety was an important requirement for food imports to Japan.

The food safety issue will not be covered in the FTA agreement, but it would help enhance confidence in Thai products.