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TDRI moots fund to support the ’victims’ of free-trade pacts

The Nation (Bangkok) | 6 September 2006

TDRI moots fund to support the ’victims’ of free-trade pacts

Wichit Chaitrong

The Thailand Development Research Institute (TDRI) has proposed that the government collect an adjustment fund from the beneficiaries of free-trade agreements in order to compensate those who suffer in the early stages of their implementation.

Speaking yesterday at a seminar on FTAs, TDRI researcher Worawan Chanduaywit said that such a fund made up of contributions from exporters or importers could assist, for instance, affected farmers.

As an example, she said the government could collect 20 per cent of the benefits that exporters or importers receive from tariff cuts resulting from free-trade deals over the first two years of their operation. This rate could be reduced to 10 per cent in later years. Meanwhile, the fund could be used to support affected farmers, giving them time to shift to other crops, if they fail to directly compete with imports under a free-trade agreement.

Thailand is in the process of negotiating bilateral trade agreements with several countries, including the US and Japan.

Worawan said free-trade deals should not be totally blamed for any adverse impact on Thai farmers. She cited the example of the declining domestic price for garlic and said it is mainly a result of the falling prices in the world markets and is not entirely the result of an influx of Chinese exports.

She said the government should also provide an adjustment programme for workers affected by trade agreements, for instance by extending social security payments from the current period of six months to one year for workers over 50 who face unemployment.

Based on the institute’s studies of four of Thailand’s FTAs - with Australia, New Zealand, China and India - and three more agreements under negotiation, with the US, Japan and Peru, Worawan said she expected the FTAs will force 10,000 people in the chemical and metal industries out of work. However, the seven FTAs would create 20,000 jobs in the leather and shoe industries.

The FTAs would also create 90,000 jobs in the food, drink and tobacco industries, she said, but added that some 10,000 people will be out of work in the paper, plastics, printing, electronics and telecommunications.

She said relocating workers from one industry to another is not easy. For instance, male workers who lose jobs in the metal and chemical industries are unlikely to be able to instantly shift to shoe and leather manufacturing.

TDRI research director Somkiat Tangkitvanich said the study showed that exporters will save Bt7.2 billion in tax payments because of the FTAs with China and India, while importers will save Bt1.5 billion in taxes and duties.

He believes a new government will sign an FTA with Japan, otherwise it would affect foreigner investor confidence.

"The Democrat party is also open to FTAs, so I think the new government would do that," he said.

Yesterday’s seminar also urged the government to engage Parliament in the free-trade debate, to cross-check the details of proposed agreements.

 source: The Nation